Legislature

Pension Paranoia

Oklahoma State Capitol

I’m glad that at least one statewide Republican leader has publicly asked for an actuarial study to determine the specific financial impact of a proposed and radical change to one state pension plan.

Oklahoma State Auditor and Inspector Gary Jones, writing in The Oklahoman/NewsOK.com, argues, “Any changes to the pension systems must be verified by an actuarial study to provide the impact those changes will have to the fiscal stability of the plan. It only makes sense to give the pension experts, CPAs and actuaries a chance to fix this problem. Working with these experts, legislators would be able to make the necessary, tough, informed decisions to find an actuarially sound solution.”

Jones’ point makes perfect sense, but some Republican leaders, such as Oklahoma Treasurer Ken Miller and Gov. Mary Fallin, both Republicans, are simply relying on reductionist rhetoric to move some new state employees into 401(k)-styled pensions without defined benefit payments and thereby putting one pension plan at risk.

Senate Bill 2120 and House Bill 2630 would require that new state employees under the Oklahoma Public Employees Retirement System (OPERS) go into a new 401(k)-styled plan. One major question that hasn’t been addressed fully by Miller and Fallin, according to some opponents of their plan, is how the old plan would still remain solvent without new participants.

Instead, we only hear dire cries of a pension crisis from them and the editorial board of The Oklahoman and how the new plan will be portable if employees leave their jobs. (Of course, that wonderful portability has nothing to do with how well the 401(k)-styled plan performs.) While it’s true that all of the state’s pensions face an $11 billion liability that liability has been reduced by some $5 billion just in recent years, and it will be reduced even more if state leaders simply provided appropriate funding and made wise financial decisions.

Jones, of course, who writes that the pension problems were created by “irresponsible, reckless and self-serving actions by the Legislature,” isn’t the only one calling for a financial study of the proposed change. David Blatt, director of the Oklahoma Policy Institute, has been raising this concern for months. How can you make such a major change within a financial system without calculating the impact in specific dollars? As state treasurer, Miller, in particular, should get behind conducting such a study.

Blatt has also pointed out that the change would harm the pension plan for current employees. He writes:

. . .the proposal to close off the system for new employees and shift these workers to defined contribution plans risks weakening OPERS and increasing the system’s unfunded liabilities. The reason is that pension plans depend heavily on investment earnings to grow their assets so as to be able to meet their obligations. As long as plans remain open to new employees, investment managers can invest for the longer-term because they have a mix of young, mid-career and retired workers.

In other words, if there’s less money to invest, there’s going to be smaller returns. Think of employees, in particular, who have been hired in the last ten years or so and are under the old plan. Think of employees hired under OPERS this year. Will the lack of new participants create a huge liability? Will political leaders, then, declare yet another emergency?

It becomes clear when viewed from a larger perspective that Republicans here and in other states simply want to reduce retirement benefits for government employees. They want to force a crisis. Of course, most Republicans won’t address the issue with that basic language.

Here’s the GOP game plan at the state level here and elsewhere: Cut taxes for rich people, give huge tax breaks to corporations, keep wages stagnant for rank-and-file state workers and cut their benefits, making them financially insecure.

The only thing that will stop the execution of that plan is if people stand up, voice their concerns and vote differently. But the neoliberalism (i.e., “free market” principles) model pits people against one another. If I don’t have guaranteed retirement benefits then why should you have them? The right-wing emphasizes the point. Consequently, no one gets decent retirement benefits. Meanwhile, the wealthiest top 1 percent snicker away from above.

The growing income inequality in this country is the only thing that’s not sustainable, not one pension program in one relatively small state.

Let The Lege Begin

Image of Mary Fallin

I found Gov. Mary Fallin’s State of the State speech Monday somewhat less ideological than last’s year address, but it still contained the tired GOP tropes about cutting taxes and government that have decimated education funding here and prevented thousands of people from getting health insurance.

To her credit, Fallin didn’t overly stress this year how much Oklahoma had to teach Washington, an argument filled with holes and backed by no real evidence. In fact, if not for all the federal money and disaster aid flowing into this place, Oklahoma might not even be a viable entity.

