House Republican Caucus Unveils Pro-Growth Strategic Plan

OKLAHOMA CITY – The House Republican Caucus today unveiled their 2013 legislative agenda, which included a three-point plan addressing economic development, education reforms and infrastructure funding and maintenance.

Speaker T.W. Shannon

“Oklahomans have spoken loud and clear this year by voting in the largest Republican majority in Oklahoma history,” said House Speaker T.W. Shannon, R-Lawton. “They want overreaching regulations that limit their freedom repealed. They want policies enacted that protect their rights, that encourage job growth and prosperity and that improves our education system so their children can have a brighter future.”

On infrastructure, Speaker Shannon proposed an eight-year, pay-as-you-go plan to directly fund the upkeep and repair of infrastructure.

“In the past, the model has been to neglect infrastructure to the point of decay and then to take out bonds to repair those needs,” said Shannon. “Our plan will be similar to the eight-year transportation plan we introduced last year that allows us to prioritize projects based on need and to pay our way as we go without adding more debt onto the backs of hardworking Oklahomans.

House Republican Majority Caucus Elects Leadership

OKLAHOMA CITY – Two days after the election that gave Republicans a historic 72-29 seat control in the Oklahoma House of Representatives, the House Republican caucus today elected its leadership and re-affirmed state Rep. T.W. Shannon as their choice for House Speaker-elect.

Speaker-elect T.W. Shannon
R-Lawton

Speaker-elect Shannon is only the sixth Republican speaker in state history.

“I am truly honored and, frankly, humbled by the support of my colleagues,” said Shannon, R-Lawton, who ran unopposed for the position. “We face many challenges in the upcoming session, but I view challenges as opportunities to lead and make our state better for every Oklahoman.

“Our nation is at a tipping point, and I truly believe Oklahoma can be a light for the rest of the nation to follow. Leaders in Washington, D.C. have proven they are incapable of leading. We have the will to get things done, and I am ready to collaborate with the entire House body to develop a conservative, free-market, limited-government agenda that will create strong, prosperous families and grow our economy.”

The Republican caucus also elected several top leadership positions today and voted on proposed caucus rules.

In addition to electing Shannon, the caucus chose state Rep. Mike Jackson as Speaker Pro Tempore-elect.

“I am looking forward to working with Speaker-elect Shannon and the members of the caucus,” said Jackson, R-Enid. “It is a privilege to serve the members, and I feel like 2013 is going to be a great year for the people of Oklahoma.”

State Rep. Weldon Watson, R-Tulsa, who also ran unopposed, was chosen as Caucus Chairman.

"It has been a privilege to serve the caucus as Chairman during the past two years, and I am honored to continue serving," said Watson. "Our caucus has continued to grow. We have a great opportunity to govern and I am excited about the potential we have to make a difference for the future of Oklahoma."

Other elected leadership positions include:

• Vice Caucus Chairman, state Rep. Harold Wright, R-Weatherford, who ran unopposed.
• Caucus Secretary, state Rep. Elise Hall, R-Oklahoma City, who ran unopposed.
• Assistant Majority Floor Leader, state Rep. Lee Denney, R-Cushing.
• Assistant Majority Floor Leader, state Rep. Charles Ortega, R-Altus.
• Assistant Majority Floor Leader, state Rep. Randy McDaniel, R-Oklahoma City.
• Assistant Majority Whip, state Rep. Mike Sanders, R-Kingfisher.
• Assistant Majority Whip, state Rep. Steve Vaughan, R-Ponca City.
• Assistant Majority Whip, state Rep. Todd Russ, R-Cordell.
• Assistant Majority Whip, state Rep. Sean Roberts, Hominy.

"I'm humbled that my colleagues feel I have good judgment and trust me to do the job," said Wright, who was elected for a second term. "I always look at this position as a way to serve the members, much like I serve my own constituents. Serving the caucus can be a thankless job sometimes, but it is vitally important if you are going to build coalitions that get the people's work done."

"I am very honored to be elected by my fellow representatives to a position of leadership," said Hall. "We have a great opportunity to enact truly conservative policies during the next two years and I plan on working as hard as I can to repay my colleagues for their support."

