Monday, August 2, 2010

Treating a pension deficit disorder

[This Marlin Oil advertorial appears in the August 4 edition of The City Sentinel.]

In stories for, senior editor Patrick B. McGuigan of The City Sentinel has detailed devastating national investigations finding that Oklahoma’s Teacher Retirement System (TRS) is horribly underfunded. For Oklahoma taxpayers, a financial crisis of unimaginable proportions lies waiting in the wings, unless the economy grows robustly and/or benefits are cut.

The Pew Center for the States found Oklahoma was among the five worst of the 50 states in terms of unfunded mandates in its system. In all, American state governments faced what Pew researchers called a "trillion dollar gap" between promised retirement benefits to public employees and the resources to pay for them.

In a later story, McGuigan detailed research from the Manhattan Institute and the Foundation for Educational Choice finding that nationally the gap in government retirement plans is “worse than you think.” A third investigation, from the Institute for Truth in Accounting, estimated that unfunded mandates could cost each Oklahoma family $14,600.  

In 2007, state Treasurer Scott Meacham said, "The biggest problem exists with the biggest pension fund – the Teachers’ Retirement System – where actuaries indicated that nearly three times more money than is currently received is needed to properly fund the system."

But somebody apparently hasn’t read any of this. Management for TRS this year redecorated offices in the Capitol complex in Oklahoma City, at a cost of about $115,000.

In San Francisco, an initiative effort aimed at addressing that city’s own nightmarish pension shortfall has emerged from a perhaps unexpected direction. A local public defender joined forces with a retired Silicon Valley entrepreneur to gather signatures needed that could force a popular vote on pension reform. Those pushing reform are “progressive” (i.e. liberal) but in this case they are fiscally quite conservative.

The San Francisco initiative proposal would limit future benefits and put new burdens on public employees themselves to help fund their own retirement plans. Public employee labor unions are opposing the effort, but at least a solution is being put on the table.

It’s not often that most Oklahomans would point to San Francisco as a possible source of reform ideas, but that’s the case here. It is past time to take seriously what researchers at the Oklahoma Council of Public Affairs call Oklahoma’s “Pension Deficit Disorder.”  

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