Senate Approves Bill to Strengthen Retirement Systems

The full Senate has given its approval to a measure to strengthen state retirement systems. Sen. Mike Mazzei, R-Tulsa, is author of Senate Bill 1894. While the legislation would apply to the retirement systems for teachers, public employees and judges, Mazzei said there’s a particular concern about the Teachers Retirement System of Oklahoma (OTRS), which is only 49 percent funded.

“Right now OTRS has $7 billion in unfunded liability. That’s more than our entire state budget for this year,” Mazzei said. “In addition, the retirement system for state employees has $2 billion in unfunded liability. Our state simply cannot afford to put this issue on the back burner any longer—this really is a crisis situation.”

SB 1894 includes several reforms, including a requirement that fiscal retirement bills have an actuarial study. Furthermore, such bills may be introduced in the first session of the legislature, but no action can occur until the second session so that the legislature can review the actual impact of any proposed changes. The bill would also require a specific provision for funding any proposed legislation that fiscally impacts a retirement system.

“We have made some movement toward improving our retirement systems, but it isn’t happening fast enough. We’re going to need an additional $900 million dollars for OTRS over the next nine years just to get the system to a 60 percent funded level,” Mazzei explained.

Mazzei said his bill was based on retirement system reforms that had been approved in Georgia, which has since seen their funded levels move from 80 to 100 percent.

“Our unfunded liability levels hurt the state because it causes us to have a lower bond rating, meaning we pay more for our capital improvement projects. It may actually be costing us $20 million a year,” Mazzei said. “But more than that, we’re also putting the pensions of thousands of teachers at risk. The subsequent ripple effect through our economy would be catastrophic. I’m very gratified the full Senate agrees that we need to address the situation now, before it’s too late.”

The measure now moves to the House of Representatives for consideration.