Jan. 12—Incoming majority members in the Alaska House and Senate say that reforming Alaska’s public retirement system is one of their top priorities in the coming legislative session in an effort to address the state’s recruitment and retention crisis, which has made it difficult to hire teachers, law enforcement officers and state workers in most departments.
Senate Majority Leader Cathy Giessel, an Anchorage Republican, said that pension reform and increasing the state’s public education budget were twin priorities that would be considered in the session that is set to begin in Juneau on Jan. 21.
“The pension, of course, connects with the education funding in that if we don’t have qualified teachers in these classrooms, no matter what amount of funding we put in, the effectiveness may not be to the maximum. So those two are kind of joined at the hip,” said Giessel, who proposed one of two plans put forward so far that would reinstate defined benefits for the state’s public sector workers.
In 2006, Alaska lawmakers moved the state’s public retirement system to a defined contribution plan — which offers employees investment accounts but no guaranteed income in retirement — amid concerns over the financial obligations created by the state’s pension plan. Since then, state analyses have shown that the defined contribution plans do not provide most beneficiaries with enough funds to retire securely. The state has also increasingly dealt with staffing shortages as older employees have retired.
“I think the data is pretty overwhelming that we are in a crisis situation,” said Giessel. “It’s more than just Medicaid being delayed or food stamps being delayed. This goes much deeper to fundamental state function.”
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Giessel reintroduced this year a bill she had developed last session. That measure passed the Senate but stalled in the Republican-controlled House. But Giessel said this year incoming Rep.-elect Chuck Kopp, an Anchorage Republican who is expected to serve as majority leader, has agreed to sponsor companion legislation to hers in the House, giving it much higher chances for a speedy consideration.
Giessel’s plan would alleviate some of the state’s financial risk by shifting some of the responsibility for keeping the retirement system funded onto the plan beneficiaries. Some lawmakers remained unconvinced last year about the potential cost for the state, which could come from having more career-long workers who gradually climb the pay-scale, thus costing the state more money in salaries. Giessel said she hoped to present information in the coming session about the potential savings the state would incur by reducing its recruitment efforts and the costs of constantly training new and inexperienced employees.
Sen. Jesse Kiehl, a Juneau Democrat, introduced a competing proposal this year that would shift less financial risk onto workers. He said Friday that he thought his was the “the ideal approach” but that he’s “not under any illusions it will pass,” so planned to support Giessel’s bill, while still putting his back on the legislative docket.
Proponents of the change are hopeful that a return to defined benefits could be viewed favorably by both chambers in the coming session. But it would still require Gov. Mike Dunleavy’s signature. The Republican governor, who himself receives a state pension earned from his time as a public school teacher, has shown limited interest in expanding the state’s public retirement options.
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