| May 3, 2011

Countdown to the budget deal: Consolidate EBC and OSEEGIB

Editor’s Note: At $16.6 billion, Oklahoma government spending is at an all-time high. At $26 billion, Oklahoma’s debt load is staggering. Oklahoma voters have installed a center-right government to do something about it. As the legislative session winds down and the FY-2012 budget is finalized, policymakers should keep in mind that their constituents are not interested in “revenue enhancements.” By a 4 to 1 margin, they are interested in smaller government.

Recently in The Oklahoman, OCPA adjunct scholar Russell Jones, a marketing professor at the University of Central Oklahoma, pointed to U.S. Census Bureau data showing that Oklahoma ranks 14th among the 50 states in the number of government employees as a percentage of the population. “Oklahoma governments have 18,048 more full-time equivalent employees than our population justifies,” he wrote. “These employees are paid $709,018,036 per year.”

Moreover, according to a news story March 2 in USA Today, Oklahoma’s public employees earn higher average pay and benefits than Oklahoma’s private-sector workers. Using data from the Bureau of Economic Analysis, USA Today reported that average public-sector compensation (including salaries and benefits) in Oklahoma in 2009 was $47,258, which was $1,667 greater than the compensation of Oklahoma’s private-sector workers.

Fortunately, OCPA has shown how policymakers can craft a state budget that respects their constituents’ family budgets. For example, as we recommended last year:

Enact legislation which implements the reforms of SB 2052, which was passed by the state Legislature this year but vetoed by Governor Brad Henry. The reforms include consolidation of the state Employee Benefits Council (EBC) and the Oklahoma State and Education Employees Group Insurance Board (OSEEGIB), which would have resulted in an administrative savings of $2 million to $3 million annually. Non-appropriated revenue of OSEEGIB and EBC is derived from state appropriations for health-benefit payments for employees, so any spending reductions at EBC and OSEEGIB equals savings for state-appropriated agencies. Other reforms of the bill include implementation of a “winner take all” competitive bidding process for HMO companies that are offered by the state to employees (this is how most private-sector firms choose health insurance products). This reform, coupled with the stabilization of the benefit allowance for state employees, would result in savings of more than $70 million annually. Total savings annually: $73 million.

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