The Oklahoma State Pension Commission has approved a six-part plan proposed by state Treasurer Scott Meacham to address the state’s underfunded public employee pension funds.
Meacham chairs the pension commission.
The proposal would prevent the Legislature or fund trustees from providing cost-of-living increases without appropriating the funds necessary to fully fund those increases on a current as well as a future basis.
The proposal also would eliminate the provision that allows up to 120 days of unused sick leave to be counted as an additional year of employment.
Meacham, who did not seek re-election to a full second term as treasurer, said the severity of the underfunding was a result of lack of discipline.
“For decades, benefit increases have been granted to members of the retirement systems without those benefits being funded by the Legislature,” he said.
“The result has been that each benefit increase has served to only make the unfunded liability 'hole’ grow until now the funded status of Oklahoma’s pension systems has reached crisis levels,” Meacham said.
Meacham said the unfunded liability of the pension systems total $16.5 billion.
Adequately funding the systems would cost $736 million a year, he said, more than 10% of the state’s general fund budget.
“Waiting is not an option,” he said. “The problem will only get worse and the ultimate cost will only get higher unless immediate action is taken to turn the state pensions in the right direction.”
Meacham said that requiring new cost-of-living adjustments to be financed by the Oklahoma Legislature rather than the pension systems would allow the systems to reach a funding level of 80% in 25 years.
The worst-performing state pension fund is the Oklahoma Teachers Retirement System, which is funded at 48%.