For school districts, fire departments, and other government entities across the nation, public pensions are an important tool for recruiting and retaining high-quality public employees. In Oklahoma, defined benefit pensions for teachers are especially valuable given the ongoing teacher shortage and the continuing cuts to education funding in state. Today NPPC released a new report- Retirement Security for Oklahoma Teachers Still Overlooked– that examines the vital role pensions can play in alleviating Oklahoma’s teacher shortage crisis.
Sadly, the story playing out in Oklahoma is one that is happening in states across the country. In states like Oklahoma, Kansas, and West Virginia, conservative governors and state legislatures enacted extreme tax policies that slashed revenue and have created budget crises. Inevitably, public pensions get sucked into the mess as irresponsible politicians look for other sources of money to fill holes in the budget.
In Oklahoma specifically, not only did the state’s political leaders pass damaging income tax cuts several years ago, but the state’s economy is also heavily dependent on the energy sector. This was a boon for the state when oil and natural gas were doing well several years ago, but now that the energy sector is in a slump, the state’s economy is suffering. Due to this painful combination of tax cuts and slumping energy markets, Oklahoma has declared multiple revenue failures in the past two years. These ongoing revenue failures have spurred budget cuts- cuts that come in addition to cuts already enacted through the regular budget process. As it stands, Oklahoma has cut spending on education more than almost any other state since the 2008 recession.
For public schools in Oklahoma, the cuts to education spending have had dramatic effects. Class sizes are increasing as teaching positions are being eliminated. Oklahoma’s teachers are being asked to carry a heavier load while they also face some of the lowest teacher pay rates in the nation. Throughout the United States, public school teachers earn less, on average, than their comparably educated peers in the private sector. One way school districts make up for this difference in pay is through strong benefits packages for teachers, including the promise of a secure retirement through a defined benefit pension. Even here, though, Oklahoma teachers are not safe.
Three years ago, the Oklahoma legislature closed the public pension plan for state employees to new hires (effective November 1, 2015). This move did not affect teachers, who are in a separate pension plan, but some of the same legislators have called for closing the teacher pension plan and moving new teachers into a 401(k)-style defined contribution plan. This would be a mistake. As West Virginia learned, closing a teacher pension plan dramatically increases costs for the state and severely undermines retirement security for teachers. Fortunately, legislation that would weaken or close Oklahoma’s teacher pension system has been defeated, but the threat remains.
So what should Oklahoma do to address its ongoing teacher shortage? The state should seriously examine whether the tax changes enacted several years ago are providing the state with enough revenue to fund essential functions, such as education. Additional revenue could enable the state not only to end the repeated revenue failures, but to give teachers a pay raise and hire more teachers to alleviate crowded classrooms. However, the value of defined benefit pensions should not be overlooked. The specter of closing the teacher pension plan looms large. With Oklahoma’s teachers already facing so many challenges, taking away the security of a traditional pension would only give them more reason to leave the state or leave the teaching profession altogether. Oklahoma needs good teachers to educate its next generation of citizens and those teachers need the security of their pension.
To read the full report, please click here: Retirement Security for Oklahoma Teachers Still Overlooked
