March 13, 2011

Oklahoma's Pension Woes Mount

[This Marlin Oil advertorial appears in the March 17 edition of The City Sentinel.]

Just when the stars seemed perfectly aligned to bring real reform to Oklahoma's terribly troubled government pension and retirement programs, a series of public employee rallies at the state Capitol in Oklahoma City stymied momentum Republicans had built for months.

Before leaders announced they were withdrawing most reform proposals and planning on a “task force” study of pension and retirement plan issues, 800 firefighters packed the Capitol one day last week. Then a group of unions sponsored a weekend rally and, finally, the Oklahoma Education Association said it would blanket legislators early this week. As that stopped GOP momentum, the announcement that it was time to "study" an issue that has been well-studied for at least a decade was no surprise -- merely a heartbreaking disappointment.

It's enough to induce despair, but at least one major bill that still seems on track toward passage should not be underestimated. The Truth in Funding Act, House Bill 2132, places enough limits on pension payouts that it captures roughly $5 billion toward the bottom line. Trouble is, the state's unfunded pension debt is $16 billion. So, at best, HB 2132 is a good first step, not the end of the line.

The best hope for a better endgame in 2011, before the end of the legislative session in May, is for state officials to continue to learn the truth about pension problems here and in other states, and act rationally to prevent a fiscal catastrophe that can scarcely be overstated.

Northwestern University in Chicago estimates that Oklahoma will be the very first state to run out of pension cash flow, some time in 2017. The Institute for Truth in Accounting puts real public debt in Oklahoma at $14,800 per taxpayer, far higher than past estimates.

That's not all. A shift in the way the Moody's Investors Service weighs traditional public debt and debt coming from public (government) pension obligations means that instead of having one of America's best bond ratings -- in the best 10 to 15 among the 50 states -- Oklahoma may be ranked among the 12 or so worst states in the USA when new ratings come out in a few months.

It's not too late to get ahead of the pension bust, but state leaders are playing with fire by waiting another year to address the rest of the $16 billion nightmare, part of what the Pew Center for the States estimates is a $1 trillion unfunded gap nationwide.

The future is rushing in. There are, truly, no surprises when it comes to what needs to be done. To be blunt, if it is to be done, it is best to get it done quickly.

No comments:

Post a Comment