During the next several weeks Speaker-elect Shannon will announce additional appointed leadership positions.

On Wednesday, November 14 at 11:00 a.m., the newly elected members of the entire House will be sworn in at the Capitol. In early January, the full House will convene for an organizational day to formally elect House leadership.

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

DHS settlement amended by Contingency Review Board, details undisclosed

By Patrick B. McGuigan at CapitolBeatOK.com (Published: 29-Dec-2011) 

At the state Capitol in Oklahoma City, the Contingency Review Board today (Thursday, December 29) amended and then approved an amended settlement agreement in a long-running lawsuit against the Oklahoma Department of Human Services (DHS). The board consists of Governor Mary Fallin, President Pro Temp Brian Bingman of Sapulpa and House Speaker Kris Steele of Shawnee. 

DHS and other parties to the litigation must accept the amended settlement before it is binding. The draft accord had passed one round of review by several parties, including the “Children’s Rights” group that has led the litigious attack on the troubled agency, in the case DG vs. Yarborough. 

The Children’s Rights organization, which is based in New York, has contended DHS inadequately monitors foster children, putting them at risk of harm. The agency has faced a wave of criticism for its handling of child protective services. 

The commission that governs the agency faced increasing critical scrutiny earlier this year for inattentiveness to the litigation and for open meetings’ violations. 

To gain approval, the amended draft accord, which was revised in an executive session of the CRB, must now be pressed anew through the route that brought the possible settlement to the CRB. The accord is subject to judicial review, as well as agreement of the contending parties. 

Further, legitimacy of the CRB’s involvement is being challenged by Oklahoma City attorney Jerry Fent, a perennial and often effective critic of government practices. 

Thus the draft agreement is merely the start of another round of scrutiny. If a binding agreement is not reached, the case could still go to trial in February (a preliminary hearing is slated for January 6). 

Speaker Kris Steele

Speaker Steele, who has been a critic of the agency and an advocate of significant changes in the agency’s governance and practices, said, “This is a golden opportunity to improve the agency under Oklahoma’s terms instead of a court’s terms. I’d like to thank Attorney General [Scott] Pruitt and our DHS commissioners for their leadership in steering this process to a path that is truly in the best interest of Oklahoma, its taxpayers and its vulnerable citizens. Make no mistake: This is a good day for Oklahoma.”

 

President Pro Tem Bingman, in a statement sent to CapitolBeatOK, commented, “There is no obligation we ought to take more seriously than the responsibility to protect the most vulnerable among us - particularly children in heartbreaking situations beyond their control.  The most important thing in this settlement agreement is a focus on improving the quality of services provided for the children of Oklahoma.

“Today's vote to approve the settlement agreement is a step in the right direction, and still must be approved by U.S. District Judge Gregory Frizzell.  Like all Oklahomans, I am eager for Department of Human Services officials, state-elected officials, and the legislature to work together for the benefit of Oklahoma's children."

Gov. Mary Fallin

After the executive session, which lasted a bit more than one hour, the board returned to open session. Gov. Fallin pointed out, “no votes were taken in closed session.” After return to open session, Sen. Bingman moved, and Speaker Steele seconded, approval of the settlement, as amended. The motion carried and the panel then adjourned.

In a brief discussion with reporters, Governor Fallin said that while the accord is subject to consent from parties in the litigation, she regards the draft accord as “a positive step.” 

She reflected, “All parties have negotiated in good faith.” Concerning the validity of CRB actions, Fallin said state officials “don’t believe [Fent’s] analysis is correct.”

Fallin has been carefully critical of DHS’ performance since assuming office last January. This fall, she named two new members to the commission that governs the agency – former Oklahoma County District Attorney Wes Lane and businessman Brad Yarborough. Soon after his appointment, Yarborough was elected chairman of the DHS commission. 

Attorney Fent’s challenges to the CRB’s practices have been successful in at least two cases. Further, state Rep. Mike Reynolds, an Oklahoma City Republican, argues the panel impermissibly mixes executive and legislative powers in a single board. 

