Teacher Pension Plan Crisis
Thursday, March 15th 2007, 10:10 am
By: News On 6
A fiscal crisis is threatening Oklahoma's retired teachers. Their pension plan is massively underfunded, coming up $7.5 billion short. Oklahoma's entire state budget is $7 billion so there's no quick fix and the problem keeps compounding every year. This is being called the biggest fiscal issue currently facing the Oklahoma Legislature. While the state House did take a major step forward Thursday by voting to support one funding idea, educators say the system can barely cover cost of living increases for current retirees.
The News On 6â€™s Heather Lewin reports unless something's done now there's no telling how bad the financial picture could get for Oklahoma's future teachers.
After 28 years of teaching in Green Country schools, retiree Matti Palluconi is worried about the future, and as chair of the Teachers Retirement System Board, she's got a closer view than most of just how much trouble the pension fund faces.
â€œCurrently retirees can never expect to have the same percent COLA every other year as other employees that have state funding," said Palluconi.
She says while most pension plans are funded at 80%, the teachersâ€™ retirement fund gets just under 50%. Retirement checks and cost of living increases must come out of that already shallow cash pool.
The past 20 years there has been a 2% COLA every other year, so that's about 1% a year which does not keep up with inflation,â€ said Palluconi. â€œIt's hard to live on retirement checks that don't get some kind of COLA every other year."
State leaders agree something must be done a plan to redirect profits from state mineral rights could soon be up to a vote of the people. Lawmakers supporting the plan say the situation is already causing experienced teachers to leave the state.
Palluconi says she's frustrated not only as a retired teacher, but also on behalf of current educators already being paid lower salaries than others in the region.
â€œBut the least they can expect is to be assured they have a good retirement fund that can pay them their checks when they do retire," she said.
She says current system is doing that, but just barely.
â€œBut if the legislature is not able to do something very soon, this year hopefully, then those expectations diminish,â€ Palluconi said.
Two possible solutions are in the works. The Senate is now looking at the House plan to redirect about $43 million from state mineral rights into the teachers' retirement fund. Also a Senate bill would increase pension funding from state taxes by half a percentage point each year until 2011, then maintaining that level it could close the funding gap by 2026.