(Oklahoma City) Governor Keatings proposal to radically alter Oklahomas two largest state retirement systems may not be in the best interest of current or future teachers and state employees, according to State Senator Larry Dickerson.
The Poteau legislator said the plan could also hurt Oklahomas effort to recruit new teachers to address a statewide teacher shortage.
Im certainly willing to listen and let Governor Keating make the case for his changes, but on the surface, it looks like a very risky proposal that could jeopardize the retirement benefits of state workers and teachers, said Sen. Dickerson, chairman of the Senate Appropriations Subcommittee on General Government and Transportation.
Governor Keatings proposal would prohibit new teachers and state employees from joining the existing state retirement systems, forcing them to enroll in a 401K-like program. Instead of receiving a guaranteed pension as current employees do, the new teachers and state workers would be required to build their own retirement nest eggs through personal investments in the stock market, mutual funds and other sanctioned activities. Current teachers and employees would have the option of joining the 401K plan or remaining in the current system.
Basically, the governor is telling new teachers and state employees that their retirement will depend on how well they play the stock market. With the volatile nature of Wall Street, Governor Keating could not guarantee any state employee or teacher that a retirement check would be waiting for them at the end of their career. If the economy faltered or a few bad investments were made, they could end up with nothing, said Sen. Dickerson.
The legislator noted that the states current retirement package is also one of the major selling points that schools and agencies use when they recruit new teachers and employees. Thats because the offer of a guaranteed pension can help make up for other shortcomings in an overall compensation package.
Oklahoma is now working to address a teacher shortage by recruiting hundreds of new instructors to the public schools, but those efforts would be hindered by any decrease in retirement benefits, according to Sen. Dickerson.
Were not going to improve our recruiting pitch to new teachers by doing away with guaranteed pensions and tying their retirement to the stock market. That would be just one more reason for a teaching graduate to leave Oklahoma to seek a better job elsewhere. At a time when were trying to offer more attractive compensation packages to new teachers, especially math and science instructors, I think the governors plan would definitely send the wrong message, said Sen. Dickerson.
In addition to damaging recruiting efforts, the lawmaker is concerned that the Keating program could ultimately threaten the stability of the current state retirement systems that it seeks to supplement. As more new employees enter the Keating plan, the number of participants in the Oklahoma Public Employees Retirement System (OPERS) and the Oklahoma Teachers Retirement System (OTRS) will decline over time, decreasing the financial support of those systems.
I dont think anyone can predict what effect this plan will have on the retirement systems 10, 20 or 30 years into the future. Maybe the systems will be fine or maybe they wont. Governor Keatings plan offers no assurances or guarantees, said Sen. Dickerson.
In his executive budget, Governor Keating claimed that his plan would help shore up OTRS and free up additional funds to use on other initiatives, such as a teacher health insurance plan. The governor estimated that $500 million a year now dedicated to OTRS could eventually be directed elsewhere.
I know Governor Keating has noble intentions, but I think its risky to divert money from the retirement systems to fund other state initiatives, no matter how worthy they may be. We certainly need to find money for teachers health insurance, but I dont think it should be at the expense of their retirement system, said Sen. Dickerson.
Both the House and Senate Republican caucuses have expressed support for a 401K-like retirement program for state employees and teachers. SB 1235 by Sen. Kathleen Wilcoxson would implement such a program.
I know a lot of people used to think that the only direction the stock market went was up, but history and common sense proved that notion wrong. I think a conservative approach on this issue is much safer than the radical approach suggested by the governor, said Sen. Dickerson.