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“The Money Wasn’t Stolen, but
the Legislature Certainly Took It”
A Non-Scholarly Rendition of One Slice
of Oklahoma Folklore
Oklahoma Retired Educators Association
The story’s been told so many times and in so many forms that it has entered into Oklahoma folklore. What story?....
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OREA Members Represented at Interim Study
Giving both oral and written testimony, OREA Executive Director Norman Cooper appeared before the Senate Interim Study on Pensions Improvement at the state Capitol on Wednesday, October 16. He was one of several speakers on a rather lengthy agenda, which primarily focused on the wisdom of making major structural and benefits changes to the state’s retirement systems as proposed in the last year by Governor Mary Fallin and State Treasurer Ken Miller.
Cooper made a number of comments and suggestions to the study committee regarding the current condition of the Teachers’ Retirement System, in addition to giving background information about the system leading up to its much improved current status.
Cooper told the committee of the system actuary’s comments in the fall of 2012 that TRS is on an upward trajectory in comparison with other pension systems around the nation. Although the TRS funding level remains relatively low – but improving – he paraphrased the actuary in saying that the underlying fundamentals of the system point to solid progress in the years to come.
Giving his own opinion, Cooper said, “If only left alone, TRS is poised for progress. The positive impact of recent reforms should be allowed to take full effect before making other changes. Now is not the time to undermine the strong likelihood of progress.”
He emphasized the importance of maintaining the defined benefit plan design of TRS, as opposed to a change to a defined contribution or 401(k)-style plan that shifts much of the risk for preparing for retirement from the state to the individual employee. He said that the state should “value the lifetime financial security of retirees over saving the state money on its pension plans. Retiree pension benefits are modest and well deserved.” Cooper called for the legislature to keep the state’s retirement promises made over several decades to employees of state government and public education at all levels.
Agreeing with several other speakers, including State Treasurer Ken Miller, who also appeared as a witness, Cooper recommended to the Senate panel the critical importance of state government making full payment each year of the actuarial required contribution, or “ARC,” to each of its retirement systems. The failure to pay the ARC in recent decades has been a primary driver of the relatively poor condition of several of the state’s retirement systems, particularly the Teachers’ Retirement System, the largest and most underfunded of all the systems.
Noting that none on the study panel had enough legislative experience to have awareness of key points in TRS history, Cooper provided a short written tutorial on the diversion of almost $350 million in gross production tax revenue away from the Teachers’ Retirement System in the 1980’s. He said the loss of the critical funding played a significant role in creating the underfunded retirement system that we have today. According to reliable estimates, Cooper said the value of the diverted funds could be $3-5 billion dollars today, had they been invested in the same fashion as other TRS funds.
On another topic, Cooper called on the legislature to act again next session on OREA-sponsored legislation passed in 2013, but vetoed by Governor Fallin, to create a cost-of-living adjustment (COLA) revolving fund to gather money from one or more dedicated sources to provide benefits improvements to retirees when justified by inflation. As an example of the need for COLAs, he informed the committee that retired educators had received cumulative benefits improvements between 1988 and 2013 of only 33.5%, while the general cost of living had more than doubled and health insurance premium rates for pre-Medicare retirees had risen from $75 per month to almost $500, an increase of over 650%.
In other written remarks, Cooper urged the legislature to: (a) improve funding to the Teachers’ Retirement System to ensure its continued progress; (b) treat all retirees equally and fairly when benefits are improved; (c) allow for the election by retired educators of one of their own for membership on the TRS Board of Trustees; (d) make common sense changes to current state pension law to permit the legislature to make simple pension decisions without having to go through cumbersome and unnecessary procedural hoops; and (e) maintain the Teachers’ Retirement System Board of Trustees as an independent board rather than consolidating it with other state pension boards. Regarding the latter, Cooper noted the recent report that showed TRS ranked in the 1st (best) percentile for investment returns for all reporting periods in the last ten years. “Any possible savings achieved with a combined retirement system board could come at the risk of loss of hundreds of millions in investment dollars.”
1ST PERCENTILE INVESTMENT PERFORMANCE SAYS
TEACHERS’ RETIREMENT SYSTEM IS OK!
Upon hearing recent news from the Oklahoma Pension Commission that the Teachers’ Retirement System (TRS) had achieved a top one percent national investment ranking for each of the key reporting periods of the last ten years, Oklahoma Retired Educators Association President Elaine Dodd remarked Wednesday that “it’s always great to hear positive news about our frequently maligned retirement system, but it really came as no surprise to us.”
TRS, with current assets of approximately $12 billion, achieved an investment return of more than 17% in the last fiscal year, easily beating its annual goal of eight percent and extending its record as one of the very best major public pension systems in the nation when it comes to long-term investing.
The Teachers’ Retirement System has averaged 10.2% for the last ten years, which included five years of the worst state and national economic recession the U.S. has seen since the 1930’s. “TRS assets dropped $3.3 billion to a low of $6.2 billion in 2009, but have almost doubled since that time to the current all-time highs we now enjoy,” Dodd said.
