The Oklahoma legislature overrode the governor’s veto on the state budget proposal, which aims to divert money from the state’s pension plans to fund education needs.
Gov. Kevin Stitt vetoed the $7.7 billion budget for fiscal year 2021, as well as two additional state House bills he said would take tens of millions of dollars away from teachers, law enforcement workers, and firefighters.
“We have made great progress shoring up our retirement systems in the last few years, and now is not the time to undo that progress,” Stitt said in a statement.
“While I understand the importance of a balanced budget, it is fiscally irresponsible to do so at the expense of the solvency of these pension systems,” he added.
The governor argued the budget measures would lower funded ratios for the state’s retirement systems back down to 2014 levels.
Unfunded liabilities for the state’s pension plans were last reported as $6.5 billion, according to the governor’s veto documents.
A proposal to cut funds from the state Teachers’ Retirement System alone would increase unfunded liabilities by $186.2 million, the governor said. Oklahoma Teachers has a roughly 72% funded ratio, as of fiscal year 2019.
Another proposal to cut dedicated revenues to the state’s Firefighters’ Pension and Retirement System, Police Pension and Retirement System, and Law Enforcement Retirement System would similarly increase unfunded liabilities. The Oklahoma Police Pension was fully funded in 2019.
Unpersuaded by Stitt’s arguments, a broad majority of lawmakers in the state House and Senate overturned the veto on the state budget measures. Stitt is a Republican, so the GOP-controlled legislature has broken from him on this issue.
Many contended that the funds intended for the pension systems were required immediately to support the state’s schools and teachers. Plus, the reduction in state funding would be repaid on a five-year schedule, according to state documents.
Others sided with the governor on the pension plans, including the minority state Senate Democrats.
“While we agree funding is needed to prevent cuts to education, we do not believe taking funds intended for public pensions is the way to do it,” read a statement from Senate Democratic Leader Kay Floyd on behalf of the Democratic Caucus.
The Senate Democrats instead advocated that the state legislature pass a cost of living adjustment (COLA) for retirees.