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House panel advances governor's pension plan

Posted: April 15, 2014 - 10:09pm

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.

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

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KenaiKardinal88
385
Points
KenaiKardinal88 04/16/14 - 01:37 pm
2
3
Unions Stealing From Permanent Fund

Democrats gave the Unions everything - now Alaska's wealth is at risk.

Detroit looks like an atomic bomb hit it - someday Alaska will look the same, for the same reason - unrestrained Union greed.

Raoulduke
2669
Points
Raoulduke 04/16/14 - 07:19 pm
3
2
Unions

KK 88- If it were not for the unions .You would be making $3 an hour,and the term middle class.Would never have existed.The unions literally had to fight for fair labor practice.Retirement plans,health insurance,a 40 hour work week never would have seen the light of day without the unions.Do some unbias research into this fact.Which hopefully might open your eyes to a panoramic view.Instead of a narrow,blinder wearing one.True!The financial state of Alaska is at risk.Remember the Republicans have been in control of every aspect of government in this state for decades.You should be blaming them,and not Unions.

Suss
3097
Points
Suss 04/16/14 - 07:19 pm
3
0
Alaskan History 101

All of the Alaskan retirement programs were written into law by Republican led legislatures and signed into law by Republican governors.

There are retirees that were there for the vote, stop by your local senior center and get acquainted with living history sources.

cheapersmokes
778
Points
cheapersmokes 04/17/14 - 02:09 am
3
2
So they made a mistake!

So the Republicans made one single mistake in granting the unions pension benefits. The unions had their place but what have they done lately except take a nice portion of your pay check each month to feather their own nests.

KenaiKardinal88
385
Points
KenaiKardinal88 04/17/14 - 02:33 pm
2
3
Proud Union Member

You haters of fiscally responsble Alaskans have it all wrong.

I'm a union member, I have the baseball cap that says, "I Built the Trans-Alaskan Pipeline" Only the old folks know what I'm talking about.

Private unions are not the problem, greedy Democrats and greedy government employees are.

Raoulduke
2669
Points
Raoulduke 04/17/14 - 07:39 pm
2
1
Union member

KK88-Was the union. I built the pipeline union,or the Teamsters,United steel workers union? What was the name of the union? The old timers are the only ones that know? First it's the financial state of Alaska is at risk.Then it is fiscally responsible.Remember! The MAJORITY REPUBLICANS have CONTROLLED every aspect of this state for decades from finance to education to commerce.So! why are you blaming the MINORITY Democrats for the problems of Alaska? Trying to make any sense from you is like trying to make sense with a drunk. It can not be done.

cheapersmokes
778
Points
cheapersmokes 04/21/14 - 12:43 am
0
1
Unions

Let's face facts here for one minute. The pension plans for government and school teachers are way too generous. Union employees, business agents and other officers enjoy fantastic pay and benefits also. I was a member of Teamsters for a Democratic Union (TDU) at the time when they agreed to hold free and open elections so the officers could avoid prison time. The Teamsters union had something like 1,300 people who were making over $600,000 a year from union dues then. They were getting paid for numerous positions at the same time. They sure didn't like it when our whole slate of candidates kicked their butts and put them all out of office! Unions only exist to feather their own nests now.

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