Rep. Mark McCullough Will Not Seek Re-election

OKLAHOMA CITY –State Rep. Mark McCullough (R-Sapulpa, District 30) announced his intention to not seek re-election in 2016 and to retire from the House of Representatives after serving out the remainder of his current term. District 30 includes the communities of Sapulpa, Glenpool, Kiefer, Mounds, Liberty, Oak Ridge and Bixby.

“It has been the honor of a lifetime to represent the area where I grew up and where my family is from. I am very humbled that my friends and neighbors saw fit to allow me to serve them in the Legislature these ten years. I am grateful.” McCullough said.

McCullough entered the Legislature in 2006, winning a highly competitive election, and again in 2008 in another very competitive election year. He faced token opposition in 2010 and ran unopposed in the last two elections. 

Reflecting on his motivation for running for office, and now choosing to leave after his current term is up, McCullough stated: “The Lord put it on my heart to run for office, and now I believe He’s telling me its ok to step away. There will always be another battle to fight at the Capitol, and I’ve fought my share – and maybe a few more,” he added with a grin. “I’ve tried to be a good steward with my time in office, and now it’s time for the people of District 30 to begin the process of choosing who that new steward should be.”

When asked to comment about the impending legislative session and what he might do after leaving office he stated: “It’s definitely the budget. We are really in the hole this year, and I imagine most of my time will be spent on that.” I’m going to work until the bell, though, that’s how my parents taught me. After next November? Just keep practicing law and be a husband and dad. My family was very patient to share me with the state for a while and now I just want to try and spend more time with them.”

McCullough has been in solo law practice in Sapulpa for nine years where he focuses on Probate and Estate Planning. He is assisted in his practice by his highly effective legal secretary, office manager, and wife of 17 years, Charlotte McCullough. His son Everett is in sixth grade at Sapulpa Middle School and his son Clayton is in fourth grade at Freedom Elementary.

While in the Legislature, Rep. McCullough was involved in several major policy initiatives including pension reform, lawsuit reform, criminal justice reform, improvements in Medicaid and perhaps most significantly, worker’s compensation reform.

McCullough was an early – and sometimes lonely – voice in the Legislature for comprehensive worker’s compensation reform, ultimately being asked to serve on the House legislative team responsible for writing and guiding the final reform bill through in 2013.

When asked to reflect on that experience, he said, “Years back, I’d get asked to speak at worker’s comp conferences as the ‘other guy.’ I’d speak on the huge problems facing our system and the possibility of switching to a modern administrative system. I remember having the trial lawyers in the back of the room snicker loudly and otherwise express a lot of hostility.” He continued: “Well, a few of us never quit studying and preparing, so we had all the elements ready to go “off the shelf” when leadership decided to run the bill. And now we finally have a model administrative system based on best practices. A system that I believe is serving our workers much better than the old adversarial one, and is sending insurance premium rates through the floor, which helps businesses stay competitive – just like we thought it would.” 

In addition to policy work, McCullough has also served as Chairman of Judiciary Appropriations and Budget Committee for the last several years where he is responsible for evaluating and meeting the budget needs for several state entities including the Courts, the District Attorneys and the Attorney General’s office. He also serves on the full Appropriations and Budget Committee, and as such is on the Budget Team, where he has focused the bulk of his time and efforts in the Legislature the last few years. 

“The budget is a jealous and fickle mistress.” McCullough said. “It takes a ton of time and you don’t know which way it’s going to toss you at any given moment during session. You have to keep a lot of Alka Seltzer handy. The yearly budget is a big, very real, fight between competing priorities – with well represented advocates. One positive aspect of earning a spot on the Budget Team has been the opportunity to strongly advocate – year after year  – for the Common Education budget: either for a bigger slice of the pie or a lesser cut if times were tough. When it comes to the eight schools districts in District 30, it has always been an easy choice of what to fight for.”

Finally, Rep. McCullough has had a career long focus on the importance of preserving the traditional, nuclear family. “I just sensed early on that this was something that the Lord wanted me to focus on, and the message is this: The family is desperately important, especially to the well being of children. All the research tells us, the Scriptures tell us and common sense tells us that kids do better with mom and dad. We shouldn’t vilify single parents, we should help them, but we should do everything we can to keep couples healthily, happily married.”

