City Pension Reform Needed to Ensure Bright Future
By DEWEY F. BARTLETT JR.
Mayor, City of Tulsa
CHANGES NEEDED: Mayor Bartlett speaks about the city’s pension reform during a recent news conference. Standing behind him are members of the Pension Reform Committee. From left, Mike Kier, City of Tulsa finance director; Darita DeLoach Huckabee, INCOG Legal and Legislative Affairs; Phil Frohlich, founder and owner of Prescott Group Capital Management; and Steve Mackin, chief operating officer of Cancer Treatment Centers of America.
Last year I selected six members of our community to serve on a Pension Reform Committee as a proactive step to ensure that our organization can fulfill its promise to city employees and retirees concerning their Municipal Employees Retirement Program ().
The city’s pension plan is in very good condition. However, the unfunded portion of the pension plan has been increasing this past decade: employees’ contributions rose to six percent in 2012 with the city doubling its contributions, which still is not enough to shore up our unfunded liability and demonstrates the need for structural reform.
We’ve seen far too many cities – both large and small across our nation – experience dire financial straits which have led to shutting down basic services, filing bankruptcy and jeopardizing city pension plans. This has been occurring since our nation’s economic distress began in 2008. All citizens should be concerned about this. We must ensure the City of Tulsa is financially sound and able to provide basic core services, such as water, sewer maintenance and trash disposal. If not, we can’t hire people to assure daily services run smoothly. We must do what’s in the best interest of our employees, citizens and government and handle everything in a collaborative way.
The Pension Reform Committee was tasked with the following goals: avoid the risk of a massive tax hike for citizens to pay pension benefits for employees; reduce our unfunded pension liability (as of Jan. 1, 2013, MERP’s unfunded liability was $119 million); avoid budget cuts to other services to pay for unfunded liabilities; propose reforms that establish a stable, long-term pension model for Oklahoma; make possible recommendations to the state legislature; and create a sustainable and fiscally-responsible system.
I recently met with the board and presented the Pension Reform Committee’s recommendation, which is to move our current pension system to a defined contribution model for new employees. This will allow us to pay down its unfunded liability as well as keep promises made to employees and retirees while encouraging talent growth and recruitment. The committee’s recommendation would only affect new employees if these reforms are adopted. Pension reform is not an easy process. It’s time for our organization to provide real reform through policy.
Going forward, the board will further evaluate the Pension Reform Committee’s recommendation. I appreciate the board and the Pension Reform Committee’s dedicated efforts to return us to a strong financial position that will honor what is already in place for current city employees and retirees while securing benefits for the future. Together, we’re working toward having a sustainable and affordable pension system as well as an attractive system to the modern workforce.