Some leaders of Oklahoma’s pension systems think the systems can withstand paying a cost-of-living adjustment to state retirees next year.
State retirees have gone 11 years without a cost-of-living adjustment in their pension checks, but that could change after executive directors of five state pension systems gave state legislators a positive financial outlook in a Friday hearing.
The directors detailed the health of each pension system and the effects of offering retirees a 2% or 4% adjustment next year as part of a deeper dive on the issue.
Oklahoma’s pension systems, which used to be some of the worst in the nation, have come a long way in the past decade, the directors said.
Several of the state’s pension systems are funded at or above 99%.
Others, like those for retired teachers and firefighters, are lower but hitting high points. The teachers’ system is at 72% and the firefighters’ system is at 71%
“In my history, I don’t know that we’ve ever been over 70% funded so we’re very proud of that,” said Chase Rankin, executive director of the firefighters’ system.
Rep. Avery Frix, R-Muskogee, pushed unsuccessfully this year to give most state retirees a 4% cost-of-living adjustment. He plans to renew his push during the 2020 legislative session.
Frix said the information presented Friday at his interim study on cost-of-living adjustments solidifies his argument that legislators can offer an adjustment without bankrupting the systems.
“My hope is to show that our state retirement systems have improved dramatically over the past decade, and we are now in a position to give our retirees the COLA they deserve and have been promised,” he said.
Frix pointedly asked most of the state’s pension heads whether the systems could withstand offering an adjustment. Most said yes.
Offering a 4% adjustment would likely reduce the funded rates of each pension system between one and three percentage points.
Ginger Sigler, the executive director of the Oklahoma Police and Pension Retirement system, said the improvements in the retirement systems were done on the backs of state retirees.
The police pension system is funded at nearly 103%, and would drop to 101% with a pension adjustment.
“Our retirees have suffered from this and I think it’s time to give a COLA. We need to be prudent about it, but I think it’s time,” she said
Tom Spencer, executive director of the Teachers’ Retirement System of Oklahoma, said the decision was not his to make.
“That’s not for me to say,” he said. “I don’t like to see the funded ratio ever go down.”
Retirees packed the Capitol hearing room for the interim study, leaving standing room only for latecomers.
Retired Oklahoma City teacher Debbie Hogue-Downing walked away from the meeting convinced a pension adjustment is feasible.
A widow, Hogue-Downing has grown more concerned about her finances in the five years since her husband’s death. Home repair costs have started adding up as everything else in Hogue-Downing’s life has started to cost more.
“We need to let legislators know that it’s important for us and we’re serious about this,” she said.
House legislators, both Democrats and Republicans, overwhelmingly supported offering a pension adjustment to retirees this year, but Senate leadership was concerned about the health of the pension systems and didn’t want to cause lasting damage.
Part of what hurt the state’s pension systems a decade ago was legislators repeatedly giving retirees more generous benefits than the state could afford.
Earlier this year, Senate leaders asked for an actuarial analysis of offering retirees a 2% adjustment, which is less than the plan the House approved.
Cost-of-living adjustments will undoubtedly be an issue next year, and may force the House and Senate to come to a compromise during the 2020 legislative session.