Claremore Daily Progress

November 13, 2013

House Speaker Shannon speaks at ECU

Eric Swanson Staff Writer

Ada — Efforts to overhaul Oklahoma’s public pension system are likely to dominate the Legislature’s agenda in 2014, House Speaker T.W. Shannon said Wednesday. “The experts tell me that Oklahoma’s about six to eight years out from reaching critical mass on the issue, but I don’t like this federal motto of governing by crisis,” Shannon said. “This is one of those issues that we need to really nail down and address now.” The Lawton Republican touched on pension reform and other issues during a town hall meeting at the Chickasaw Business and Conference Center, located on the East Central University campus. More than 70 people attended the event, hosted by the Ada Area Chamber of Commerce. Lawmakers have already taken several steps designed to reduce the state pension system’s unfunded liability from $16 billion to its current level of about $11 billion. Those measures included a 2013 bill that increased the years-of-service requirement for new firefighters from 20 to 22 years. House Bill 2078 changed the vesting schedule from 10 to 11 years and raised the minimum age for receiving retirement benefits to 50. The bill also raised firefighters’ contribution rate from 8 percent to 9 percent, and it boosted cities’ rates from 13 percent to 14 percent. Gov. May Fallin signed HB 2078 into law, but she rejected another bill that would have allowed new state employees to select a defined contributions plan instead of the traditional pension program. Unlike a defined benefits plan, a defined contributions plan does not provide a specific monthly benefit when participating workers retire. The employer, worker or both make contributions to the plan on a regular basis, and benefits are based on those contributions plus any investment earnings on the money in the account. Shannon said research shows that younger workers prefer defined contribution plans instead of defined benefits plan because a defined contribution plan allows workers to take the money with them when they start a new job. “The challenge you have now with the defined benefit plans is you’re in while you’re in, but in many cases, once you get out, you can’t take it with you,” he said. “And that is actually a disincentive to attracting qualified younger workers in many regards.” Shannon said he believes the state will eventually move away from defined benefit plans. Some public employees oppose proposals to change Oklahoma’s pension systems, saying that any new reforms could hurt teachers, firefighters and state workers. Judicial reform Pension reform wasn’t the only issue on Shannon’s mind. He said lawmakers may also consider proposals to shake up the state’s judicial system in 2014. Shannon said the state Supreme Court has overstepped its authority by striking down laws on technical grounds, such as violations of the single-subject rule. The rule says ballot initiatives and legislation may deal with only one main issue. Shannon noted that the Supreme Court is considering a legal challenge to a law that replaced Oklahoma’s court-based workers’ compensation system with an administrative system. He said he could not predict how the court would decide the case, but the dispute prompted him to start thinking about judicial reform. “It is my belief that the third branch of government, the judiciary, was not designed to be a superlegislature,” Shannon said. “That’s not what the founders of the state or the country even had in mind for the third branch of government. Their job is to ensure that the will of the majority isn’t superseding the constitutional authority of the minority.” Shannon said the Legislature has completed an interim study on court-related issues, including term limits and age limits for justices, but he has not generated any legislative proposals yet.