“For several years, we’ve been telling our members about positive developments at their retirement system,” Dodd continued. “Members of the TRS Board of Trustees and the management and staff of the system have performed admirably in trying times, and they should be commended for their investment accomplishments.”
The level of TRS funding has improved from approximately 49% to 55% in the last two years, and the system is now on a 21 or 22 year funding period, compared to an infinite funding period just a few years ago. The TRS actuary months ago declared the system to be on an upward trajectory compared to most other major public pension systems. The system is benefitting from strong employee and employer payroll contributions, as well as improving dedicated revenues from the state income and sales taxes.
News from the pension commission comes at a time when a few leading state politicians are ramping up efforts to make major structural and benefits changes to TRS and other state retirement systems, each of which can tout its own accomplishments in recent years.
“It doesn’t make sense to us that Governor Mary Fallin and State Treasurer Ken Miller are calling for the consolidation of all retirement system boards into one super board controlled only by the governor, especially when their stated goal of saving the state a small amount of money appears illogical. They’re willing to put more than $24 billion in total state pension assets at risk to save maybe a few million dollars, which could be offset by hundreds of millions or more in lost investment performance,” Dodd said.
Fallin and Miller spearheaded an ill-fated movement in the 2013 legislative session to pass bills to consolidate retirement boards and replace the current defined benefit plan design of most systems with a hybrid version pension plan called a “cash balance” plan. They were unable to generate significant backing for their plan, especially in the face of a strong retiree backlash that resonated with lawmakers.
“Implementation of the Fallin-Miller plan would, in our view, result in the state backing out on much of the financial commitment it has made to its pension plans, and would reduce retirement benefits for future generations of teachers, state employees, firefighters, police, judges and justices, and other law enforcement personnel,” Dodd observed. “That is just unacceptable to our members, and we know other retirees and the public feel the same way.”
Approximately 100,000 former education, state, municipal and county employees rely on modest retirement benefits earned – significantly paid for from their own pockets – through long careers of service to the public. Their combined benefits are reputed to have a positive economic impact of $2 billion or more on the state’s economy.
(Note: The Oklahoma Retired Educators Association, founded in 1952, is the leading advocate for more than 53,000 retired public educators in Oklahoma, with members residing in each of the state’s 77 counties.)
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Awards Presented at Convention
Legendary OREA leader Marian Clark, of the Rogers County Retired Educators Association (pictured at left along with Awards Committee Chair David Coates) was named Oklahoma's "Retired Educator of the Year" at the 2013 OREA Annual State Convention. She is the first recipient of the award.
After a decades-long teaching career, Clark transitioned in the early 1990's to other worthwhile pursuits, including advocating for retired educators at the local and state levels, and making significant contributions to her community. She also served two years as President of the Oklahoma Retired Educators Association from 2003-05.
Like so many others retired from the education profession, Marian Clark has spent life well, with purpose and serves as a reminder to others of the virtues of Oklahoma's retired educators.
Rep. Ed Cannaday (pictured at right along with Awards Committee Chair David Coates) former educator and now four-term member of the Oklahoma House of Representatives for eastern Oklahoma District 15, is the 2013 winner of the OREA "Friend of Retired Educators" award.
Nominated by his friends in the McIntosh County Retired Educators Association for taking an active interest in learning their issues and then advocating for them in the House of Representatives, Cannaday and his wife were on hand to personally receive the award at the Tulsa convention, Friday, May 17. The audience response to his brief remarks made it clear he was an excellent choice for the award.
Ruth Ann Taylor, member of Pontotoc County REA, has been named winner of the OREA "Volunteer of the Year" award. She was recognized for years of broadbased volunteer service to schools and other worthy projects in and around her community in Ada. Her volunteer resume was sinply fantastic!
Adair County was deemed to have the best "Special Community Service Project" for its backpack food program for poverty kids in the county. Lynda Hagar, Adair County President, is pictured receiving the award from David Coates, Awards Committee Chair.
Every Member can be an Effective Lobbyist by . . .
Establishing and maintaining consistent contacts with legislators
Developing positive relationships based on honesty, integrity and trust
Keeping well informed on important legislative issues
Informing legislators of OREA views on important issues
Lobbying legislators in the home district or at the state Capitol to support OREA positions on legislative issues
Providing information to fellow OREA members and others about legislative matters, including legislators’ views on key bills or issues
Organizing meetings or activities for the purpose of lobbying legislators in their home districts
Organizing OREA members and others to contact legislators via telephone, e-mail, regular mail or face-to-face to communicate OREA views on legislative matters
Keeping OREA informed about local lobbying activities and contacts with legislators
“Program Ideas for Local Unit Meetings and Activities”
Need a new, fresh program idea for your local county meeting? Thanks to the OREA Communications Committee and the Tulsa Metro Retired Educators Association for their suggestions.
Click here for lots of amazing ideas
|Ever wonder how OREA members become officers, board members, or committee chairs? Perhaps there are members who would like to
become more active in the association but aren't certain of the way
officers are elected and the responsibilities of each. Click here for
an overview of officers, board members, and committee chairs
how they achieve an office.
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