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.

AG Says Funds From Sale of School Property Financed by Bonds Cannot be Diverted

In an opinion by Attorney General Scott Pruitt released last week schools are told that they cannot divert funds derived from the sale of school property, if the property was purchased with bond funds, to another purpose. 

The request for an official Opinion of the Attorney General was requested by Rep. Jabar Shumate, D-Tulsa. Rep. Shumate asked two questions: 

1.) When a school district sells or disposes of property that was financed in whole or in part by the issuance of bonds, how may the proceeds be used?; and, 

2.) Is there a time limitation past which a governmental bond issuer need not account for proceeds from the sale or disposal of property financed in whole or part by the issuance of bonds?

The opinion states: 

“When a school district borrows funds by the issuance of bonds for a specific purpose and the school district later sells the property, it must either use the sale proceeds representing the funds borrowed and applicable interest paid for the same specific purpose stated in the bond measure, if possible, or it must pay back the proceeds into the sinking fund.”

The opinion says there is no time limit on the requirement to use the funds appropriately saying, "the use of the borrowed funds [being] applicable to subsequent uses as well as to the first use thereof."

Crisis of Confidence: State Treasurer Still Optimistic About Economy

By State Treasurer Ken Miller (Aug. 19, 2008)

OKLAHOMA CITY - It is widely understood that a free market economy has many variables on which growth is dependent. Less understood is the impact of the intangible determinant called confidence – how people feel about their financial situation, business and the direction of the country.

Lately, there has been a great deal of attention focused on this translucent and sometimes irrational economic variable. Such discussions center on how recent events affect public confidence. 

The consensus is that insufficient fiscal policies, the credit downgrade, debt problems here and abroad, geopolitical events and volatility in the stock market have lessened consumer, producer and investor confidence and have contributed to anemic GDP and job growth.

An economist from Moody’s rating agency blamed the current economic malaise on a “crisis of confidence.” The fear is that the negativity will create a self-fulfilling prophecy resulting in a vicious downward cycle and another recession.

Treasurer's Commentary: It's the spending, stupid!

By State Treasurer Ken Miller

Ken Miller

While recent reports show state economic prospects heating up, no recovery is guaranteed. Oklahoma is not immune from macroeconomic conditions or bad decisions made in our nation’s capitol. Unfortunately, the current Washington stalemate threatens our economic recovery just as it’s catching fire.

With the federal government borrowing 40-cents of every dollar spent, much focus is on the US debt crisis. In the last 10 years alone, the gross federal debt has ballooned about 150 percent from $5.8 trillion to $14.3 trillion. This is an increase from 56 percent of GDP in 2001 to more than 100 percent today. The cause is simple – it’s the spending, stupid!

Rep. Jason Nelson scores 94% on pro-taxpayer legislative index

Rep. Jason Nelson, R-Oklahoma City, earned a 94% on a legislative index created by Oklahomans for Responsible Government. After a long session, OFRG has chosen legislation to be included in the Legislative Index and Scorecard for Taxpayers (LIST) which grades lawmakers based on how they voted on issues important to taxpayers.

OFRG recently posted the results of its first Scorecard for Taxpayers on its website: www.ofrg.org. OFRG identified 21 measures that would have an impact on the average taxpayer and scored lawmakers on whether they voted for the good bills and against the bad ones.

“We feel this is the only legislative ranking that looks at policy decisions which affect taxpayers’ pocketbooks,” said Brian Downs, OFRG Executive Director. “We’ve made it easy for anyone to look up their lawmaker and see how they voted on bills that promote a more efficient and transparent government.”

In the House, the average score was 83.1%. There were 17 bills making up the LIST in the House with 15 requiring a Yes vote and two requiring a No vote.

Bond Indebtedness Slight in Oklahoma Study Shows

OKLAHOMA CITY – An interim study held this week by the House Appropriations and Budget Committee shows that Oklahoma has less tax-supported debt than most other states.

The study, requested by state Rep. John Wright, focused on a comparative review of the state’s bond indebtedness and let lawmakers know what debt obligations the state would have in 2010. Interim state bond advisor Tim Martin and Assistant Attorney General Lynn Rogers both spoke at the study.

“The state’s relative bond position was so strong that last year we got a better bond rating,” Wright, R-Broken Arrow, said. “Our adjusted annual payments as a percentage of appropriations is projected to be 3.76 percent in fiscal year 2010.”

Wright noted the importance of understanding the state’s position in regards to bond indebtedness in a tight budget year.

“I thought it was important that we be fully informed of the state’s current economic position, which includes its debt obligations,” Wright said. “Our strong position may give the Legislature additional options when it comes to how we approach budget decisions this year.”