House Media Division
An interim study on the financial status of the state’s pension system was held by the House Economic Development and Financial Services Committee.
The official results have been tabulated and the state pension system’s unfunded liability decreased from $11.6 billion to $11.4 billion. The funded ratio went from 65 percent to 66.5 percent.
“The financial condition of the state pension system improved by $200 million,” said Rep. Randy McDaniel, committee chairman. “The improvement is the result of recent legislative reforms and strong investment returns this past fiscal year.”
While thankful for the financial gains, Chairman McDaniel said he offers his continued support for more reforms, namely the transition to a defined contribution plan for designated future state employees.
“Additional reforms are necessary to ensure past promises can be kept and future pension funding requirements do not crowd out other critical state needs,” said Rep. McDaniel, R-Oklahoma City. “Interest rates on bonds remind benign. It is unwise to presume equities will consistently outperform historical averages and cover other investment and funding deficiencies.”
In 2010, Oklahoma’s pension unfunded liability was over $16 billion. The state ranked as one of the most financially distressed state public pension systems in the country. Rep. McDaniel and state Sen. Mike Mazzei sponsored reforms that were signed into law by Gov. Mary Fallin. These reforms have significantly improved the situation.
“More work is necessary,” Rep. McDaniel said. “I look forward to working with other leaders to achieve meaningful results. The immense size of the unfunded liability at over $11 billion still threatens the financial security of the state.”
“I am pleased to hear we have made some progress; however, the $11.4 billion pension debt remains one of the state’s biggest problems,” said Speaker T.W. Shannon, R-Lawton. “Our teachers and all public employees deserve solvency to their system. We should begin looking at the private sector as a model to move to a defined contribution system for new employees that is modern and sustainable. We must make it a top priority to shore up our current debt and to not pass this financial hardship to future generations.”
