Cost of government: Revak rolls Senate committee leadership to get lavish state pension plan reinstated

29
833

It’s not enough that Alaska has the highest unfunded pension liability in the United States, per capita. A Republican running for Congress now wants to add more debt to Alaskans.

Alaska State Sen. Josh Revak led the charge on Wednesday get a bill out of the Senate Labor and Commerce Committee. HB 55 would give a costly defined benefits package to first responders. It’s the first step to getting defined pensions back for all State employees.

At a time when the Legislature cannot see its way to pay Alaska Permanent Fund dividends still owed to Alaskans, it may force this bill to the governor’s desk during his re-election year.

On behalf of Democrats in the House and Senate, Revak unexpectedly filed a “Rule 48” memo to force the bill into the final committee of referral, the Finance Committee. This is a last-resort measure, but for Revak, it’s a first resort.

Labor and Commerce Committee Chair Mia Costello has scheduled a hearing for Saturday on the bill but is unclear if the signatories in the Rule 48 memo are available for the committee hearing.

Most in the Capitol believe Revak’s action is a play is to get the public safety union endorsement for his anemic congressional campaign. Revak filed for Congress after Congressman Don Young died.

The Alaska Policy Forum and Americans For Prosperity both oppose HB 55, saying there are ways to create defined benefit plans that are fiscally neutral, but this is not the way.

Across the country, state pension plans are bankrupting governments. There have been repeated efforts in Congress to allow governments to declare bankruptcy in order to reneg on the pension benefits that are promised to state workers.

In Alaska, the now-defunct pension plan has $5.4 billion to $31 billion in unfunded liabilities as of 2020, depending on how the sources determine assumptions. On a per-capita basis, it’s the highest unfunded liability pension in the nation, according to ALEC, the American Legislative Exchange Council. Pew Research shows Alaska is 67 percent unfunded in its existing pension debt.

Those favoring HB 55 say that a pension for first responders will help with worker retention.

Those opposing the bill say it will bring with it huge financial risk for the state, that it has not gone through rigorous stress testing, and that it will add to unfunded liabilities that the state may not be able to pay to future first responders, especially as no new oil is coming online in Alaska, and Alaska is increasingly relying on the Permanent Fund to pay for government.

Other critics of the bill point out that 86 percent of police stations around the country face retention issues and yet most of them are in a traditional pension systems, like the one Revak is pushing to restart in Alaska.

When Alaska had a pension plan for public employees, the state’s debt skyrocketed, from $1 billion to $4.5 billion in a two-year period between 2007 and 2009. Alaska has moved to a 401K program to be more fiscally responsible, but the state is still saddled with paying off the old pension plan obligations.

Sponsors of HB 55 are Democrat caucus members Reps. Andy Josephson, Chris Tuck, Adam Wool, Matt Claman, Zack Fields, Liz Snyder, Bryce Edgmon, Ivy Spohnholz, Andi Story, Harriet Drummond, Daniel Ortiz, Cal Schrage, and Republicans Sara Rasmussen and Kelly Merrick.

In the Senate, the sponsors of the bill are all Democrats: Tom Begich, Elvi Gray-Jackson, and Bill Wielechowski.

For political reasons involving union endorsements, Sen. Revak has joined the Democrats to lead the effort and move the bill to a vote.

five-year cost analysis report by consultant actuary Buck Global on behalf of the Legislature raised serious concerns: “Adverse plan experience (due to poor asset returns and/or unexpected growth in liabilities) or changes to more conservative assumptions will increase the plan’s unfunded liabilities, which results in higher Additional State Contributions.”

It also said that the impact of HB 55 on projected Additional State Contributions “depends on how large the unfunded liabilities become. If the Actuarially Determined Contribution rate for HB 55 members’ pension and healthcare benefits exceeds 9%, then HB 55 will lead to larger increases in Additional State Contributions compared to what would have happened without HB 55…By shifting active P/F members (and all future P/F hires) from DCR to DB, the State will be taking on greater risk of higher contributions in future years.”

The Buck Global report warns that analysis that HB 55 would commit Alaska to unpredictable long-term costs in the future.

29 COMMENTS

    • Revak – another true conservative, right?
      More good ol boy BS by the RINO’S – aligning with the democrats.
      Don’t worry though, I’m sure RINO Begich will be a real conservative. And don’t forget 20 year SwampCreature Tabitha – she’ll be a real conservative also…

      • I’ve spent several hours interviewing Nick Begich III both with and audience and face to face. By all counts, he is no RINO. He is deeply conservative, articulate, well-informed and honest. He has been campaigning for months with many endorsements that agree with me. I challenge you to provide even one example of him pandering to the left.