McCullough held numerous studies on this issue of family fragmentation and its negative effects on society, its costs to government and how to prevent it. He also held press conferences raising awareness of the issue and ran several bills aimed at chipping away at the problem. One major success came two years ago when, working with Rep. Jason Nelson and many others, a bill passed bringing the first substantive change in Oklahoma’s divorce laws since the late 1950s. The bill required a statewide, pre-divorce class that included topics such as substance abuse, co-parenting, domestic violence and potential reconciliation. The bill was based on Tulsa District Court’s highly successful model.

McCullough went on to state that this accomplishment, like every major achievement in the Legislature, was a team effort, requiring seriousness of purpose and a focus on eternal principals. “If you hang around me down at the Capitol very long, you’ll hear a few saying bounce around the office with some regularity: 1) There is no “I” in Team, 2) I take the job seriously… but I hope I don’t take myself too seriously, and 3) If its not about God, what are we doing here?” He concluded: “I’m not the best Christian sometimes. Just ask the people that have to work with me. We all need Christ’s grace. But I do sincerely attempt to seek the Lord in all that I do in this job, while trying to weave Biblical principles into every bill and every transaction over which I have influence. And I pray in some small way, that has made a difference.”

Government Modernization, Pension Reform Plans Announced

OKLAHOMA CITY – House Republican leaders last week unveiled another round of policy proposals designed to make government more efficient and fiscally stable.

Next session, Rep. Jason Murphey and other House Republicans will carry a series of government modernization proposals to continue consolidating and improving duplicative or ineffective state services, while Rep. Randy McDaniel will carry proposals to continue reforming the state’s fiscally unstable pension systems.

The proposals are part of the House Republican commitment to fiscal conservatism, saving taxpayer dollars and improving efficiency across state government.

“Government efficiency is now the rule rather than the exception,” said House Speaker Kris Steele, R-Shawnee. “As we continue building a pro-growth Oklahoma, we must continue bringing fiscal order to state government. These proposals are all critical to that effort. We’ve promised the public a more effective, fiscally stable government, so we’re intent on delivering one.”
Government Modernization

Murphey, chairman of the House Government Modernization Committee, noted that legislators “cleared the deck” in 2011 by passing more than 20 pieces of government modernization legislation that were later signed into law by Gov. Mary Fallin.

“We left nothing on the table,” said Murphey, R-Guthrie. “Last year was a tipping point, so this year we’re going to take that momentum and run with it.”

Murphey named several House Republicans who will carry government modernization legislation next session:

1. Rep. David Derby, R-Owasso, will carry legislation consolidating the state’s fiber network to include OneNet;
2. Rep. David Brumbaugh, R-Broken Arrow, will carry legislation on purchasing, education spending transparency and fleet reform;
3. Rep. Elise Hall, R-Oklahoma City, will carry legislation improving transparency into the state’s bond indebtedness;
4. Rep. Josh Cockroft, R-Tecumseh, will carry legislation creating a one-stop-shop for open records requests through the office of Chief Information Officer Alex Pettit;
5. Rep. Aaron Stiles, R-Norman, will carry legislation building on his business licensing one-stop-shop legislation from last year;
6. Rep. Lewis Moore, R-Arcadia will carry legislation to reform the way the state manages state agency workers’ compensation spending; and
7. state House Speaker-designate T.W. Shannon, R-Lawton, will carry legislation requiring reforms to the management of state assets.

Murphey will carry two bills focusing on purchasing reforms and transparency.

“House Bill 2197 will focus on purchasing reform and will create options for higher education to take advantage of some of the savings we have been able to enact in past purchasing reforms,” Murphey said. “The intent of House Bill 2196 will be to create online information in a dashboard-type performance matrix to aid the public and press in getting agency data and gauging agency effectiveness.”

An example of a government agency performance matrix can be found at track.dc.gov.

Steele will carry a follow-up to House Bill 2140, last year’s government agency consolidation bill. The follow-up bill, HB 3053, would consolidate the Merit Protection Commission and State Bond Advisor into the Office of State Finance and rename OSF the Office of Enterprise and Management Services. HB 3053 would also consolidate the Oklahoma State and Education Employees Group Insurance Board and Employment Benefits Council Board into the Oklahoma Health and Wellness Board.

