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State Capitol Building, Room 217 • Oklahoma City, OK 73105 • (405) 521-3191 • www.treasurer.ok.gov A publication of the Office of the State Treasurer • Treasurer Ken Miller, Ph.D. Economic Report TM Volume 3, Issue 3 • March 31, 2013 Oklahoma News and analysis of Oklahoma’s economy Inside SEE ROAD MAP PAGE 3 • Treasurer’s commentary: Capitol complexities • Q & A with Senate Appropriations Chair Clark Jolley • February gross collections dip • February unemployment drops • Economic indicators Contributor Regina Birchum, Deputy Treasurer for Policy/Chief of Staff Editor Tim Allen, Deputy Treasurer for Communications/Program Administration The states are often referred to as laboratories for policy and reforms. Across the nation, states struggling with pension debts and deficits are pursuing structural reforms to public worker benefit plans. As Oklahoma attempts to solve its pension problem, it may find a road map in reforms enacted by other states. While the approaches differ, concerns raised in states considering changes to public pensions are fairly consistent: whether proposals will reduce benefits for current employees; how the state will meet current pension commitments when new workers contribute to a different system; how cost-of-living adjustments (COLAs) can be funded; and, whether a new benefit structure will offer enough security for future public workers. With very few exceptions, states adopting or considering reforms have not suggested changes to benefits promised to workers enrolled in the state’s current plan, nor any retiree. Such is the case in Oklahoma, where policymakers have proposed no changes to the benefits promised to current workers or retirees. Contributions Concerns that the loss of new contributions to the defined benefit plan will harm workers under the current system can be met by maintaining dedicated funding levels. With this commitment, and employers contributing to a less costly plan, the state can dedicate a portion of the “savings” toward the unfunded liabilities of the closed plan. Additionally, once past obligations are met, the state can use the savings from the less-costly benefit plan to grant COLAs or adjust employee compensation. COLAs In recent years Oklahoma stopped granting unfunded cost of living adjustments, but statute is unclear on what constitutes funding. For example, Pension reform road maps could an individual plan grant a COLA if the plan is fully funded and investment earnings are sufficient to absorb the cost? Kentucky, whose pension reform proposals have recently been adopted by both legislative bodies and await action from the governor, also require that any COLA be pre-funded by the Legislature. Rhode Island, which enacted what has been called the boldest pension reform in the nation, suspended COLAs for all public workers until the collective funded status of all the plans exceeds 80 percent. However, even under the suspension the state allows one COLA every five years, based on the plan’s five-year average investment return. Retirement security Some current public workers, whose benefits would be unaffected by any reforms proposed in Oklahoma, have expressed concern for the workforce that replaces them in the future. They worry that a reduction in benefits could discourage well-qualified workers from entering public service. To address this concern, many states are retaining attractive public worker benefits, even after adopting reforms, by assuming “As Oklahoma attempts to solve its pension problem, it may find a road map in reforms enacted in other states.”
Object Description
Okla State Agency |
Treasurer, Oklahoma State |
Okla Agency Code |
'740' |
Title | Oklahoma economic report, 03/31/2013, v.3 no.3 |
Authors |
Oklahoma. State Treasurer. Miller, Ken. |
Publication Date | 2013-03-31 |
Publication type | Newsletter |
Purpose | Pension reform road maps; Treasurer's Commentary by Ken Miller, Capitol complexities; FY-14 Budget Requests; Q&A with Senate Appropriations Chair Clark Jolley; Meet Senator Clark Jolley; Gross receipts & General Revenue compared; Gross collections dip in February; Report shows state unemployment rate drops in February; |
For all issues click |
T1400.6 E19r |
Digital Format | PDF, Adobe Reader required |
ODL electronic copy | Downloaded from agency website: http://www.ok.gov/treasurer/documents/OER_3-31-13.pdf |
Rights and Permissions | This Oklahoma state government publication is provided for educational purposes under U.S. copyright law. Other usage requires permission of copyright holders. |
Date created | 2013-04-11 |
Date modified | 2013-04-11 |
OCLC number | 890222834 |
Description
Title | OER_3-31-13 1 |
Full text | State Capitol Building, Room 217 • Oklahoma City, OK 73105 • (405) 521-3191 • www.treasurer.ok.gov A publication of the Office of the State Treasurer • Treasurer Ken Miller, Ph.D. Economic Report TM Volume 3, Issue 3 • March 31, 2013 Oklahoma News and analysis of Oklahoma’s economy Inside SEE ROAD MAP PAGE 3 • Treasurer’s commentary: Capitol complexities • Q & A with Senate Appropriations Chair Clark Jolley • February gross collections dip • February unemployment drops • Economic indicators Contributor Regina Birchum, Deputy Treasurer for Policy/Chief of Staff Editor Tim Allen, Deputy Treasurer for Communications/Program Administration The states are often referred to as laboratories for policy and reforms. Across the nation, states struggling with pension debts and deficits are pursuing structural reforms to public worker benefit plans. As Oklahoma attempts to solve its pension problem, it may find a road map in reforms enacted by other states. While the approaches differ, concerns raised in states considering changes to public pensions are fairly consistent: whether proposals will reduce benefits for current employees; how the state will meet current pension commitments when new workers contribute to a different system; how cost-of-living adjustments (COLAs) can be funded; and, whether a new benefit structure will offer enough security for future public workers. With very few exceptions, states adopting or considering reforms have not suggested changes to benefits promised to workers enrolled in the state’s current plan, nor any retiree. Such is the case in Oklahoma, where policymakers have proposed no changes to the benefits promised to current workers or retirees. Contributions Concerns that the loss of new contributions to the defined benefit plan will harm workers under the current system can be met by maintaining dedicated funding levels. With this commitment, and employers contributing to a less costly plan, the state can dedicate a portion of the “savings” toward the unfunded liabilities of the closed plan. Additionally, once past obligations are met, the state can use the savings from the less-costly benefit plan to grant COLAs or adjust employee compensation. COLAs In recent years Oklahoma stopped granting unfunded cost of living adjustments, but statute is unclear on what constitutes funding. For example, Pension reform road maps could an individual plan grant a COLA if the plan is fully funded and investment earnings are sufficient to absorb the cost? Kentucky, whose pension reform proposals have recently been adopted by both legislative bodies and await action from the governor, also require that any COLA be pre-funded by the Legislature. Rhode Island, which enacted what has been called the boldest pension reform in the nation, suspended COLAs for all public workers until the collective funded status of all the plans exceeds 80 percent. However, even under the suspension the state allows one COLA every five years, based on the plan’s five-year average investment return. Retirement security Some current public workers, whose benefits would be unaffected by any reforms proposed in Oklahoma, have expressed concern for the workforce that replaces them in the future. They worry that a reduction in benefits could discourage well-qualified workers from entering public service. To address this concern, many states are retaining attractive public worker benefits, even after adopting reforms, by assuming “As Oklahoma attempts to solve its pension problem, it may find a road map in reforms enacted in other states.” |
Date created | 2013-04-11 |
Date modified | 2013-04-11 |