Lawmakers boost pension benefits for police with veto override

Oklahoma taxpayers are helping to foot the bill for millions of dollars in expanded pension benefits for police officers. State lawmakers approved the deal in the waning days of the legislative session.

The changes would greatly boost the pensions of current officers in the late stages of their careers. Police in the system can retire at age 50 with at least 10 years of service or after 20 years of service, whichever is later.

Backers of Senate Bill 102, including police unions like the Fraternal Order of Police, said it could help with police recruitment and retention. The expanded benefit comes as police retirees getting pension benefits have had one cost-of-living adjustment, or COLA, in the last 15 years.

The conflicting priorities of retirees and active officers was evident in public comments last year after the legislation was introduced. Pension bills have to be introduced in odd years and can only be voted on in even years after proposed changes go through an actuarial analysis.

David Shupe, who retired as a deputy chief after 43 years with the Oklahoma City Police Department, said the responsibility to increase retention and recruitment should fall on municipalities, not the pension system. He said the Legislature’s passage of SB 102 makes it less likely that retirees will get any COLAs for the foreseeable future.

“I understand both retirees and active police officers are members of the same pension. I get that,” Shupe told board members last year. “But to even consider lowering the assets of the pension at the expense of some members to recruit some unknown person who is not an OPPRS member and has not contributed a dime to the system is at the very least illogical and at the most not in line with a board member’s fiduciary responsibility of acting in all current members’ best interests.”

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Gov. Kevin Stitt vetoed SB 102 on May 21. Lawmakers in the House and Senate overrode the veto in the last week of the session, with police officers packing the galleries to watch the override votes in each chamber.

Several lawmakers conceded it was a tough vote to take, especially in an election year. Police union political action committees have contributed more than $60,000 to legislative candidates in the current election cycle, according to reports filed with the Oklahoma Ethics Commission.

Sen. Darrell Weaver, R-Moore, who spent more than a decade leading the Bureau of Narcotics and Dangerous Drugs Control, said recruitment and retention are frequent topics at law enforcement conferences. Weaver sponsored a separate House bill that would have granted a COLA, but it never made it to a floor vote in the Senate.

“I hate positions where it’s one against the other,” Weaver said before the Senate passed the bill May 14. “The officers, some of them sitting in the balcony, I worked with some of their dads. I wish this would have been tied to a COLA. This is a tough vote for me because of the retirees. But I can’t stand in this body and not vote for the men and the women for the job they’re doing. I know the struggles they’re having in Oklahoma City and Tulsa and almost every small department all over the state.”

A legislative battle for pension reform in Oklahoma

In passing the law, legislators exempted the Oklahoma Police Pension and Retirement System from a statute forbidding declines in the funding-level ratio for the $3 billion pension system. That move alarmed some of the architects of the state’s wide-ranging pension reforms more than a decade ago. At that time, most of the state’s seven retirement systems were woefully underfunded, although few in office now remember the bruising battles over pension reform.

Separate actuarial estimates for the Legislature and the police retirement system projected the system’s funded ratio under SB 102 would drop to 94%, down from 106%. The police pension system is among the best-funded of the state’s public pension systems.

Mike Mazzei, a Stitt appointee to the police pension board and a former state senator, was instrumental in pushing pension reforms during his 12 years in office.

“In 2004, the police pension system was only 81% funded,” Mazzei said in a briefing paper circulated to lawmakers. “It took 20 years to get it to today’s healthy state, and we reformers always hoped that when the systems got financially stable, the retirees would then be able to benefit from regular cost of living adjustments, which are sorely needed right now in this era of punishing inflation.”

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Backers of SB 102 said it would not affect state appropriations because the expanded benefit would be paid by higher contributions by police officers and their municipal employers. The employee contribution will rise to 9%, up from 8%. The local government contribution will rise to 14%, up from 13%. The measure was authored by Sen. Jessica Garvin, R-Duncan, and Rep. Steve Bashore, R-Miami.

As well as member and employer contributions, the police pension system uses investment returns to pay for benefits. It also gets annual allocations – about $44.5 million in fiscal year 2023 – from the state’s insurance premium tax, which is collected from policyholders by insurance companies. The police pension system gets 14.7% of the revenues collected under the insurance premium tax.

