TRANSCRIPT
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Dick Pryor: This is Capitol Insider - taking you inside politics, policy and government in Oklahoma. I'm Dick Pryor with Quorum Call publisher, Shawn Ashley. Shawn, tuition and mandatory fees are going up at many colleges and universities in Oklahoma as approved by the State Regents for Higher Education Thursday. How much was the increase?
Shawn Ashley: System-wide, the increase averaged 2.2 percent, but that really doesn't tell the whole story because there was a wide spread in the 16 colleges and universities that did increase their tuition and fees. The smallest increase was at Western Oklahoma State College in Altus at 1.8 percent, and the largest was at Oklahoma State University at 4.7 percent. The remainder of the increases were scattered between those two extremes.
Dick Pryor: Now, colleges and universities are hesitant to raise fees and tuition. Why did they see it necessary to do it now?
Shawn Ashley: Each year it really comes down to the same general issue. State appropriations do not cover the full cost of educating students, and those costs continue to rise, which leads to tuition and fee increases. Chancellor Sean Burrage noted, “the modest increase will empower state system campuses to advance leading-age programs and services, expand collaboration with the business community, and continue momentum to address other strategies outlined in our Blueprint 2030 Strategic Plan.”
Dick Pryor: The Oklahoma Supreme Court has ruled that it was judicial error to allow the state attorney general's office to intervene in a civil lawsuit against State Farm Insurance Company. So, on Wednesday, Attorney General Gentner Drummond filed a separate lawsuit to pursue the matter. What is the AG alleging?
Shawn Ashley: Drummond cast this as a consumer protection lawsuit, and the lawsuit alleges State Farm engaged in a pattern of deceptive and fraudulent conduct that harmed policyholders throughout Oklahoma by using undisclosed claims handling practices, restrictive internal standards, and outcome-oriented engineering reviews to reduce claim payments and increase corporate profits. The state is seeking injunctive relief, civil penalties, disgorgement of profits, restitution, and other relief authorized under state law.
Dick Pryor: During the legislative session, lawmakers approved cost of living benefit increases for retirees in the state's pension systems. That includes teachers, judges and justices, public employees, police and firefighters. How much were the increases and when do they take effect?
Shawn Ashley: The cost-of-living allowances or COLAs were 3% for those retired 10 to 20 years and 6% for those retired 20 years or more. And those increases will take effect October 1st.
Dick Pryor: And leaders of the state's retirement systems reacted to the COLA plan in comments at the Oklahoma State Pension Commission meeting Tuesday. How do they see that affecting their systems?
Shawn Ashley: Each system reported the benefit increases will have a negative fiscal impact on their systems. Sarah Green, executive director of the Oklahoma Teacher's Retirement System, said that system's COLA will cost approximately $350 million. Oklahoma Public Employees Retirement System Executive Director Joe Fox said the OPERS COLA will have about a $132 million fiscal impact on that system. On the positive side, each of the pension systems’ leaders said they expect this year's investment gains to offset those costs, but that requires them to have a good year in the stock market and the bond market.
Dick Pryor: By law, the legislature is required to fund any benefit increase they provide, and they did not do that.
Shawn Ashley: That's right. The Oklahoma Pension Legislation Actuarial Analysis Act, often called OPLA, was passed in 2006, and it requires lawmakers to fund any benefit increases. But the bills passed this year and some in previous years have declared themselves to be non-fiscal measures in order to avoid that requirement.
Dick Pryor: Now, we've seen this happen before - where the legislature increased retiree benefits without appropriating the money to pay for them - and that did not work out well.
Shawn Ashley: It did not. In the 1980s, 1990s and early 2000s, the legislature approved unfunded benefit increases that caused the system's funded status to decline significantly. And that funded status is important for bond rating agencies, which ultimately determine how much the state will end up paying when it borrows money. A lower bond rating increases borrowing costs for the state, which is why lawmakers passed OPLA in the first place.
Dick Pryor: All right, thank you, Shawn.
Shawn Ashley: You're very welcome.
Dick Pryor: For more information, go to quorumcall.online. Audio and transcripts are at kgou.org. Until next time, with Shawn Ashley, I'm Dick Pryor.
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