House panel advances governor’s pension plan

  • By Becky Bohrer
  • Tuesday, April 15, 2014 11:09pm
  • News

JUNEAU — The House Finance Committee advanced Gov. Sean Parnell’s plan for addressing the state’s pension obligation Tuesday, but the issue was not yet settled.

As HB385 was moving from committee, Senate Finance was meeting on the opposite end of the fifth floor of the Capitol, discussing other possible options.

Senate Finance co-chair Pete Kelly, R-Fairbanks, said he is interested in putting more toward the teachers retirement system than Parnell proposed — perhaps around $2 billion — and looking at ways for the state to preserve its cash reserves. But he stressed it will be a committee decision, and he was not sure what direction the committee would take.

ADVERTISEMENT
0 seconds of 0 secondsVolume 0%
Press shift question mark to access a list of keyboard shortcuts
00:00
00:00
00:00
 

The decision comes down to how much money the state wants to put down, how much it wants to make it annual payments and over what period it wants to spread those payments.

The debate comes at a time of deficit spending for the state amid slumping revenues. While the state has billions of dollars in reserves now, Legislative Finance Division Director David Teal said they could be gone by 2024, largely a function of spending and revenue trends.

Parnell’s plan calls for taking $3 billion from the constitutional budget reserve and putting about $1.9 billion into the public employees’ retirement system and $1.1 billion toward the teachers’ system.

After the infusion, the plan calls for annual $500 million payments over 20 years, with a $131 million payment in 2036, according to information from Parnell’s budget office. The teachers’ retirement share of the $500 million would be about $340 million. The bill leaves open the potential for the need for additional funding, should an actuarial review deem that necessary.

The idea is to ease the pressure on the state budget, relative to the current payment plan the state is on, while also addressing the nearly $12-billion pension obligation. But some lawmakers question how affordable that is in light of other state obligations.

When asked by Kelly if putting about $2 billion toward the teachers’ system and $1.5 billon toward the public employees’ system would get them both to a level at which they’re considered healthy, Teal said that would do so.

Between the two systems, the teachers’ system is in worse shape, Teal said, with a funding ratio that he told Senate Finance is in the “danger zone” in terms of the health of retirement systems. That funding ratio is about 52 percent, according to the state departments of Administration and Revenue. The teachers’ system also is an obligation paid by the state, Teal noted, as compared to the public employees’ system, for which municipalities also pay. The unfunded liability of the teachers’ system is $4.5 billion. Teal said even a $2 billion infusion would boost the funding ratio to over 70 percent, which he said wouldn’t be bad.

The funding ratio for the public employees’ system is about 61 percent.

One issue there are new accounting standards that call for municipalities to report pension liabilities on their balance sheets. Teal said that could make some local governments look “pretty horrible.” But Deputy Administration Commissioner Mike Barnhill said any deposit into the system will reduce the amount of the liability and the amount of pension liabilities allocated to municipal balance sheets, helping local governments.

HB385: http://bit.ly/1kTMS8u

SB220: http://bit.ly/1iHLYuj

More in News

Attorneys Eric Derleth and Dan Strigle speak to Superior Court Judge Kelly Lawson during the opening arguments of State of Alaska v. Nathan Erfurth at the Kenai Courthouse in Kenai, Alaska, on Wednesday, July 16, 2025. (Jake Dye/Peninsula Clarion)
Opening arguments offered in Erfurth trial

The trial is set to continue for around two weeks, into early August.

Evacuees in Seward, Alaska, walk along Adams Street following a tsunami warning on Wednesday, July 16, 2025. (Photo by Jeff Helminiak/Peninsula Clarion)
Update: Tsunami warning downgraded to advisory

An all clear was issued for Kachemak Bay communities at 1:48 p.m. by the Kenai Peninsula Borough Office of Emergency Management.

The Ninilchik River on May 18, 2019, in Ninilchik, Alaska. (Photo by Michael Armstrong/Homer News)
Ninilchik River to remain closed to king salmon fishing

It was an “error in regulation” that would have opened the Ninilchik River to king salmon fishing on Wednesday.

A table used by parties to a case sits empty in Courtroom 4 of the Kenai Courthouse in Kenai, Alaska, on Wednesday, Dec. 11, 2024. (Jake Dye/Peninsula Clarion)
Nikiski woman sentenced to 4 years in prison for 2023 drug death

Lawana Barker was sentenced for her role in the 2023 death of Michael Rodgers.

Alaska State Troopers logo.
Seward resident arrested after Monday night police pursuit

Troopers say she led them on a high-speed chase on Kalifornsky Beach Road for around 7 miles.

Concert-goers listen to The Discopians at Concert on the Lawn on Saturday, July 12, 2025, at Karen Hornaday Park in Homer, Alaska. (Delcenia Cosman/Homer News)
‘Dancing at the end of the world’

KBBI AM 890 hosted their annual Concert on the Lawn Saturday.

Lisa Gabriel unfurls a set beach seine during a test fishery for the gear near Clam Gulch, Alaska, on Wednesday, July 9, 2025. (Jake Dye/Peninsula Clarion)
Seine test fishery continues after board of fish calls for more data

The east side setnet fishery has been entirely closed in recent years to protect Kenai River king salmon

Jason Criss stands for a photo in Soldotna, Alaska, after being named a qualifier for the Special Olympics USA Games on Thursday, July 10, 2025. (Jake Dye/Peninsula Clarion)
Soldotna athlete to compete in 2026 Special Olympics USA Games

Thousands of athletes from across all 50 states will be competing in 16 sports.

Most Read

You're browsing in private mode.
Please sign in or subscribe to continue reading articles in this mode.

Peninsula Clarion relies on subscription revenue to provide local content for our readers.

Subscribe

Already a subscriber? Please sign in