Steele noted that as a package, the government modernization legislation of the two-year 53rd Legislative Session is expected to generate hundreds of millions of dollars in savings.

“These reforms are huge parts of our larger effort to find savings across government so we can lower the tax burden on all Oklahomans,” Steele said.
Pension Reform

McDaniel, chairman of the House Pension Oversight Committee, noted that while last year’s pension reforms shaved more than $5 billion off the state’s unfunded liability, more needs to be done to further stabilize the state’s pension systems.

“The goal is to put all our systems on a sustainable path, which would be a notable accomplishment for public workers and taxpayers alike,” McDaniel said.

Much of last year’s pension reform legislation focused on the pension systems for teachers, state employees and judges, so McDaniel will carry legislation this year to improve the fiscal stability of the firefighter and law enforcement pension systems.

“We have negotiated with representatives from both the firefighter and law enforcement organizations. I think we have come to an agreement that is fair to our public safety employees and fair to taxpayers,” McDaniel, R-Oklahoma City, said. “Employees and employers will both pay a little more into the system in order to ensure the pension plans are financially strong over the long run.”

McDaniel will also file a resolution seeking a constitutional amendment that would require more accountability in future pension system decisions.

“The constitutional amendment contains the fundamental principles of proper pension oversight. We need a higher law that takes into consideration the future generations of Oklahomans,” McDaniel said.

The amendment would:

(1) Protect plan assets by prohibiting diversion of pension funds to other uses;
(2) Institute a prudent investor rule to ensure wise investments of pension funds;
(3) Reduce future debts by directing adequate funding to pension systems;
(4) Require funding standards and practices to be established before additional benefits are authorized.

NOTE: For accompanying video, go to http://www.okhouse.tv/iViewVideo.aspx?VideoID=400

Pension Reform Results in Historic Debt Reduction

OKLAHOMA CITY (November 10, 2011) – Pension reforms implemented earlier this year have reduced the state’s pension debt by $5.5 billion. This is the largest single-year debt reduction in Oklahoma history, lawmakers were informed today.

Thanks to recently enacted reforms, the unfunded liability of all the state pension plans has fallen from over $16 billion to $10.6 billion, officials announced.

“The reforms are making a meaningful difference. At a time when nations in Europe as well as other states in our country struggle to even address their structural debt problems, Oklahoma’s financial condition is already exhibiting remarkable improvement,” said state Rep. Randy McDaniel, an Oklahoma City Republican who chairs the House Pension Oversight Committee.

“This is good news for all Oklahomans,” said state Rep. Todd Russ, a Cordell Republican who is vice-chair of the House Pension Oversight Committee. “Workers depending on state pension systems benefit from greater long-term security, and all working families are protected from the tax increases that might have otherwise occurred.”

In addition to reducing debt, the state pension plans are experiencing growth in asset levels. The state’s major pension plans now have $21.5 billion in assets, an increase of over $3.5 billion in the past year due to healthy investment returns.

The combination of a reduced unfunded liability and asset growth has improved the integrated ratio of Oklahoma state pensions from 56 percent to 67 percent, McDaniel noted.

“The reforms we approved this year are working exceedingly well. Our debts are declining significantly while our assets are increasing,” McDaniel said. “Although more can be done to solidify our pension system, this has been an exceptional year for improving the financial stability of our pension plans.”

The reforms enacted this year included House Bill 2132, which requires a funding source before cost-of-living adjustments (COLAs) can be granted, and several acts that increased the retirement age for future employees.

Continued Good News on Pension Issues

OKLAHOMA CITY  – For the second time in two months, state lawmakers were told this week that reforms enacted this year have resulted in significant improvement to a state pension plan.

Thanks to legislative reforms, the Oklahoma Public Employees Retirement System’s unfunded liability has been slashed by approximately $1.7 billion, officials told members of the Pension Oversight Committee today.

Teachers' Retirement System Responding Positively to Pension Reform Efforts

Sen. Mike Mazzei
R-Tulsa

The chairman of the Senate Select Committee on Pensions said he was encouraged that the solvency of the state’s largest retirement system has dramatically improved in recent months. Dr. James Wilbanks, Executive Director of the Teachers’ Retirement System, announced the decrease in unfunded liability in the pension fund late last month.

