Fiscal Chairs Forum: State Efforts to Stabilize Public Pension Plans
Fiscal Chairs Forum:
State Efforts to Stabilize Public Pension Plans
May 17, 2012
The Fiscals Chairs forum featured an in-depth discussion of, and policy options to, one of the thorniest problems confronting state policymakers: public pensions. As states cautiously recover from the Great Recession, one of the significant fiscal challenges they confront involves devising solutions to boost underfunded and unfunded public pension plans. During the forum, the fiscal chairs heard from fellow state officials representing three states (Oregon, Rhode Island and California), each tackling unique public pension challenges in innovative ways.
Capitol Ideas Today: Pension Reform Necessary, but Not Easy
Moderator: Kevin Lembo, Connecticut, State Comptroller
Senator Richard Devlin, Senate Co-Chair of the Joint Ways and Means Committee, Oregon
Senator Devlin began his presentation by noting that Oregon’s public retirement system, like so many other retirement plans across the country, faced myriad challenges. While the system’s funded status stood at 112 percent in 2007, in the aftermath of the Great Recession, it dropped to 80 percent in 2008 before climbing up to 87 percent in 2010. In 2011, it is estimated to drop to 81 percent. He added that there were three main categories of retirees in the Oregon plan: Tier One and Tier Two members of the Public Employees Retirement System and Oregon Public Service Retirement Plan members (employees hired on or after August 29, 2003). Each of these categories received different pension benefits. As of October 2011, the average monthly benefit for a retiree in the system amounted to $2,373 while the average beneficiary was 59 years at retirement with 22 years of public service in the system. Senator Devlin stressed that the Legislature continued to carefully monitor the system’s financial status and enact necessary reforms.
Richard Licht, Director, Department Of Administration, Rhode Island
Director Licht began his remarks by stating that, in fall 2011, Rhode Island policymakers faced a critical choice: they could maintain the state’s pension system as it currently stood, eventually triggering significant tax increases and/or service cuts, or enact reforms to enhance solvency and control the growth of future obligations. Thankfully, he noted, the state’s policymakers, acting in a bipartisan fashion, overwhelmingly decided on the latter option and approved major reforms, spearheaded by Governor Lincoln Chafee, House Speaker Gordon Fox, Senate President Theresa Paiva and State Treasurer Gina Raimondo. Among the monumental reforms enacted were requiring certain state workers and school teachers to move some of their retirement funds into a 401(k)-style account, suspending annual cost-of-living raises until pension funding levels reach 80 percent, raising age requirements, increasing employee contributions and re-amortizing pension system debt to lower and smooth future payments.
Grant Boyken, Pension and Benefits Officer, Office of the State Treasurer, California
Mr. Boyken prefaced his remarks on California’s public retirement systems by commenting that the two major state plans, California Public Employees’ Retirement System (CalPERS) and California State Teachers’ Retirement System (CalSTRS) currently had $232 billion and $154 billion in assets, respectively. In context of the enormity of the funds, California State Treasurer Bill Lockyer felt very strongly about improving the transparency and accountability of the two plans. In recent years, there had been “pay-to-play” scandals involving placement of agents and several high-profile cases of pension spiking and extravagant public sector pension payments involving the California public plans. Consequently, Treasurer Lockyer has actively promoted legislation by the California Legislature along with enacting new policies at CalPERS and CalSTRS to thwart irregular and potentially illegal activities.
- News Clips
- 2010 Two Key Retirement Bills that Passed by the Utah Legislature
- Arizona Pensions, as of July 2011
Kevin Lembo was elected State Comptroller in Connecticut in 2010, following decades of experience in government, finance, and health care. As the state's fiscal guardian, he is committed to eliminating wasteful spending, strengthening budget transparency, delivering government services more efficiently and addressing the state's health care challenges. Comptroller Lembo's office oversees the procurement of and administers health care for tens of thousands of lives, and has led implementation of the Health Enhancement Program.
Before serving as State Comptroller, Lembo served two terms as Connecticut's first Healthcare Advocate, where he helped thousands of Connecticut residents navigate the complexities of the health care system; advocated for patients denied coverage or treatment; and returned more than $25 million to consumers. He holds a Master of Public Administration degree from California State University and is a member of the Pi Alpha Honor Society. He has served as a clinical instructor at the Yale School of Nursing. Lembo was named a Toll Fellow of the Council of State Governments in 2004, and has been honored for his leadership by many groups and associations.
Richard Devlin began his service in the Oregon Legislature after being elected to the House of Representatives in 1996. He served three terms in the House before his election to the Oregon Senate in 2002 and was the Senate Majority Leader from 2007-2010. He is currently serving as the Co-Chair of the Joint Ways and Means Committee.
Senator Devlin earned his Bachelor of Science in Administration of Justice from Portland State University and his Master of Arts in Management from Pepperdine University. His occupational background is in adult and juvenile corrections and criminal investigations, and he served in the U.S. Marine Corps.
Richard Licht serves as the Director of Rhode Island's Department of Administration. The department's responsibilities include the development and administration of the $7.5 billion state budget; determining and maintaining standard specifications for purchases, contracts, bids and awards for state purchases; maintenance and upkeep and procurement of state facilities; administration of the statewide planning program and overall personnel administration and management of state departments and agencies and the negotiation of state employee union contracts.
Licht, a Providence native, is a graduate of the Moses Brown School, and earned an A.B. in economics from Harvard College, a J.D. from Harvard Law School, and an LL.M. in taxation from the Boston University School of Law. He clerked for Rhode Island Supreme Court Chief Justice Thomas Roberts before serving as State Senator from 1975-1984. From 1985-1989, Licht was the state’s first full-time Lieutenant Governor, and he served on the Board of Governors for Higher Education from 1991-1997, including three years as Chairman. He previously served as a Partner with Adler, Pollock & Sheehan, and has served on numerous charitable and civic boards and commissions.
Grant Boyken is the Pension and Benefits Officer for the California State Treasurer's Office. He analyzes issues related to employee benefits and insurance for the Treasurer's Office, and represents Treasurer Lockyer as a designee on the governing boards of the California Public Employees' Retirement System, the California State Teachers' Retirement System, and the California Earthquake Authority.
Prior to his current position, he worked as a Senior Research Specialist at the State Library's California Research Bureau, where he conducted research and analysis for the Public Employee Post-Employment Benefits Commission in 2007. He has a master's degree in Sociology from the University of California, Davis.