Policy: Entitlements

Oklahoma House leaders link pension overhaul to pay

By |
Associated Press,Labor,Oklahoma,Entitlements,Pensions

Members of the Oklahoma House have urged the Senate and Gov. Mary Fallin to commit to funding targeted pay increases for state employees before signing off on a pension overhaul bill, according to one state lawmaker.

Rep. Leslie Osborn, R-Mustang, has authored a measure to revamp the state's employee compensation system. Osborn said her plan will force lawmakers to make some hard financial decisions in other areas.

"I think the dollars are there," Osborn said.

Osborn has the support of Republican House Speaker Jeff Hickman of Fairview, The Oklahoman reported Sunday.

"I don't think we can simply reform the pension plans now and tell our state employees, 'We'll get to the salary issue later,'" Hickman said. Hickman said he would like to see House members consider the pay raise bill and pension bill one right after the other on the House floor.

"I think we need to be talking about running those together," Hickman said. "Perhaps we don't have one without the other. That may be what we have to ultimately decide to do."

Osborn said the goal of her bill is to raise state employee salaries to 90 percent of the private market within four years by setting aside an amount equal to 3 percent of the previous fiscal year's payroll costs for salary adjustments each year.

Oklahoma state employees are paid about 20 percent less than the private market, according to the Oklahoma Public Employees Association.

Three percent of last year's payroll would amount to about $40 million a year, according to the Oklahoma Office of Management and Enterprise Services.

The plan is not to give every employee a 3 percent pay raise, however. Instead, Osborn said she wants to see targeted raises given each year, starting with the most underpaid employees, who would receive raises much higher than 3 percent while others wait their turn.

Osborn said public safety employees, corrections employees and some Department of Human Services jobs should be first in line.

Under the state's current defined benefit pension system, employees who retire after working at least 7 1/2 years for the state are promised a set amount, depending on their salaries and years of service.

Employees are required to pay 3 1/2 percent of their salaries into the system, while the state kicks in 16 1/2 percent to meet current requirements and make up for past years when the system was underfunded.

A proposal to overhaul the state pension system by Rep. Randy McDaniel, R-Edmond, calls for leaving current employees on the existing system, but putting new employees under a 401(k)-style defined contribution system where the employees would be required to contribute 3 to 7 percent of their salaries into the system and the state would be required to match those contributions dollar for dollar.

The OPEA and other employee groups oppose the change because the employees would be required to contribute a greater percentage of their retirement costs and would take on investment risks currently taken on by the state.

View article comments Leave a comment