The full Senate has taken a major step toward addressing Oklahoma’s $16 billion unfunded pension liability with unanimous approval Wednesday of a major reform measure.
State Sen. Mike Mazzei is the author of Senate Bill 891 and chairman of the Senate Select Committee on Pensions. He said the biggest part of that $16 billion in unfunded liability is in the Oklahoma Teachers Retirement System (OTRS), with $10 billion in unfunded liability.
“Under Senate Bill 891, cost of living increases (COLAs) must be funded by the legislature, instead of leaving them to be absorbed by the retirement system,” said Mazzei, R-Tulsa. “This legislation makes that crucial reform for all our pension systems. This fiscal responsibility measure should reduce our unfunded liability more than $5 billion.”
Mazzei said the Select Committee on Pension has outlined key goals necessary to protecting the pensions of hardworking Oklahoma teachers, police, firefighters and other public employees. Those goals are:
Reduce Oklahoma’s unfunded pension liability
Avoid the risk of a massive tax hike
Avoid budget cuts to pay for unfunded liabilities
Protect Oklahoma’s bond rating
Propose reforms that establish a stable, long-term pension model for Oklahoma
Mazzei said the reforms in SB 891 would not result in any changes in benefits for those already participating in the state’s six public retirement systems. He also noted that bond rating experts, such as Moody’s, have said if Oklahoma doesn’t improve their pension systems, the state’s bond ratings will suffer.
“That means the interest we’ll be charged for future bond packages to pay for capital needs will skyrocket,” Mazzei said. “We don’t want to find ourselves in the same position as other states, like Illinois, where they’ve been forced to raise income taxes by 66 percent because of unfunded pension liability.”
SB 891 now moves to the House for further consideration.