“Our committee’s goal was to reduce the unfunded liability in TRS which was more than $10 billion this past session. Thursday’s (Sept. 29) announcement shows we were right on target,” said Sen. Mike Mazzei, who chairs the Select Committee on Pensions. “It now stands at $7.6 billion, meaning we are on track to ensuring long-term stability. This will protect the retirements of dedicated educators throughout Oklahoma.”

According to Wilbanks, the estimated time needed to fully fund the pension plan has virtually been cut in half. Previously, it was projected that it would take nearly 40 years or more to fully fund the plan—now it could be 100 percent funded within 22 years.

“For too many years, legislators refused to acknowledge or address the fact that left unchecked, the Teachers’ Retirement System was facing insolvency,” said Senate President Pro Tempore Brian Bingman. “Sen. Mazzei has worked tirelessly on this issue for years, and now we are already seeing the results of our legislative efforts. In terms of protecting our state’s financial future, we cannot understate the importance of these new laws.”

Oklahoma Attorney General, legislators to probe Wall Street’s handling of state pension investments

OKLAHOMA CITY – Attorney General Scott Pruitt joined Rep. Randy McDaniel and House Speaker Kris Steele Thursday to announce the next step in the effort to reform and protect the state’s public employee pension system.

In response to claims of potential fraud, Attorney General Pruitt opened an investigation Thursday into whether financial institutions properly handled state pension funds.

Attorney General Scott Pruitt

“I commend the leadership of Gov. Fallin, Speaker Steele and Pro Tem Bingman on this issue and their efforts to protect Oklahoma’s investments,” Pruitt said. “An often overlooked area in pension reform is how funds are maintained by banks and what we can do to ensure investments are handled appropriately. I have launched an investigation to review management of these funds, and if there is any occurrence of fraud, I will take the necessary enforcement steps to recover potential losses of tens of millions of dollars.”

On Thursday, Pruitt sent letters to several custodial banks seeking data on investment transactions, including those involving foreign currency exchanges, on behalf of pensions for state employees, teachers, police officers and firefighters. The investigation and potential litigation is similar to actions taken in California, Virginia and Florida to recoup more than $200 million in state pension funds.

“The investigation will reveal whether we need to pursue litigation against fraudulent and deceptive practices,” Pruitt said.

Oklahoma’s major pension systems have investment assets of $21.4 billion, according to the state Pension Commission (for more information on pension investment assets, click here). Like private sector pension systems, public sector pension systems nationwide routinely invest in financial markets in an effort to realize investment gains.

Rep. Randy McDaniel and Speaker Kris Steele
at signing of pension reform legislation

McDaniel, R-Oklahoma City, chairman of the House Oversight Committee on Pensions, will conduct an interim study this year on pension investments.

McDaniel’s interim study seeks to determine whether Oklahoma’s pension investments are being handled properly and effectively.

“Investment performance has a significant financial impact on the fiscal health of pension systems,” McDaniel said. “Through my interim study, we will look at everything from pension investment policies and procedures to the performance of our outside money managers. With billions of public dollars in assets at stake, it makes good financial sense to take a serious look at these investments.”

McDaniel, a financial adviser, said if any mismanagement of pension funds is found, Oklahoma should not hesitate to try to recoup losses.

“Wall Street banks need to be held accountable for their actions. When fraud or deception occurs, there must be consequences. Ethical behavior is an absolute requirement of the investment managers who handle pension fund assets,” McDaniel said. “I look forward to working with the attorney general so we can take whatever actions are necessary to continue pension reform in Oklahoma.”

This past session, Steele, R-Shawnee, and McDaniel authored several pieces of pension reform legislation that reduced Oklahoma’s unfunded pension liabilities by billions of dollars and placed fiscally conservative, common-sense policies on Oklahoma’s public pension systems.

“Pension reform continues to be a priority in the House because fiscally unstable pension systems can cause fiscal havoc across state government, which risks funding for core services,” Steele said. “Putting Wall Street on notice is a big time statement that we take seriously our roles as stewards of the public’s money. This bold effort also shows Oklahoma’s commitment to providing its valued state employees with the stable, fully-funded pension plans they have been promised. I commend Attorney General Pruitt and Rep. McDaniel for their commitment to this critical cause.”

