Senate eyes teacher pensions

Alexia Aston

The Oklahoman USA TODAY NETWORK

Plan redirects $254M from retirement fund

Republican Senate leaders want to redirect $254 million meant for Oklahoma’s pension fund for public school educators to expand the Parental Choice Tax Credit, boost teacher pay and improve literacy rates.

Senate President Pro Tempore Lonnie Paxton, R-Tuttle, unveiled the plan Tuesday, Feb. 24, alongside budget and education leaders. The proposal would cap annual state contributions to Oklahoma Teachers’ Retirement System at $200 million and send $25 million in remaining funds to help parents send their children to private schools.

Senate Budget Chairman Chuck Hall, R-Perry, said that the proposal would not decrease the $25 billion in assets currently in the fund or affect the money paid out to the 70,000 retirees each year. Instead, the plan would

continue to grow the fund by $200 million each year, Hall added, and free up $254 million to invest in the “urgent public education needs.” He didn’t address that some of the money would ultimately go toward private schools.

The state contributes 5.25% of revenues from sales tax, use tax, corporate income taxes, individual income taxes and lottery proceeds to the system. The annual state contributions are projected to reach $454 million in 2027, which is the amount that Senate leaders want to split between the pension and other education priorities.

“The system should be strong, and it is strong,” Hall said. “There is no reason to think that it won’t stay that way. Employer contributions will continue. Employee contributions will continue.”

After the proposal was introduced, Republican House leaders raised alarms about the plan to cap the Teachers’ Retirement System and reallocate funds and asked for a plan that isn’t “compromising educators’ long-term stability.” Senate Democrats blasted the proposal, saying the plan would put a potential cost of living adjustment for retired teachers at risk.

Pam Deering, executive director of the Cooperative Council for Oklahoma School Administration, said in a statement that her organization is encouraged to see Senate leadership’s support for teacher pay raises and literacy coaches, calling the proposal a “great list of important education priorities.”

“As we all know, we are still early in the appropriations and budget process and look forward to the House of Representatives plan for public education investments, as well,” Deering said.

The Senate’s proposal is one step in finalizing a budget for 2027. The chamber must ultimately compromise with House representatives on a balanced budget before the May 30 deadline to adjourn.

Lawmakers have $571 million less to disburse on state programs and agencies this year than in 2025. With a challenging budget year, Hall said when Senate education policy leaders began talking with him about pressing education needs, he empowered the appropriations team to “be creative” on finding sources of funding without growing government.

The Senate plan is similar to Gov. Kevin Stitt’s proposed executive budget, which seeks to cap the amount apportioned to the Teachers’ Retirement System at $300 million.

The Teachers’ Retirement System is at an 80% funding ratio and is projected to be fully funded by 2034. Stitt wants to increase that funding period to 12 years, meaning the pension retirement system would take longer to fully fund.

The Senate proposal mirrors Stitt’s call to eliminate the $250 million spending cap on the Parental Choice Tax Credit program. The program provides $5,000 to $7,500 to families to offset the cost of private school tuition and fees.

Senate leaders are seeking to expand the tax credit to increase the funding cap by 10% and allow as many as 7,000 more students to participate in the program, said Senate Education Chairman Adam Pugh, R-Edmond.

To pay for that $25 million priority, the state would use the money redirected from the Oklahoma Teachers’ Retirement System under the Senate proposal. Only public school employees benefit from that system.

“The state has been paying above and beyond the traditional contribution to catch that fund up from what I believe was 46% two decades ago to now just over 80%, and the state will continue to make an additional payment,” Pugh explained.

“But I’m the chair of Education, so I don’t have to separate charter school education, private school education. Everybody up here represents every single one of those families, and to a number of those families, this program has been a lifeline.”

Pugh is running to become Oklahoma’s next state superintendent of public instruction.

A report issued in early January by the Oklahoma Tax Commission found that less than 10% of the tax credits issued for the current school year went to families receiving income-based government assistance, such as food stamps. Families earning $250,000 or more received about 20% of the credits.

Sen. Carri Hicks, D-Oklahoma City, criticized the proposal in a statement, saying the “private school voucher scheme”largely benefits wealthy people who already have kids in private schools.

