OKLAHOMA CITY – Most state retirees will receive bigger pension checks soon, with enactment of a cost-of-living-adjustment measure.
Gov. Kevin Stitt signed House Bill 3350, which authorizes a COLA of 2% to 4% for more than 100,000 retired state employees, teachers, judges and justices, firefighters, police officers, and other law enforcement officers such as the Oklahoma Highway Patrol.
The pension system for the Oklahoma Department of Wildlife Conservation was not included in the COLA proposed by HB 3350. That agency is self-supporting “and they operate their own separate retirement system,” explained Sterling Zearley, executive director of the Oklahoma Public Employees Association. With Stitt’s signature on the bill May 21, the pension increase – the first in 12 years – goes into effect July 1.
Former state employees who have been retired for more than five years on that date will get a 4% boost in their pensions. Those who have been retired for two to five years on July 1 will realize a 2% increase in their benefit. Former state employees who have been retired for less than two years will not get a pension increase.
Principal authors of HB 3350 were Rep. Avery Frix, R-Muskogee, and Sen. Roger Thompson, R-Okemah. Co-authors included Reps. Trey Caldwell and Daniel Pae, both R-Lawton; Rep. David Perryman, D-Chickasha; and Sen. Chris Kidd, R-Waurika. The bill cleared the Legislature overwhelmingly: 99-0 in the House of Representatives, 41-5 in the Senate.
The COLAs are projected to have a $776 million lifetime impact on the six affected pension systems, according to a fiscal analysis prepared for the Legislature. The National Institute on Retirement Security (NIRS) reported that four years ago, 122,516 residents of Oklahoma received $2.5 billion in pension benefits from state and local pension plans.
Between 1993 and 2016, almost 32% of Oklahoma’s pension fund receipts came from employer contributions, 13.63% was derived from employee contributions, and 54.7% came from investment earnings. Earnings on investments and employee contributions – not taxpayer-based contributions – have historically made up the bulk of pension fund receipts, the NIRS noted.
Each dollar paid out in pension benefits supported $1.39 in total economic activity in Oklahoma, research indicated. This “multiplier” incorporates the direct, indirect, and induced impacts of retiree spending as it ripples through the state economy, the NIRS explained. Most pension benefits received by retirees are spent in their communities. One person’s spending becomes another person’s income, creating a multiplier effect.
In addition, taxes paid by retirees and beneficiaries directly out of pension payments totaled $192.6 million, records show.
Editor’s note: Mike Ray is a state government retiree who worked for the Oklahoma House of Representatives for 19 years.