For thousands of Oklahoma public employees, retirees, and their families, retirement security is on the ballot.
Later this month, Oklahoma Republicans will choose between Mike Mazzei and Gentner Drummond. The gubernatorial primary runoff presents voters with two sharply different records on public pensions.
Advocates founded the National Public Pension Coalition to defend defined-benefit pensions as these debates unfold across the country. While every state has its own independent retirement systems, the larger struggle is consistent. Will career public servants retire with a guaranteed lifetime pension they have earned? Or will they be shifted into privatized, risky, high-fee 401(k)-style retirement accounts?
Public employees do vitally important work for their communities. They include police officers, paramedics, firefighters, and plow truck drivers. They accept lower wages in exchange for better health care and a secure retirement through defined-benefit pensions. Lawmakers promise public employees in Oklahoma and around the country a secure retirement through defined-benefit pensions. Negotiators hammer out the terms at the bargaining table and in legislative committee rooms.
That debate has shaped pension policy in Oklahoma for years. This is why workers in Oklahoma launched Keep Oklahoma’s Promises. It protects the deferred wages of hardworking firefighters, teachers, first responders, and other government employees. This work is vitally important because elected officials like Mike Mazzei seek to bolster their political credentials. They do so by threatening the retirement security of public servants and their dependents.
Attorney General Gentner Drummond: A Pension Champion
Meanwhile, Attorney General Gentner Drummond has emerged as one of the state’s most visible defenders of existing pension systems. Most recently, Drummond refused to approve a proposed investment management scheme. It involved a newly created firm with little operating history. He cited concerns about the procurement process and other issues, including campaign contributions and staff connections.
Drummond’s caution hearkens back to a dark chapter in Oklahoma public pension history. In 1975, former Governor David Hall was convicted on federal bribery and extortion charges after steering state retirement investments to a favored investment firm in exchange for personal payments. It was one of the most infamous corruption scandals in state history, with a governor going to prison for stealing the retirees savings.
Drummond’s defense of public pensions has earned broad support. Public-employee groups include the Oklahoma Fraternal Order of Police, which offered unanimous backing. Endorsements came from the Firefighters Association at state and Oklahoma City chapters, plus Tulsa FirePAC and Retired Educators Association.
Mike Mazzei offers a very different record.
During his tenure in the Oklahoma Senate, Mazzei chaired the Senate Select Committee on Pensions. He authored or supported numerous pension measures. During his time in the Oklahoma Senate, Mazzei chaired the Senate Select Committee on Pensions. He helped enact legislation that increased retirement ages for new teachers, changed retirement eligibility, and increased firefighter contributions. Additionally, he moved new state employees into the OPERS Pathfinder plan and paused cost-of-living adjustments for retirees for 12 years.
Mazzei’s attendance has been inconsistent. Recently, it prompted the headline: Oklahoma Gubernatorial Hopeful AWOL From Police Pension Board. He missed 75% of the meetings since his appointment. A pension fiduciary who skirts their responsibilities is not someone who takes their job seriously.
Mazzei has singlehandedly done more to undermine the pension security of Oklahoma public sector workers than any other elected official since former Governor Hall–and he went to prison.
Worse, Mazzei’s aim as Governor would be to inflict even more damage on public-sector retirements. Mazzei’s current campaign Plan proposes moving county employees into a more sustainable retirement model through 401(k) plans. It specifies that the proposal would not change the statewide retirement systems covering teachers, police officers, firefighters, or law enforcement. That language differs from earlier campaign versions. Earlier versions argued more broadly for replacing defined-benefit plans with 401(k)-style accounts.
Oklahoma represents something larger than a single election.
Across the United States, nearly 5,000 independently administered public pension systems provide retirement security to approximately 15.3 million active public employees and 12.4 million retirees and beneficiaries. These systems distribute more than $405 billion in retirement benefits each year. They support families and local economies in communities large and small. These plans control over $6 trillion in retirement assets.
Public workers who spend decades serving their communities to earn these benefits. Teachers educate our children, firefighters respond to emergencies, and police officers protect neighborhoods. Social workers assist vulnerable families, and millions of other public workers spend decades serving communities.
For surviving spouses and families of employees who die in the line of duty, defined-benefit pensions provide long-term financial stability when it is needed most.
Yet for decades, a well-funded network of advocacy organizations, think tanks, and financial interests has argued that traditional pensions should be replaced with defined-contribution plans such as 401(k)s, individual retirement accounts, or similar retirement products. Often, those pushing this message have a profit-driven self-interest motivating their crusade.
Mazzei aims to dismantle DB pensions for personal gain.
Who benefits from replacing pooled pension systems with individually managed accounts? In Mike Mazzei’s case, his personal mission to destroy DB pensions would benefit him directly, as he is a broker of individual retirement accounts in Tulsa.
Investment professionals like Mike Mazzei look at the more than $6 trillion in public pension assets and, instead of seeing a bedrock institution of retirement security, see a market opportunity. Pension stewards like Gentner Drummond know these assets exist to pay lifetime benefits to retired teachers, not to create new revenue streams and fees for Wall Street.
Folks whose livelihoods come from an industry that profits from managing investment assets often downplay the higher fees that individual DC accounts incur. Mike Mazzei makes money in an industry that profits by managing investment assets. Every worker shifted from a pooled defined-benefit pension to an individual 401(k)-style account represents another account that incurs investment and administrative fees. Those fees come out of workers’ retirement savings. Defined-contribution plans create millions of individual accounts that generate ongoing management and administrative fees, while pooled defined-benefit pensions are significantly less expensive to operate.
According to the National Institute on Retirement Security, defined-benefit pensions provide the same retirement benefit at 27% lower cost than even the most ideal defined-contribution plan. The collective power of defined-benefit pension plans reduces fees for each individual member. It’s the ideal financial vehicle for professionals who built their careers choosing a fulfilling career of sacrifice over one of personal enrichment.
Supporters of individualized defined-contribution plans, like Mazzei, often exaggerate the extent of unfunded pension liabilities as evidence that public pensions are unsustainable. As digits on a page, these numbers may induce anxiety for policymakers, but these “liabilities” include payments to widows who survive long after their spouse dies in the line of duty.
Gentner Drummond understands sacrifice
As an Air Force captain who served his country in the Gulf War, Gentner Drummond understands knows the role pensions play in ensuring those who serve us, whether in the military or as first responders, are cared for later in life. Pensions are not just numbers; they are human lives, each promised dignity in retirement by the State of Oklahoma.
One candidate understands public service, emphasizes preserving and safeguarding institutional pension systems while scrutinizing how pension assets are managed. The other has built much of his public career around destabilizing pension systems, missing important pension meetings while touting his financial management skills, and continues to push risky defined-contribution retirement schemes in parts of Oklahoma government, a new arrangement from which he could personally profit.
On August 25th, Oklahoma voters will decide which vision they prefer. The broader national debate over the future of public pensions will continue long after the ballots are counted.