Oklahoma faces many serious fiscal challenges and perhaps none is more crucial to Oklahoma’s future than reforming our state’s public pension systems.

Oklahoma’s six active defined benefit (DB) retirement plans have amassed more than $11 billion in unfunded liabilities that, in spite of reforms, increased over the prior year. To put this in perspective, the state’s pension debt exceeds the state appropriated budget by about 50 percent and nearly equals state gross revenue collections for an entire year.

Only one of the systems has maintained its assumed rate of return over the last 10 years. The state’s track record with meeting the annual actuarially required contribution payment is poor. Over at least the last 20 years, required annual contributions have been met on only a few occasions. Every time Governor Fallin and I meet with the bond rating agencies, Oklahoma’s state retirement system debt is mentioned as one of the state’s greatest financial challenges.

Given these problems, Oklahoma cannot afford to maintain the status quo. The cost of our pension debt puts significant pressure on adequately funding government operations and threatens further reductions in services. Across the country, states and local governments are experiencing pension challenges, many even worse than here. Retirees from Pritchard, Ala. were forced to go without payments, Illinois and New Jersey were investigated for not properly disclosing liabilities, Detroit pensioners are faced with the prospect of a reduction in benefits of 10-30 percent, and the list goes on. This is why the time to act is now for Oklahoma.

The fundamental problem is that DB plans, which have been shelved by most private business and several state and local governments, make it very easy for politicians to promise today what taxpayers must pay for tomorrow This is why states like Michigan, cities like San Diego, Calif., and Broken Arrow, Okla., and the state Department of Wildlife have chosen to close their DB plans to new entrants and convert to defined contribution (DC) plans. By moving to DC style plans, similar to 401(k) plans, we can stop burdening taxpayers with new liabilities, keep our promises to retirees and current employees and fairly compensate future state employees in a way that meets the needs of the next generation of workers.

The governor and legislators who have proposed moving to a DC model for new, non-hazardous duty employees should be commended. Retirement reform is a heavy lift, which requires a willingness to recognize math and fiscal reality. OCPA is also to be commended for long ago recognizing Oklahoma’s pension debt problem and proposing needed recommendations for change.

Oklahoma cannot fully invest in the state’s future until it ends the outdated and unsustainable practices of the past. While the state must keep every promise made to current workers and retirees, it must also meet the needs of today’s mobile workforce and be cognizant of limited taxpayer dollars. Moving new, non-hazardous duty employees to a DC plan is just the kind of budget planning needed to help ensure Oklahoma’s future is a bright one.

[Miller is a Ph.D. economist and serves as chair of the Oklahoma State Pension Commission. Prior to his election as state treasurer, he served as chairman of the House Appropriations and Budget Committee.]