UPDATED OPEA Press Release: Market-Based Compensation and Defined Benefit Retirement

State employees ask for the reinstatement of the defined benefit retirement plan & $296 million dollar investment in salaries.

(This story was updated on April 21, 2023 to address legislative bill numbers)

In 2022 the Oklahoma Public Employees Association supported HB 3422 authored by Representative Mike Osburn and Senator Roger Thompson. House Bill 3422 required Human Capital Management to conduct a study to examine the overall compensation for positions covered by the Office of Management and Enterprise Services under the Civil Service and Human Capital Management Act. Oklahoma hired an outside contractor to conduct the study to determine how the State of Oklahoma can attract the brightest Oklahomans to work for the state and retain the best state employees. The study sought to determine how competitive a state employees’ total compensation (salary, insurance, leave, retirement, etc.) is compared to similar roles in surrounding states and in the private market.

The study examined how to retain and attract employees by improving HR practices and improving compensation. This data is based on 453 different job classifications selected by OMES consisting of 18,784 Oklahoma state employees. The study determined that Market competitive range is defined as pay between 85% and 115% of the proposed salary grade midpoint.

The study found that 57% of Oklahoma state employees’ fall below the market competitive range for their salary grade (Page 17). Historically, it was argued that state employee salary was expected to be lower than the competitive market range due to their state benefit package, but the state employee benefits package is no longer competitive.” There is a gap in compensation between the state and private sector, making it difficult to attract and retain talent. The benefits package was previously more extensive and would attract employees when compensation was lower; however, the benefits package has been reduced over the years, making it difficult to retain employees when pay and benefits are higher elsewhere.” (Page 42).

In 2015 the Oklahoma state employee benefit package was just 2.97% below the market competitive range. As of 2021 the benefits package has tumbled to 17.5% below the market competitive range (OMES). One of the largest factors contributing to the decrease in value is Retirement which has decreased in value by 28%. In 2015 this benefit was targeted by the state legislature. The state employee defined benefit retirement system was closed to new employees, sending all employees hired after November 2015 to enroll in a defined contribution 401K type retirement known as Pathfinder.

It is no secret that Oklahoma state employment has a turnover problem. As of 2021 state employee turnover costs the state of Oklahoma $110 million with a turnover rate of 17.1. In just one year the state employee turnover rate has increased to 21.3% (OMES). This problem is costing Oklahoma Taxpayers over one hundred million dollars yearly.

How do you fix it? Restore the benefits that once attracted state employees like the defined benefit retirement system. In addition, the study suggest a 296 million dollar investment in state employees to bring their salaries to 85% of the competitive market value (Page 20). This can be done by signing HB 1798 into law. While the 296-million-dollar price tag is high. State leaders must look at this as an investment. With state employee turnover costing Oklahomans over $100 million a year we could recoup that money in just under 5 years’ time.

For questions, please contact Sterling Zearley at sterlingz@opea.org

Related News