OPERS has received several calls today concerning a story that was posted on the Yahoo Finance website on Monday October 18, 2010. It is an article that says several states “may” run out of money in the next decade or two. The State of Oklahoma (not OPERS) is #7 on the list. This article is based on a paper by a professor who is using questionable, if not actually false, assumptions about public pension plans. The paper also lumps all pension plans in a state together as if we had a single pension plan. That one fact alone puts Oklahoma on the list since the Oklahoma Teachers Retirement System (“OTRS”) is one of the poorest funded pension systems in the country. OPERS and OTRS are two completely separate funds with different memberships, different contribution structures, and different investment portfolios.
The fact is that there is not a single intellectually defensible study that would support the statement that OPERS will run out of money in the near future. The OPERS fund could be better funded, but the current assets of OPERS along with continuing contributions from its members, will keep OPERS solvent for decades to come. The professor’s paper is good at grabbing headlines, but is not very good at providing accurate information to the public. Giving further publicity to this paper unnecessarily alarms retirees who depend on OPERS pensions.
This does not mean that Oklahoma is not in need of reforms for its public pension systems. The OPERS Board and staff will be working with legislative leaders in the coming session to come up with solutions to ensure the continued financial health of OPERS. But there is no basis for OPERS members to be alarmed by this article.
For a response on this topic from the National Association of State Retirement Administrators (NASRA), click here.