The lead editorial in today's Oklahoman highlights OCPA's plan to defuse Oklahoma's pension bomb.
Steve Anderson, a research fellow at the Oklahoma Council of Public Affairs, a conservative think tank, has some suggestions. A longtime certified public accountant and former budget analyst in the Office of State Finance, Anderson outlines his plan in the most recent issue of OCPA's Perspective magazine.
If implemented, he said, the plan would in time pay off the debt without needing an infusion of new money and make millions of dollars available immediately for state services.
The most important component is to have all new teachers, support personnel and government employees begin their jobs in a defined-contribution plan instead of the defined-benefit plan now used by OTRS and OPERS. “Without taking this essential step, nothing else will correct the funding issue,” Anderson said.
These accounts would be owned by the employee from the start, unlike the defined-benefit plans that require several years of service before retirement benefits are obtained. This would allow employees more portability and easier access to their funds. In addition, the plan would make matching payments by the employee voluntary instead of mandatory, and cap the state's contribution at 9 percent. Workers could contribute additional amounts.
There are a number of other pieces to Anderson's proposal. This may not be the answer, but it provides starting point for policymakers. And start they must.
“Do we want to leave our grandchildren a fiscally solvent state with no pension debt and a low tax rate?” Anderson asks. “Or do we choose to ignore all the warning signals and leave our problems (and higher taxes) to the coming generations?”