IMMEDIATE RELEASE: September 16, 2015
House Committee Unanimously Agrees to Advance BillLessening National Teacher Shortage Impact on Oklahoma Schools
OKLAHOMA CITY – The House Business, Labor & Retirement Laws Committee today unanimously voted to send to the state actuary for review a plan to help reduce the impact of the national teacher shortage on Oklahoma classrooms. House Bill 1061, authored by Rep. Randy McDaniel, will allow school districts to pay up to $18,000 annually to teachers for the first 36 months after they begin collecting their retirement benefits.
“I am pleased that the members of the committee were willing to discuss this idea and debate its merits,” said McDaniel, R-Edmond, chairman of the Business, Labor and Retirement Laws Committee. “All but one other state is currently dealing with a teacher shortage which is exacerbated by the retirement of many of our best and most experienced educators.”
The current annual salary cap for retired teachers in Oklahoma is $15,000 for the first three years. House Republican leaders said they hope the additional $3,000 might allow recently retired teachers to return to the classroom or encourage other teachers who are considering retirement to keep teaching while receiving their retirement benefit and up to $18,000 in salary for three years.
“We have reduced unfunded liabilities in OTRS by more than $6 billion during the past six years, and we continue to prove our commitment to education by proposing ideas to strengthen our system and improve educational outcomes for Oklahoma students,” said House Speaker Jeff Hickman, R-Fairview. “This plan builds on the commitment we made to retired teachers, while also keeping or bringing back quality, experienced educators to Oklahoma classrooms.”
The Oklahoma Pension Legislation Actuarial Analysis Act (OPLAA) prohibits the Legislature from passing measures that increase the unfunded liabilities of the state’s public pension system. OPLAA requires an independent analysis of pension bills by the state’s contracted actuary. If the actuary determines that the legislation will increase liabilities, OPLAA requires the proposal to be concurrently funded with additional resources, instead of raiding the principal of the retirement funds as had been done prior to 2004 when Republicans gained a majority in the Oklahoma House.
After 36 months, there is no cap on what a retired educator can be paid while also receiving pension earnings. The state-contracted actuary must now review HB1061 to determine if it will increase liabilities to the Oklahoma Teachers Retirement System (OTRS). Under the proposal, in order to offset the negative fiscal impact to OTRS of raising the cap by $3,000, the employer contribution rate would be increased from 9.5 percent to 11 percent for retirees who are rehired.
“Our goal is to provide an incentive to keep our best teachers in the classroom and bring some of our retired teachers back, while keeping costs low for our schools,” McDaniel said. “We believe this is another way to deal with the national shortage without harming the financial strength and security of the OTRS, which House Republicans have worked hard to improve during the last decade.”
The committee also approved an amendment today to the measure that would include higher education employees in the actuarial study.
“Our teachers retirement system is stronger than it has been in decades,” Hickman said. “The strength of OTRS today and our ability to perhaps adjust this cap is primarily because of the reform efforts of House Republicans.”
The return-to-work issue was a major point of discussion last session and numerous bills were filed on the topic. Most of those differently designed bills either greatly increased the income cap or removed the cap altogether, but McDaniel said they were not considered by his committee because of their adverse fiscal impact to the retirement system for Oklahoma’s teachers.
McDaniel said the actuary should have his review completed by the end of the year, allowing the Legislature time to consider the bill during the 2016 legislative session.