Towards the end of her speech, which opened the 2014 legislative session, Fallin did claim:

Washington is leading this country in the wrong direction, but Oklahoma isn’t about to follow.

In fact, we can offer a model to the rest of this country of what sound, common sense, conservative governance looks like.

“Sound . . . conservative governance”? What about the 22.8 percent decline in per-student funding since 2008? What about our teacher shortage? What about the dilapidated state Capitol building? What about the state’s high incarceration rates? We actually lead the nation in female incarceration on a per capita basis, a dubious distinction. What about all the studies showing Oklahoma is an unhealthy state with medical access problems?

Of course, State of the State speeches are often little more than a rah-rah spectacle, filled with superlatives and applause lines, and, as we’ve seen in the past, they don’t necessarily lead to changes. What you hear in a State of the State speech is often what you don’t get at the end of a legislative session.

Perhaps, the most controversial element of Fallin’s speech was her support for cutting the income tax rate from 5.25 to 5 percent. This cut, if passed, would come as the state faces a $170 million budget shortfall. To pay for the cut and make up for the shortfall, Fallin wants more targeted agency cuts.

“Any business worth its salt can find five percent costs savings without crippling the services it provides,” Fallin said, but that statement ignores cuts to agencies in previous years. At some point, no business or family or government agency can perform effectively without adequate resources.

Fallin made the point that she wants to raise common education funding by $50 million, but her budget also calls for a $49.4 million cut to higher education and a $47.7 million cut for the Oklahoma Health Care Authority. The education systems’ increase and cut negate each other when viewed from a larger perspective about the state’s future. The cuts in health care and Fallin’s stubborn refusal to expand Medicaid under the federal Affordable Care Act lack basic compassion, especially given the amount of money the oil and gas industry is given in tax breaks here.

Let me be clear that I think the proposed income tax proposal, even though it’s small, is irresponsible at this time. The tax savings will be primarily accrued by the wealthiest people in the state while our education systems go underfunded and people go without medical care. College students, working families and those without health insurance would sacrifice so the richest people here could get richer.

The GOP tax cut plans fell apart last legislative session and resulted in a bill that obviously wasn’t going to pass constitutional muster. It may well be that Fallin’s proposal and other tax cut proposals are simple political posturing in an election year. We can at least hope that is the case and that it all implodes again this year.

Fallin’s speech gave state employees, many of whom have gone without raises for seven years, little to cheer about. This is what she said:

First, we should begin offering targeted salary increases to some state employees paid below market value. I have included money to do so within my budget.

Second, we should reform our current pay system to one that rewards performance over time served. Doing so will encourage better productivity and services.

And finally, new hires within the Oklahoma Public Employees Retirement System should be moved from an outdated, mid-20th century pension system and to the more portable and flexible 401k-style benefits used in the private sector.

Let me parse those sentences. Note that only “some” employees will receive raises. Why? State employees with long years of service should be especially wary of so-called performance-based pay. There are complicated state jobs that require a high level of education and a practiced skill set. Long-time employees should be appropriately compensated and that should include adequate financial recognition for years of service. Fallin and the GOP seem intent to demonize, at least subtly, employees with long-term service to the state.

The pension issue, which is expected to be a heated one this upcoming session, boils down to this point: Some key members of the GOP leadership, including Fallin and Oklahoma Treasurer Ken Miller, want to reduce retirement benefits for state employees. The only way they can probably do that politically is to only target new employees, but that will eventually put stress on the current system, and then all state employees could eventually face cuts unless the political landscape changes. Note that Fallin only said 401(k)-style pension plans are “more portable and flexible.” What she can’t say, of course, is that they pay better than standard pension plans.

Fallin did call for a bond issue to repair the Capitol building, which is a good idea. Most Democrats are in favor of this approach, but it was a dud last year among certain GOP factions.

The symbolism of a dilapidated and crumbling place of government seems lost on many Oklahoma Republicans, which hold commanding majorities in the House and Senate, along with all the statewide offices. Is this the year it all comes crashing down on them, literally and figuratively?

