Governor Signs Bill to Strengthen Public Retirement Systems

Governor Brad Henry this week signed a measure to strengthen Oklahoma’s teacher and public employee retirement systems.

Sen. Mike Mazzei, author of Senate Bill 1894, said the reforms contained in the measure would not only strengthen public retirement systems, but eventually save the state millions of dollars and improve Oklahoma’s bond rating, allowing for better financing of capital improvement projects.

“The Teacher’s Retirement System alone is saddled with an unfunded liability of $7 billion – more than the state’s annual budget as a whole,” said Mazzei, R-Tulsa. “This is an urgent problem that must be corrected. Not only does this situation threaten the financial security of thousands of teachers, but it could ultimately cripple the state’s finances.”

Mazzei explained that the unfunded liabilities have significantly increased the cost of bonding expenses related to capital improvement projects to the tune of approximately $20 million per year.

The reforms enacted by Senate Bill 1894, Mazzei said, set a solid foundation for addressing the problems facing Oklahoma’s public retirement systems.

The bill requires a specific provision for funding any proposed legislation which has a fiscal impact on the retirement system. Additionally, the measure requires that any fiscal retirement measures must be accompanied by an actuarial study. Under the provisions of the bill, any legislation that has a fiscal impact on retirement systems may be introduced in the first session of the legislature, but no action on the bill can be taken until the second session of the legislature, allowing for sufficient time to review any potential impact.

With more Oklahoma teachers reaching retirement age, the state must take action to correct problems, Mazzei said.

Statistics from the Oklahoma Teachers Retirement System show that in 2005, 40,879 retirees were receiving benefits. Ten years from now, that figure is expected to grow to over 60,000.

“The unfunded liabilities in our public retirement system are a crisis for our state,” Mazzei said. “I’m pleased the Governor has signed this bill which revolutionizes our approach to our unfunded retirement systems and should help us better insure financial security for our retired teachers and public employees.”