Stitt, in his veto message, said SB 102 puts the state on a slippery slope.

“I recognize that the bill would require both members and municipalities to contribute to the system at higher levels than they do currently, but those contributions will not be enough to offset the cost of the increased benefit,” Stitt said. “This will cause the system’s funded ratio to meaningfully decline – even with the assumption of the system meeting its return target in the future.”

What benefits will police officers get under Senate Bill 102?

Under SB 102, police officers who retire with 20 years of service would see their annual benefit calculated as 3% of their final average salary multiplied by 20. That compares to existing members who reached retirement after 20 years. They get 2.5% of their final average salary multiplied by 20.

Those small differences in the percent multiplier can boost the retirement benefit in big ways. For example, an officer retiring at a base salary of $80,000 would see their annual pension benefit go from $40,000 to $48,000.

The expanded benefit includes a stair-step mechanism where officers close to retirement have to stay employed one, two or five additional years to be eligible for the 3% multiplier. Still, an officer nearing retirement could contribute an extra $2,000 over three years and boost their lifetime pension by more than $180,000.

A compromise version of the bill increased the multiplier to 2.75% and passed the Senate in March. But the House amended it in committee and sent the bill back to the Senate with the multiplier restored to 3%.

The police pension board’s trustees took a neutral position on SB 102. But some members of the board, like Mark Nelson, actively lobbied for the bills’ passage. Nelson is the president of the Oklahoma Fraternal Order of Police and the FOP’s Oklahoma City lodge.

Retiree Jeff Pierce, a former member of the police pension board and board member at the state FOP, said pension board members who wanted the bill passed should have recused themselves from any discussions about it during board meetings. Some retirees called for the pension board to request an attorney general’s opinion, but they were rebuffed by the board.

“My problem with it is you’ve got two people sitting on that pension board that are expected to take that hat off and put on their other hats, and they’re actively lobbying for the passage of that bill,” Pierce said. “It was sold and promoted as a recruitment and retention bill, but it’s an out-the-door bill. If it would have been a recruitment and retention bill, it would have only affected new hires or officers in the system who weren’t vested.”

Nelson said recruitment and retention has always been a challenge. The COVID-19 pandemic and the fallout from the protests after George Floyd’s death under police restraint in Minneapolis exacerbated the crisis. Nelson called it a “no-brainer” for the police pension system to help out with recruitment, at least on a short-term basis. He said the FOP continues to push for a COLA for retirees drawing a pension. Still, any COLAs granted would also cause the pension’s funded ratio to drop, he said.

“The pension board had nothing to do with that whatsoever,” Nelson said about SB 102. “We took a neutral stance, and it was an employee organization that went out there and lobbied and fought for this increased benefit. It was similar to back in 2020 when we got a COLA for our retirees. The FOP was right there along with all the other employee groups lobbying for that.”

Nelson said officers eligible for the expanded benefit under SB 102 can’t take advantage of it until July 2026 at the earliest.

“In reality, it changed it to a two- and three-year timeline from where we’re at currently before anybody could retire and receive this increased benefit,” Nelson said.

Stitt, who is in his final term, said the Legislature’s override of SB 102 was a short-term win for lawmakers that allowed them to say they support law enforcement in an election year. He said the bill would only encourage other public employees to argue for the same boost in benefits for their pension systems next year. That benefit boost comes at the expense of existing retirees, who likely won’t see a cost-of-living increase, Stitt said.

“When you have people who are politicians, looking for the short-term win, looking for the endorsement from law enforcement when they run next time, then they vote for it,” Stitt said at a May 31 press conference. “That’s why Oklahomans voted for me. Because I’m a businessman governor, and they know I don’t just go along and play political games.”

Paul Monies has been a reporter with Oklahoma Watch since 2017 and covers state agencies and public health. Contact him at (571) 319-3289 or pmonies@oklahomawatch.org. Follow him on Twitter @pmonies. 

This article originally appeared on Oklahoman: Oklahoma lawmakers override SB 102 veto, boosting police benefits