Since 2010, the aggregate funding ratio of Oklahoma’s state-level pension systems has risen from 58 percent to 74 percent. Meanwhile, unfunded liabilities have declined by over $6 billion.
Now, a labor group is pushing lawmakers to boost public employee cost-of-living adjustments. The state froze COLAs in 2008.
From the Associated Press:
Representatives of Oklahoma’s public retirees who have not had a cost-of-living adjustment, or COLA, since 2008 say the time has come to boost their pension incomes now that the state’s underfunded pension systems are regaining their financial strength.
Managers of some of Oklahoma’s biggest retirement systems say they are financially stronger than they were just four years ago. Unfunded liability has declined by $6.5 billion and the funded ratio of the systems has improved from 58 percent four years ago to 74.4 percent.
The turnaround has emboldened officials at the Oklahoma Public Employees Association to make COLAs for the state’s pensioners a top priority when the 2015 Legislature convenes in February.“We have made sacrifices to make sure our system is stronger,” OPEA Executive Director Sterling Zearley said. “I think it’s time that we start looking at allowing COLAs.”
But some lawmakers expressed hesitancy and called a COLA re-instatement “premature”. From the AP:
State officials responsible for overseeing the financial health of Oklahoma’s pension systems say that while their improved financial condition is good news for the state, they may still not be financially strong enough for COLAs.
“I would caution and suggest that it’s maybe still a little bit premature to be having that conversation,” said Preston Doerflinger, director of the Office of Management and Enterprise Services and Gov. Mary Fallin’s secretary of finance, administration and information technology.
Rep. Randy McDaniel, R-Edmond, who has authored many pension overhaul bills, said he favors postponing consideration of pension benefit increases until pending litigation that is challenging one of the measures is resolved.
The lawsuit challenges legislation adopted this year that would end the traditional pension system for newly hired state workers in favor of a 401(k)-style retirement plan beginning in November 2015. It alleges the transition could cost Oklahoma taxpayers millions of dollars in lost revenue returns and reduced employee contributions
State Treasurer Ken Miller cautioned that the turnaround was fueled in part on income from the investment of pension funds that has been “exceptional yet unsustainable.”
“If you look at the long term average of the stock market, 20 percent returns are extraordinary but not sustainable,” Miller said.