In a 2007 state Supreme Court case (103714), “Fent vs Contingency Review Board,” a majority of the justices found “The Legislature cannot participate, either directly or through administrative boards having legislators as members, in the administration of funds appropriated by enacted legislation.” The court concluded CRB’s involvement in administration of funds constituted “a legislative usurpation” of executive powers.

In “Fent vs. Fallin” (2011 case 109770), the court struck down the Oklahoma Quick Action Fund due to the involvement of legislative leaders in “approval of an expenditure from the fund.” 

Additionally, Reynolds points to a 1982 opinion from Attorney General Jan Eric Cartwright which found that “a committee consisting of Legislators, may not be authorized by legislation to approve or reject grant applications.”

However, defenders of the CRB note the fact situation in the current DHS settlement agreement is different and, in legal parlance, “distinguishable” from other cases.

Discussing the possible settlement with reporters, Sheree Powell, the communications coordinator at DHS, predicted a positive and “very unusual” resolution of the case, although she declined to provide any details. In response to questions from CapitolBeatOK, she said she has not seen the revised draft amendment.

Powell said, “There is no perfect child welfare system.” She echoed frequently reported views of DHS Director Howard Hendrick, that DHS staff needs to be paid more and case workers need smaller case loads, and higher pay for foster parents and therapeutic homes.

In this month’s regular meeting of the commission, Hendrick said the Legislature should approve pay raises for agency workers, and reduce employee contributions to the state retirement system. 

Responding to the views of some critics that the agency is top heavy with management, Powell defended DHS performance, saying operations are “very efficient.” She said child protective work is “very stressful.” She said the full DHS commission should be able to consider the amended draft settlement next week.

Howard Hendrick
Director of DHS

Director Hendrick told reporters today he estimated the agency has spent $7 million defending its practices in the litigation. Costs have included attorneys’ fees, expert witness fees and other expenses.

Hendrick’s float of the idea to reduce pension system payments to finance pay hikes for DHS employees has attracted criticism from some. Hendrick said he could not address specific aspects of the accord until, and unless, a final agreement is reached. He made it clear the agency was willing to litigate to defend its practices, but that he hoped an agreement could be reached. 

In an interview with Oklahoma Watchdog earlier this month, state Rep. Randy McDaniel, an Oklahoma City Republican, said this is not the time to curb pension contributions. While sympathetic to pay hikes for state workers, “we cannot do that on the back of the pension system.” 

Linda Terrell of the Oklahoma Institute for Child advocacy said her group was “optimistic” at news of draft settlement, saying “significant reform” and possible privatization of “certain pieces of foster care,” combined with “wise investment of taxpayer dollars,” could improve performance at the agency.

In a statement sent to CapitolBeatOK, Terrell also took a shot at proposals to reduce state income tax rates, saying she opposed “cutting taxes for the wealthiest among us” at the expense of “vulnerable children.” 

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.

School readiness partnership plans to make recommendations to Governor Mary Fallin

By Patrick B. McGuigan at www.CapitolBeatOK.com (Published: 19-Aug-2011) 

At a Thursday afternoon meeting in Oklahoma City, leaders of several organizations in early childhood education advocacy or services gathered to read (and, in the end, endorse) policy recommendations that will be forwarded to Governor Mary Fallin this fall. As the recommendations were discussed, however, a new public opinion poll documented that many voters are dubious about further expansion of government programs to provide early childhood education.

The recommendations come from the Oklahoma Partnership for School Readiness (OPSR), a group established in 2003. The partnership's mission is described as “to lead Oklahoma in coordinating an early childhood system focused on strengthening families and school readiness for all children.” The organization's vision is characterized as seeking to assure “ that all Oklahoma children will be safe, healthy, eager to learn and ready to succeed by the time they enter school.”

Since 2010, OPSR has carried on the duties of the State Early Childhood Advisory Council (SECAC). 

The 2012 policy recommendations remain in draft stage, and can be read on the website of Smart Start Oklahoma. Leaders of Smart Start Oklahoma told CapitolBeatOK the draft document will include comments made at Thursday's meeting, and that the text of the recommendations will not be finalized until August 31. 

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)

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.