“Public dollars belong in public schools with public transparency and legislative oversight,” Hicks said.

The Senate proposal would also direct $117 million from the $254 million redirected from the Oklahoma Teachers’ Retirement System to increase the minimum salary schedule by $2,500 across the board.

Currently, the minimum starting salary for Oklahoma teachers with a bachelor’s degree and zero years of experience is $39,601. The national average starting teacher salary is $46,526, according to data from the National Education Association, a Washington, D.C.based labor union representing public school employees. Oklahoma’s average starting teacher salary is $41,152, ranking 45th in the nation.

In a statement, Senate Minority Leader Julia Kirt, D-Oklahoma City, said it’s good to see Republicans prioritizing reading and teacher salaries, but called them “disjointed initiatives, not a longterm plan for student success.”

Sen. Mark Mann, D-Oklahoma City, said the proposal would put a potential cost of living adjustment for retired educators at risk. Mann previously served on the Oklahoma City Public Schools Board of Education.

Under the Senate proposal, $50 million would be allocated to the Strong Readers Act, which is an initiative focused on improving literacy for thirdgrade readers.

Literacy has been the focal point of the 2026 legislative session with leaders in both the House and Senate coming up with plans to improve literacy scores among third-grade students.

“The system should be strong, and it is strong. There is no reason to think that it won’t stay that way. Employer contributions will continue. Employee contributions will continue.”

Senate Budget Chairman Chuck Hall R-Perry

According to data from the Oklahoma State Department of Education, 43% of third-grade students scored at or above the proficient level on the reading state test in 2023-2024. Among students in fourth grade, 23% scored at or above proficient in 2024, according to the National Assessment of Educational Progress.

Authored by Pugh, SB 1778 is eligible to be heard on the Senate floor and would place first and second-grade students who aren’t meeting grade level targets in transitional classrooms or provide them with transitional intervention instruction through pull-out sessions. The measure would require third-grade students who aren’t meeting grade level targets to be retained. Under the proposed law, third-grade students subject to retention would be provided another opportunity to meet grade level targets through screening no fewer than two weeks prior to the start of the next school year. If the student meets that target, they would be promoted to fourth grade.

House Speaker Kyle Hilbert, R-Bristow, proposed similar changes to the Strong Readers Act through House Bill 4420. That bill could come with a price tag of $75 million and would also hold third graders back from the fourth grade if they score below basic level on the statewide reading test.

In a statement Tuesday, Hilbert issued a statement alongside House Budget Chair Trey Caldwell, R-Faxon, saying they “have concerns about any proposal that negatively impacts the Teachers’ Retirement System.”

“The House has consistently supported commonsense retirement reforms to help experienced teachers return to the classroom, which the Senate has repeatedly rejected,” they said. “We want to see the full details of Senator Pugh’s plan as we work to strengthen our schools without compromising our educators’ long-term stability.”

In tandem with SB 1778, Pugh’s SB 1338 would make permanent the HEROES Program, which provides literacy instruction teams who are placed regionally across the state to assist educators in recognizing educational needs to improve literacy outcomes. That bill is eligible to be heard on the Senate floor.

Senate Education Committee Vice Chair Ally Seifried, R-Claremore, wants to establish a three-year pilot program for mathematics instructional teams under the Oklahoma State Department of Education, mirroring the HEROES Program and implementing the Oklahoma Math Achievement and Proficiency Act. Her bill, SB 1360, must be heard in the Senate Appropriations Committee before moving to the chamber floor.

Additionally, Senate leaders want to redirect $29.8 million from the Oklahoma Teachers’ Retirement System to the school funding formula, $4.5 million to increase higher education scholarships for teacher candidates, $2.7 million for individualized reading materials for first graders and $5 million to expand the Dolly Parton Imagination Library program to all Oklahoma counties.

Dolly Parton’s Imagination Library, which bears the name of the country music legend, mails a free book each month to all registered children from birth to age five, at no cost to the child’s family. The national program works with local affiliate organizations to secure funds covering the cost of books and shipping fees. According to the Imagination Library, a donation of $31 provides one child with a year’s worth of books.