Editorial: Teachers retirement fund is improving
BY World's Editorials Writers
Friday, November 30, 2012
11/30/12 at 3:43 AM
For years, dating back at least to the 1960s, generous but short-on-funds legislatures opted to promise teachers higher pension benefits when they couldn't afford to grant salary hikes.
It was a feel-good solution to rewarding teachers - always among the nation's lowest-paid - that left to future legislatures the problem of paying for the increased retirement benefits. The result of years of rewarding teachers without paying for the rewards was one of the most seriously underfunded teacher retirement systems in the nation.
To their credit, Republican lawmakers, when they gained control of first the state House and then the Senate, began to try and correct the problem. That effort included passage two years ago of a law that requires the Legislature to fully fund cost-of-living adjustment increases.
As a result of that law and other efforts, the Oklahoma Teacher Retirement System, which has nearly 158,000 members, is on track to eliminate its unfunded liability in 22 years. Actuarial experts say that systems that are 80 percent funded (there were years when Oklahoma's system was closer to 40 percent funded) are acceptable.
Still, there are bumps along the way toward full funding. Because of investment losses during the recent Great Recession, the system's unfunded liability increased slightly last year. Its funded ration dropped from 56.7 percent at the end of fiscal 2011 to 54.8 percent a year later.
What that means is that if every member of the teacher retirement system who is eligible to retire were to do so at once, the system would be able to pay only about 55 percent on the dollar.
Despite that bump in the road, the fund is still on track to full funding in 22 years, retirement system officials say.
From this point forward, the Legislature's job will be to make sure that the progress continues and that Oklahoma not fall back into the trap of writing checks that the teacher retirement system can't cover.
Original Print Headline: Retirement