| May 9, 2012
Further pension reform needed
Following is an excerpt from OCPA’s Proposed State Budget for the Fiscal Year ending June 30, 2013.
With Oklahoma government spending at an all-time high (see chart), the time has come to set priorities and to exercise spending discipline.
Policymakers enacted significant pension reforms in 2011, but the work is not done. The legislature should implement a defined-contribution (DC) plan for all new state (OPERS-eligible) employees.
Adhering to the first rule of holes (“when you’re in one, stop digging”), this plan stops the practice of adding new liabilities for new employees. The plan would pay 4 percent of annual salary immediately, increasing to 7 percent of annual salary after 4 years of service. The state would contribute 4 percent of salary to the employee’s 401(k) beginning when the employee is hired.
The plan would take the difference between the new DC plan contribution and the old DB (defined benefit) plan contribution and inject it into the system, using it to pay down pension debt over time.
Submitted each year by the Oklahoma Council of Public Affairs, Inc. to the taxpayers of the State of Oklahoma and their elected Officials, the OCPA “Budget Book” is carefully crafted by Fiscal Policy Director Jonathan Small to help lawmakers set priorities and exercise spending discipline while creating a state budget that respects your family budget. Offering unmatched fiscal policy analysis and recommendations, Small draws on his experiences as a former budget analyst for the Oklahoma Office of State Finance, former fiscal policy analyst and research analyst for the Oklahoma House of Representatives, and former director of government affairs for the Oklahoma Insurance Department to provide perspective on the state budget that you cannot find anywhere else.