Divorce Returns As Legislative Issue

Image of Picasso work

The Republican “social engineers” are at it again this year.

Two Oklahoma lawmakers have introduced legislation for this upcoming session, which begins today, that would make it more difficult to get a divorce here.

Both bills, which I will discuss later in detail, are unwise attempts at addressing a chronic issue in the state, which has “extraordinarily high rates of divorce among both men and women compared to the rest of the country . . .” The bills seem overly punitive and take away, to use GOP jargon, a person’s “freedom” to change their life and perhaps their children’s lives for the better on their own timetable given their own particular circumstances.

The high divorce rate here, whether one considers it a problem or not, is mainly due to people who shouldn’t be getting married in the first place. Some of these people are rushed into marriage by a conservative culture that stigmatizes people who simply live together—a no-no, when it comes to certain dominant religious denominations here—while romanticizing wedding mania. Add to this the conservatives’ refusal to offer comprehensive sexual education in schools and our low college graduate rates, and divorce and more divorce is what you get.

The larger point is that any tweaking of our marriage and divorce process, if it even needs tweaking and I don’t think it does, except for allowing same-sex marriage, should start long before any marriage even happens.

House Bill 2398, introduced by Arthur Hulbert of Fort Gibson, would extend the waiting period for the granting of a divorce to six months instead of three months. According to a media report, Hulbert thinks the extra time will “give them time to rethink reconciliation.”

It would also give people more time to argue, grow embittered and jockey for legal position, which creates even more tension. Many times, people just need to move on, and that includes couples with children. Let’s be clear that it is, generally speaking, not always in the best interest for children that their parents stay married.

Hulbert’s bill includes exceptions for extreme cases involving abuse and other things, and some might view it as innocuous, but it falsely presupposes that the high divorce rate is because of the legal process rather than the conservative religious culture here and low college graduation rates. The matter of a divorce is a holistic issue, and making this adjustment in the legal process only inflicts harm. If a couple wants to reconcile, then they will reconcile.

Another bill, HB 3115, would eliminate simple incompatibility as a reason for divorce. This bill, introduced by Sean Roberts of Hominy, has less chance of passing than Hulbert’s bill, but with GOP-dominance right now in the legislature, anything can happen.

The proposed bill lists a host of legal reasons one could use to get a divorce, such as accusing a spouse of abandonment, adultery and, here’s an interesting one, “gross neglect of duty.” Essentially, it eliminates the concept of no-fault divorce, and almost ensures couples must argue and adopt combative positions. This, of course, would not get lost on most children of the divorcing parents.

The arguments in favor or against no-fault divorce are outlined here in this academic article. The larger point is that the concept of no-fault divorce or incompatibility has been around for decades in this country and going back now and ensuring each divorce is adversarial accomplishes nothing, if the aim is to create strong marriages. Some divorces, usually those in which there is a lot of property and money involved, are always going to be contentious. Using incompatibility as a reason for divorce, while not completely removing tension, can and does make things smoother.

Most people would probably agree that what’s most important in divorce is ultimately the welfare of children from marriages, but neither of these bills directly addresses that issue. Hulbert’s bill is a gesture of wishful thinking that takes away people’s rights to a reasonable time period for a divorce, and Roberts’ bill would throw us back into acrimony and legal muddles.

Neither bill comes even close to addressing the issue that the way to reduce the divorce rate is to deal with it before people even get married. That means allowing comprehensive sexual education in our schools and increasing our college graduate rate. We should also work to create tolerance for different approaches to life relationships, and we should embrace same-sex marriage here. It’s blatant hypocrisy for conservatives to fight same-sex marriage in a state with such high divorce rates. In addition, if the legal process of marriage and ensuing divorce is what’s so important, as implied by these two bills, then everyone should be granted equal standing under the law as guaranteed in the Fourteenth Amendment of the United States Constitution.

Here’s a slogan we might use in this state: “Go to college first, then get married.” Or how about just “College before marriage”?

No, it’s not a panacea, but distributing bumper sticks with those slogans on them and adopting their edict would probably do as much, if not more, as these two proposed bills to reduce the state’s high divorce rate.

Syndicate content