ADVISORY: State pension investments announcement THURSDAY

WHO: Attorney General Scott Pruitt, Rep. Randy McDaniel, R-Oklahoma City, House Speaker Kris Steele, R-Shawnee

WHAT: Announcement on state pension investments

WHEN: Thursday, July 28 at 2 p.m.

WHERE: Broadcast Press Room, Room 432-B, State Capitol

House Speaker Announces Pension Committee Members

Speaker Kris Steele
R-Shawnee

OKLAHOMA CITY – House Speaker Kris Steele today announced the membership of the select House oversight committee on pensions that will conduct all House interim studies on pension matters.

The announcement came as Oklahoma’s recently enacted pension reforms received national attention at today’s Southern Legislative Conference’s annual meeting in Memphis, Tenn., where state Rep. Randy McDaniel, R-Oklahoma City, was a featured speaker on the issue.

“Oklahoma’s pioneering approach to pension reform is something other states should consider,” said Steele, R-Shawnee, who attended today’s conference in support of McDaniel. “Thanks to Rep. McDaniel’s presentation today, legislators from other states have officially taken notice that we are doing something right in improving our pension system in Oklahoma.”

McDaniel will serve as chairman of the House oversight committee on pensions. The committee will hear McDaniel’s four interim studies on pensions, which will study how pension system investments have been handled, ways to continue reducing the unfunded liability and pension funding formulas.

“Improving the fiscal stability of our pension system is important because failing to do so would risk sending all of state government into fiscal disarray. I am pleased the House is continuing to rise to this challenge,” Steele said.

McDaniel, who has nearly 20 years of experience in the financial services industry, said additional pension reforms are necessary.

Rep. Randy McDaniel
R-Oklahoma City

“While the reforms accomplished last session were consequential, it is clear we still face considerable challenges. The large unfunded liability, workforce demographics, and financial constraints exemplify the need for future vigilance and reform,” McDaniel said. “Nonetheless, based on the achievements of the past session, I am confident we can continue working together to improve the financial condition of the pension system.”

Members of the House select oversight committee on pensions are:

Rep. Randy McDaniel, R-Oklahoma City
Rep. David Brumbaugh, R-Tulsa
Rep. Corey Holland, R-Marlow
Rep. Steve Martin, R-Bartlesville
Rep. Mark McCullough, R-Sapulpa
Rep. Leslie Osborn, R-Tuttle
Rep. Todd Russ, R-Cordell
Rep. Weldon Watson, R-Tulsa
Rep. Steve Kouplen, D-Beggs
Rep. R.C. Pruett, D-Antlers
Rep. Brian Renegar, D-McAlester
Rep. Seneca Scott, D-Tulsa

McDaniel highlighted Oklahoma’s 2011 pension reform accomplishments at today’s Southern Legislative Conference meeting, which was attended by hundreds of legislators from other states.

At the start of the 2011 legislative session, Oklahoma’s seven retirement systems had over a $16 billion unfunded liability compared to a $6 billion unfunded liability just a decade ago. As of last March, Oklahoma’s 57 percent pension funding ratio was the third worst in the nation.

However, the reforms enacted by the Oklahoma Legislature this year will produce savings of nearly $7 billion over the next 30 years.

The major reforms enacted will require that cost-of-living adjustments (COLAs) be fully funded when authorized and will increase retirement ages to reflect rising longevity.

“Oklahoma made noteworthy strides this year. Our efforts to shore up the state’s pension plans are being recognized,” McDaniel said. “I was honored to have the opportunity to discuss our approach with policymakers from across the country and look forward to continuing to work on this important issue.”

Speaker Announces Pension Committee

As part of continued work to reform Oklahoma’s pension system, House Speaker Kris Steele has ordered the formation of a select House oversight committee on pensions. 

The committee will hear all House interim studies approved on pension matters. Among the issues up for review are how pension system investments have been handled, the way assets have been allocated from the pension systems and pension funding formulas.

“While this year has been a positive, defining one for pension reform, we know we must do more,” said Steele, R-Shawnee. “We have reason to believe past pension system investments and other financial policies may have further imperiled an already strained pension system in ways that warrant serious attention. This committee will determine precisely what problems exist and how Oklahoma can continue improving its pension system.”

