FOR IMMEDIATE RELEASE: March 11, 2014
House Passes Monumental Overhaul of State Pension System
OKLAHOMA CITY – Today, the Oklahoma House of Representatives overwhelmingly voted for a measure that would create a defined-contribution pension system for future state employees.
House Bill 2630, authored by Rep. Randy McDaniel, creates a defined-contribution system for new employees who are part of the Oklahoma Public Employee Retirement System (OPERS) based off of models used in the private sector. If signed into law, the system will phase out the state’s current and broken system over the next several decades, reduce the state’s unfunded pension debt and allow employees the retirement mobility that the modern job market demands.
“Oklahoma faces a pension crisis,” said House Speaker Jeff Hickman, R-Fairview. “The state currently carries more than $11 billion in pension debt, and the system is unsustainable. Service and hard work should be compensated, and our state employees and taxpayers deserve a system that is modern, efficient and sustainable.”
As of the current fiscal year, roughly $820 million is allocated in the state budget to address past unfunded pension debt. This measure would not only create pension stability, but would also free up hundreds of millions of dollars overtime that could be used for higher salaries for state employees, education and transportation.
Current state employees would remain under the old system and the bill would not impact current retirees.
“The 21st-century job market demands mobility and greater employee control of retirement benefits,” said Rep. Randy McDaniel, R-Oklahoma City. “To continue to attract skilled employees and provide quality services, the state of Oklahoma has to provide a competitive compensation package. This reform makes great strides to ensure that state service is a desirable career choice.”
“We applaud the House for its efforts to seriously address the issues of compensation and pay for state employees,” said Sterling Zearley, Executive Director of Oklahoma Public Employees Association. “Years of neglecting this issue have led to compensation well below market resulting in high turnover and low staffing. We appreciate the Speaker of the House and House members for recognizing the urgent situation and their willingness to conduct meaningful dialogue with OPEA. We now have the opportunity to develop competitive compensation for those who serve the people of Oklahoma.”
HB 2630 requires new state employees to contribute a minimum of 3 percent to their retirement, and the state would match the employees’ contributions up to 7 percent. The measure would not impact hazardous duty employees including correctional officers, probation and parole officers, or fugitive apprehension agents employed by the Department of Corrections.
If signed into law, the defined-contribution system would take effect November 1, 2015.
HB 2630 will now go to the Senate for consideration.