theadanews.com - Ada, Oklahoma

December 12, 2013

Dutcher says state should reform its pension plan

Eric Swanson Staff Writer adanewsreporter@cableone.net
www.theadanews.com

Ada — Oklahoma should move toward replacing its defined-benefit retirement plan for state employees with a defined-contribution plan, said a spokesman for the Oklahoma Council of Public Affairs.

“In the private sector, the defined benefit — the way it used to be, where you work all these years and you have a set amount, a defined benefit that you’re going to get — that’s just gone away in the private sector because it’s unsustainable,” said Brandon Dutcher, vice president for policy for the conservative think tank, “and so, we think we need to slowly move that way in the government sector as well.”

Dutcher touched on the state’s effort to reform its pension plan for public workers when he addressed the Ada Lions Club, which met Tuesday at the Aldridge Hotel.

The OCPA, which supports free enterprise and limited government, contends that Oklahoma must overhaul its pension system so the state can keep its promises to current and retired public workers. The think tank supports a defined-contribution plan for all new employees who would otherwise qualify for the state’s traditional pension program.

The OCPA says a defined-contribution plan would help state workers control their own retirement, and it would allow the state to pay off its pension debt with no future accumulating liabilities in 32 years.

Lawmakers have already taken several steps to reduce the state pension system’s unfunded liability from $16 billion to its current level of about $11 billion. Those measures included a 2013 bill that changed the years-of service requirement for new firefighters from 20 to 22 years.

House Bill 2078 also changed the vesting schedule from 10 to 11 years and raised the minimum age for receiving benefits to 50. The bill also changed contribution rates for cities and firefighters.

Gov.  Mary Fallin signed HB 2078 into law, but she vetoed another bill that would have allowed new state employees to opt out of the traditional pension system in favor of a defined-contribution plan.

House Speaker T. W. Shannon said earlier this year that the Legislature will probably tackle pension reform again in 2014. Some public employees oppose any additional changes to the system, saying they could hurt firefighters, teachers and other government workers.

Dutcher said pension reform will likely dominate the upcoming legislative session.

“There are many people at the state capitol who want at least all new state hires to be on a defined-contribution pension plan — basically, a 401(k) like the private sector has,” he said. “It seems like a kind of common-sense thing, but that’ll be a fight.”

 

State issues

Dutcher also touched on other issues facing Oklahoma, including efforts to revamp the state’s workers’ compensation system.

The Legislature overhauled the workers’ compensation system in 2013, changing it from a court-based system to an administrative one. Senate Bill 1062 also allows businesses to opt out of the system as long as they provide equivalent benefits to injured workers.

Supporters of SB 1062 said it would help control business costs and boost job growth, but critics said it would reduce benefits for injured workers. 

The Oklahoma Supreme Court heard a challenge Tuesday to the workers’ compensation law from opponents who say the measure is unconstitutional. The justices have taken the case under advisement and did not say when they might issue a ruling.

Dutcher said his organization was pleased to see lawmakers tackle the workers’ compensation system, but it’s not clear whether the Legislature will need to do more work on the issue.

“We just have to wait and see what the court does,” he said. “If the court upholds it, then no more would need to be done. But if the court strikes down all or part of it, then the lawmakers have to regroup and say, ‘Now what?’”