(Oklahoma City) In an effort to get budget talks moving, the leader of the Oklahoma State Senate is offering to hold a floor vote on a Republican-sponsored retirement bill that would make major changes in the pension systems for teachers and public employees.
Although he vehemently opposes the proposed legislation, Senate President Pro Tempore Stratton Taylor said Governor Keating and GOP legislative leaders have told him it is one of their top priorities and a key to their yet-to-be-made-public budget plan.
"I think it's a horrible idea to turn the teachers and public employees retirement systems upside down in search of additional revenue, but Governor Keating and his Republican colleagues indicated that they won't begin meaningful budget negotiations unless their pension overhaul plan is part of those discussions," said Sen. Taylor.
"Apparently, their budget plan won't balance unless some kind of pension raid is authorized. I believe the Republican retirement plan will be voted down overwhelmingly in the Senate, but if that's what it takes to get budget negotiations started, I'm certainly willing to give them an opportunity to pass it."
The Republican plan would establish new retirement programs for state employees and teachers, creating a 401(k)-like system that requires participants to build their own retirement funds through personal investments in the stock market. All new teachers and employees would be required to join the 401(k) plans, but existing members would have the option of staying in the current systems that guarantee a pension upon retirement.
According to Governor Keating's original but outdated executive budget, $67 million that had been going to the teachers and state employees retirement systems could be freed up by the change and directed for use on other government operations next fiscal year. The governor also estimated that up to $500 million a year in pension funds could eventually be directed elsewhere.
When the retirement plan was announced in February, it came under heavy criticism from state employees, teachers and the late Sen. Larry Dickerson, who dubbed it "the Enron plan," referring to the thousands of Enron employees who lost their pension income when the energy trading company and its 401(k) plans went belly up.
"I think teachers and state employees should get a guaranteed pension for their many years of public service, instead of having their retirement depend on how well they played the stock market in their youth. If the economy faltered or a few bad investments were made, they could end up with nothing, just like the Enron employees," said Sen. Taylor.
In addition to jeopardizing retirements, forcing all new teachers and state employees to join a 401(k) plan instead of a guaranteed pension system would hurt state recruiting efforts, especially when it comes to filling a shortage of math and science teachers, according to the Senate leader.
The Republican program could also threaten the stability of the current state retirement systems that it seeks to supplement. As more new employees enter the Republican plan, the number of OPERS and OTRS participants will decline over time, decreasing the financial support of those systems.
"No one can predict what the long-term side effects of this program will be. It's risky and makes it tougher to recruit new teachers and employees. I think it's a mistake, but if they want to vote on it, I will give them that opportunity," said Sen. Taylor.
On Tuesday, the Senate leader sent a letter to Governor Keating, Senate Minority Leader Jim Dunlap and House Minority Leader Fred Morgan offering to hold a Senate vote on their retirement proposal. Although the GOP leaders have privately requested such a vote, they did not answer the letter, which requested a response by 5:00 p.m. Tuesday.
"I'm disappointed that they didn't answer my letter, but I am operating under the assumption that they still want a vote on their retirement program. The offer is still good. I'm willing to do go the extra miles to get meaningful budget negotiations started," said Sen. Taylor.
Senator Taylor sent another letter to the GOP leaders on Wednesday, reiterating his proposal and offering to hear two of their other budget proposals that involved consolidation of agencies. Governor Keating and the Republican lawmakers have indicated that they would like to consolidate conservation districts and merge the Liquified Petroleum Gas Commission with the Corporation Commission.
Legislative leaders have also asked the GOP leaders to publicly announce their plan for the state budget something that they have declined to do. The governor's original executive budget is out of balance because of revised revenue projections that were made after its release.