Rep. Randy McDaniel, R-Oklahoma City, will serve as chairman of the bipartisan committee. Other committee members and details will be announced later this month.

Governor Fallin Signs Key Pension Reform Legislation into Law

Reforms Will Reduce Pension Systems’ Unfunded Liability by Over $5 billion


Governor Mary Fallin yesterday signed several key pieces of pension reform legislation into law at a public bill signing with state leaders. The bills aim to provide a boost to the fiscal solvency of the state’s public employee pension systems, which are currently troubled with $16 billion in unfunded liability. 


“Pension reform is about creating a sustainable future for our state budget and our state retirement systems,” Fallin said. “We can’t keep allowing these systems to go deeper and deeper into debt without serious consequences. By beginning the reform process today, we are helping to ensure that we don’t one day face a crisis scenario where the state is simply unable to deliver on the benefits we’ve promised our retired workers.”


One bill, HB 2132, authored by House Speaker Kris Steele and Senate Pro Tem Brian Bingman, would reduce unfunded liability in state pensions by $5 billion by requiring the legislature to provide a funding source for cost of living adjustments (COLA’s). Fallin said the commonsense measure restored fiscal responsibility to the system.
“We can’t promise to increase pension payments without identifying where that money is coming from,” Fallin said.


“That’s the sort of behavior that put the state of Oklahoma $16 billion in the red when it comes to our pension systems. HB 2132 changes that and ensures that any COLA increases are fully funded and fiscally sound.”

Rep. Randy McDaniel
R-Oklahoma City

In addition to HB 2132, Fallin also signed the following pension reform measures into law, all authored by Senator Mike Mazzei and Representative Randy McDaniel:

• HB 1010: increasing the retirement age for new members of the Uniform Retirement System for Justices and Judges (URSJJ) who started work after January 1st of this year. For new members with 8 years of service, the measure increases the normal retirement age from 65 to 67 years old. For new members with 10 years of service, the measure increases the normal retirement age from 60 to 62 years old.
• SB 377:  Raising the normal retirement age for new teachers from 62 to 65 years of age and establishing a minimum age of 60 for full retirement benefits for teachers who meet the rule of 90. Currently, there is no minimum age requirement for those employees whose age and service equals the sum of 90.
• SB 794: Ensuring that elected officials are treated the same as other public employees when calculating retirement benefits. Also, applying the same minimum retirement ages to all new public employees as SB 377 does to new teachers: a minimum age of 60 when the rule of 90 is met and a normal retirement age of 65.
• SB 347: providing for the forfeiture of a municipal officer or employee’s retirement benefits upon conviction of crimes related to their office (bribery, corruption. etc)

Legislature Working on Chronic Pension Problems

By state Rep. Mark McCullough

Rep. Mark McCullough

One of the greatest financial challenges facing Oklahoma is the status of our state pension systems.

The total unfunded actuarial accrued liability of all seven Oklahoma pensions systems is over $16 billion – about $4,275 per Oklahoman and more than twice the size of the entire state budget.

Oklahoma’s major pension systems are only about 60 percent funded on average. The most recent information available for the firefighters’ plan shows a 53.4 percent funded level. For police, it is 74.9 percent.

The actuary soundness for a private plan is a minimum of 80 percent.

The soundness of all major plans has declined over the last decade, and Oklahoma ranks among the worst five states in the nation according to the Pew Center on the States.

House lawmakers are committed to enacting reforms that will begin to shore up the system so retirees are protected and other citizens are not unfairly punished.

As part of that effort, I have introduced House Bill 1221, which deals with the Oklahoma Firefighters Pension and Retirement System, and the Oklahoma Police Pension and Retirement System.

In its current form, House Bill 1221 would adjust benefit levels for new workers entering the system starting in November 2011. Benefits for current firefighters or police would not be impacted.

The bill, which passed out of committee this week, contains four major changes for new members entering the system. First, it would change the multiplier from 2.5 percent to 2 percent. The bill would increase the retirement age for those entering the system starting next year so retirement would occur in 25 years instead of 20. It would also raise the employee contribution from 8 percent to 12 percent. And, finally, the bill would eliminate the Drop plan, which impartial and independent research indicates is a fiscal drain on the pension system.

