To address the ongoing staffing shortfall at state agencies, the Alaska Senate on Wednesday adopted legislation to resurrect the state employee pension scheme. This move may benefit up to 37,000 additional Alaskans.
Since 2006, when it was eliminated by the Alaska Legislature in favor of a 401(k)-like program with guaranteed benefits, Alaska has been operating without a public employee pension program for newly hired employees.
More research has revealed that new hires are now far less likely than existing employees to stay in the state and often contribute less to their retirement than those who receive pensions. The majority of Alaskan educators have additional challenges as they are not qualified for Social Security or the supplemental program that is meant to reimburse its benefits.
The pension legislation, officially known as Senate Bill 88, was passed on Wednesday, and proponents saw it as a major step in the right direction to address those issues.
This must be fixed. The main sponsor of the measure, Senate Majority Leader Cathy Giessel, R-Anchorage, stated, “We need to restore efficiency to state government by minimizing the frequent turnover of personnel.”
It was a 12–5 Senate vote. The Republican senators from Palmer, James Kaufman from Anchorage, Robert Myers from North Pole, Bert Stedman from Sitka, and David Wilson from Wasilla cast “no” votes. Voting was excused for Senators Click Bishop, a Republican from Fairbanks, Mike Shower, a Republican from Wasilla, and Matt Claman, a Democrat from Anchorage.
Representatives from public employee unions shook hands with Giessel outside the Senate chambers following the decision.
According to Dominic Lozano, president of the Alaska Professional Fire Fighters Union, “I think it’s nice to see that the building, the entire building, recognizes that Alaska has a problem.” Alaska faces a crisis in terms of public safety. A retention issue exists in Alaska. The whole building understands that Alaska has an issue that needs to be resolved right now, even though there may be differences in opinion on how to solve it.
The pension bill is unlikely to become law even after the Senate took its move.
Since it was presented last year, a comparable House bill has not been heard, and many members of the Alaska House of Representatives are dubious about the concept. Despite the governor’s statement from the previous year that “everything and everything should be explored to have an advantage in recruiting and retaining new employees,” legislators assert that they think Gov. Mike Dunleavy is also cautious.
Giessel said she’s optimistic but remained unsure if she thought the House would even hold a hearing on the bill. “We’ll see.” Without a doubt, I’ll work to get it. Also pushing will be the stakeholders, according to her.
A new pension fund and tier would be established for teachers and state employees if SB 88 were to become law. Program enrollment would be mandatory for new hires, with transitions permitted for current staff members.
In addition to retiring at age 60 or after thirty years of service, regular employees would be required to contribute eight to twelve percent of their income. After 25 years of service, public safety personnel may retire at age 50, or after 20 years at age 55.
To keep the new pension fund sustainable if it earns less than is required to provide benefits, the Alaska Retirement Management Board would decide the yearly contribution rate. It would also have the authority to modify the state’s contribution and decrease pensioners’ annual inflation-adjustment payments.
A degree of doubt has been expressed over the pension resurrection because the state’s present pension fund has billions more in obligations than assets due to earlier miscalculations.
The Senate Finance Committee’s co-chair, Stedman, voted against the bill on Wednesday but in favor of eliminating the state’s previous pension scheme in 2005.
In his address on Wednesday, he expressed skepticism on cost projections suggesting that the new pension plan will initially be less expensive than the state’s current retirement scheme. He stated, “There’s a worry that we’ll inadvertently create another unfunded liability.”
Myers and Hughes were among the other Republicans who claimed to share similar worries. Although not for all state employees, Hughes stated she would back a pension plan for those working in public safety.
Being a legislative aide and later a senator, Sen. Jesse Kiehl, D-Juneau, has been in favor of the resuscitation of a pension scheme for almost 20 years.
If the state brings back its pension plan, there is some danger, he admitted, but not as much as the state is currently facing.
To reopen the pension system, he stated, “We have a much, much safer program in front of us.” The state, according to Giessel, lacks the manpower to maintain snow-free streets and allow building projects.
Dunleavy emphasized the lack of building cranes in Anchorage during his Tuesday night State of the State speech, claiming that this is a sign of a struggling economy.
Construction cranes need permissions, Giessel stated, noting his remark on Wednesday. According to her, the state needs workers if it hopes to have a robust economy.