Back in November, I wrote about how the Oklahoma Council of Public Affairs, the state’s largest conservative think tank, was pushing for fundamental changes in the state’s retirement plans.
I was critical of an article published by an OCPA fellow, Steve Anderson. The article argued that the Oklahoma Teachers Retirement System (OTRS) and the Oklahoma Public Employees Retirement System (OPERS) should gradually switch to a defined-contribution plan from its current defined-benefit plan. That argument, which deserves a public discussion, didn’t bother me as much as the political language in the article.
For example, Anderson writes:
The conversion to the defined-contribution plan also would allow Oklahoma to stop pouring tax dollars directly into OTRS. This change would free up nearly $260 million in dedicated funding and another $40 million in reduced benefit costs in the first year of plan inception. OCPA believes this funding source should be eliminated immediately and the savings used as a funding source for eliminating the individual income tax.
The right-wing frame is clear here. The teachers’ retirement plan here is just one more state-worker benefit preventing the state from “eliminating the individual income tax.” This is a dubious claim.
Yesterday, The Oklahoman published an editorial (“Legislature must right pension plan of Oklahoma teachers”, March 7, 1011) pushing for changes in the OTRS, and the key paragraph for teachers is this:
Among its reform recommendations, the Oklahoma State Pension Commission said lawmakers should raise the retirement age for teachers and give cost-of-living adjustments only when they can be paid for out of the state budget. For the teachers system, the COLA change would cut the unfunded liability to about $7.5 billion . . .
Although The Oklahoman editorial only implicitly endorses it, the reduction of benefits for teachers, whether new, current or retired, is a major part of the conversation of so-called reform. Obviously, it’s part of the “everyone-must-sacrifice” rhetoric put forth these days by the GOP, which dominates state politics right now.
But if teachers here are looking at retirement benefit reductions then what about the income tax cut schedule Jan. 1 that primarily benefits the state’s wealthiest households? Shouldn’t at least delaying the income cut be part of the conversation, too? Let’s also don’t forget that teachers pay a portion of their retirement plan.
Look, The Oklahoman editorial is right about its basic point, which is the OTRS is underfunded and needs repair. But what we need is a real public discussion about the issue without the OCPA political rhetoric and without an immediate assumption teachers have to accept reduction benefits. I would argue, for example, that we should actually make it easier for teachers to retire earlier in order to create job opportunities for recent college graduates. Is there an overall costs savings in doing that?
The reality is drastic changes to the OTRS will be hard to implement because of its liabilities. Sure, we should debate defined-contribution as opposed to defined-benefit plans, but it might just be academic because, ironically, the plan is so underfunded it might prove impossible to change to a new system so quickly and so drastically. It might be best-or the only solution-to shore up the current plan.
In any event, teachers and state employees should pay close attention to this year’s legislative session. There’s a growing movement in favor of making critical changes in their retirement benefits.