I believe this is a fair way to begin reform. Promises made to current firefighters and police officers would be kept, and those entering the profession in the future would do so with a clear knowledge of promised benefits.

This bill is only an initial proposal. I will be meeting regularly with all concerned parties throughout session. We will work hard to craft a plan that is financially sound, but also fair and attractive to future police and firefighters.

I appreciate the firefighters who visited the Capitol this week to express their views, especially those from Sapulpa. It was a great example of democracy in action.

This is the first major legislative acknowledgement of the need to address structural funding problems in our police and fire pension systems.

By making specific adjustments today, we can chip away at the unfunded liability while dealing with beneficiaries in an open and transparent way that allows them to properly plan for retirement.

This process will not be easy or pain free, but if we do not act now, the pension plan for crucial public state employees will be in peril. This is a result that none of us should find acceptable.

State Rep. Mark McCullough, R-Sapulpa, represents the people of House District 30.

Lawmakers to Consider Major Pension Reforms

Rep. Randy McDanial

State lawmakers will vote today on major reforms that will shore up Oklahoma’s state pensions and provide opportunity for participants to have increased personal control.

“For decades, this problem has been passed on to future generations to address,” said state Rep. Randy McDaniel, who has nearly 20 years’ experience in the financial services industry. “No more. This year we will finally begin addressing one of the state’s most significant financial challenges.”

Many important reform bills have been filed and will be heard. Nonetheless, House Speaker Kris Steele and McDaniel have filed four major bills to reform state pensions.

“This is a fair and comprehensive approach,” said Steele, R-Shawnee. “We must take action on this issue. Reforms must be implemented if we are going to improve the state pension plans and fulfill our obligation to current retirees.”

House Bill 1004, by McDaniel, creates the “Leadership by Example Act” and would place all new members of the Oklahoma Legislature and statewide officials into a new defined contribution plan.

“As we reform the system, I believe legislators should lead by example,” McDaniel said. “Some groups oppose reform, especially if it requires moving their future employees into a defined contribution plan. The Legislature should not ask other groups to do something that we are not willing to do ourselves. Defined contribution plans provide workers greater control and personal choice. I believe affording that freedom to workers is a key component of reform.”

The new defined contribution plan, “Save Oklahoma,” will build on the existing and successful SoonerSave program. As of June 30, 2010, it had 35,134 participants with net assets of $458 million and no unfunded liability.

Another pair of bills would significantly improve the financial standing of state pensions in future years.

House Bill 2132, by Steele, would require that all COLAs be fully funded when authorized.

House Bill 1006, by McDaniel, would help stabilize state pensions by requiring that a pension system be at least 80-percent funded before a cost-of-living adjustment (COLA) can be authorized for the system.

“One of the major causes of the current unfunded liability is that past COLAs were enacted without actually paying for them,” McDaniel said. “As a result, money was drained from pension systems, leaving them in an increasingly precarious position for future generations. Under the reforms we are now advancing, we will focus on paying current obligations first and then making sure we actually pay as we go when enacting future COLAs.”

House Bill 1011, by McDaniel, would provide a funding source for COLAs. Under the bill, a portion of the revenues received by the Commissioners of the Land Office would be dedicated to funding COLAs for retired teachers. If enacted into law, House Bill 1011 would be the first dedicated funding source for COLAs in state history.

The Commissioners of the Land Office, also known as the “School Land Trust,” manages state-owned public lands to produce income for education.

“While these four reform measures will not eliminate the system’s problems overnight, they will significantly improve the financial soundness of the retirement systems,” McDaniel said.

McDaniel noted that 10 years ago the state’s unfunded pension liability was just over $6 billion. According to official actuarial reports, the unfunded liability now totals more than $16 billion – more than twice the size of the entire state budget.

With a growing portion of the state’s budget being needed to fund retirement plans, there are fewer tax dollars available to support core government services, he noted.

In addition, the unfunded liability threatens the state’s bond rating.

“Failure to address Oklahoma’s pension problems will result in growing budget challenges in the future,” McDaniel said. “We cannot continue doing business as usual. The reforms we are advancing this year are a serious response to a serious financial problem.”

All four of these measures, along with several other important reform bills, will be heard today in the House Economic Development, Tourism and Financial Services Committee. The executive directors of the major pension plans are invited to make public comment regarding these reform proposals.