      • I’ve spent several hours interviewing Nick Begich III both with an audience and face to face. By all counts, he is no RINO. He is deeply conservative, articulate, well-informed and honest. He has been campaigning for months with many endorsements that agree with me. I challenge you to provide even one example of him pandering to the left.

  1. Boo, Revak! Not very conservative of him and pandering to the unions already when it’s clear he stands no chance of making it to the swamp without first bribing government employees with an expanded pension the state isn’t even funding. If you vote for this guy you’re ensuring there will be NOTHING in your pension! People should do like the Bible says and be content with your pay or get a different job that pays more! Luke 3:14 We love our first responders. My husband was a firefighter/EMT in the Air Force and a Firefighter/paramedic as a civilian, but he left it for many reasons, one being because they were being pressured to pay dues to the union, which was less $ they could put in retirement, and the leftist politics the union pushed them to support and vote for meant future economic downfall and less, if any, $ in retirement. The left is acting like terrorists. They promise less crime, less violence, less “wild” fires, less natural disasters, if only we’ll vote Democrat and let them take more of our $ in taxes and inflation, but we instead get more terrorism from the left, and they say it’s because we won’t give them enough tax $ and support. This is terrorism. We wouldn’t need to bribe first responders so much to stay in their jobs if we still had people there that really loved their jobs and helping people. The left got rid of those patriots through mask and vaccine mandates, bully unions, increased crime, their politics, and threats against their lives and families. If there are still patriots in these departments, they don’t want this political pork! They’ll pocket it, and then vote for the conservatives that didn’t pander to the unions and give the workers what they never even asked for.

  2. Revak’s promotion of HB 55 changing certain state public employee retirement plans to defined benefit plans in my opinion renders him unfit for any public office.

    Nationally, we are witnessing the melt down of public pensions in most of the blue states, the catalyst for which are gold plated, defined benefit plans. Alaska is not far behind and by some measures, namely unfunded liabilities per capita, we are the worst in the nation. Do you really want Alaska to become the next CT, KY, or IL?

    Defined benefit plans are especially vulnerable to political abuse because politicians have all sorts of ways to understate the current costs of such plans as well as the magnitude of the longer term unfunded liabilities. All you have to do is hire some compliant consultant to overestimate the expected future investment returns of the plan and/or allow the plan’s trustees to take more risk in the investment portfolio, risk that is born by the public, not the plan’s beneficiaries. Politicians like him have the benefit of knowing that the plan will not blow up immediately and he will out of Dodge when it does. Public employees don’t care because they are the exclusive beneficiaries of the scheme. They have absolutely no skin in the game.

    As Frederic Bastiat observed, “all debt must be repaid, if not by the borrower, then by the lender.” So, in the near future when the some states can no longer meet their statutory pension obligations, not to mention skyrocketing costs of Medicaid and similar entitlement promises, in addition to the current costs of building roads, paying for schools and public safety and the like, who must take the hit? We know the answer, it’s the public and the taxpayers. Ask anyone living in Chicago today.

    For years, politicians all across the country have deliberately understated the true cost of the generous pensions they gave to their numerous public employee supporters and hid the real cost from the scrutiny of taxpayers through fraudulent accounting.

    The free lunch is over for politicians like Revak sticking us with the bill we are handed for buying the political support of public employees.

  3. REVAK
    Is a confirmed LIAR.
    He signed a pledge to support a full statutory PFD snd then did just the opposite.

  4. Revak just showed his leftist demokrat colors: like Begich, trying to buy an election through government union votes using constituents’ money. He claims he reneged on his full PFD pledge because there wasn’t enough money to fund government, but, miraculously, there’s enough for this & the can of worms he’s opening up.

  5. While I oppose re-instating a defined benefit program the graphic shown is incorrect. Wisconsin’s pension trust is 100% funded and there are no taxpayer liabilities other than the yearly match by the State which currently has a budget surplus.

  6. Returning to defined benefit is a terrible idea! The one move during the past quarter century in Alaska state government that was reasonably sound was phasing out defined benefit to replace it with a private sector type of retirement system. That phase-out of defined benefit showed fiscal common sense, and therefore it was alone in an otherwise flagrantly unsound era of state and municipal government spending. Taking on huge and uncertain long-term liabilities at a time when oil happens to be over $100 per barrel would burden our children and grandchildren for two generations, long after TAPS has been dismantled. As it is the last existing PERS and TRS defined benefit beneficiary will collect monthly payments and health care until 2070 even though new entrants were eliminated on July 1, 2006! Revak cannot possibly be fluent in fiscal and actuarial metrics; all he knows is what might help him win enough votes to be the Don Young replacement. Clearly Suzanne Downing understands this and we should all be grateful for her objective and informed analysis. If defined contribution is good enough for the Alaska private sector it is appropriate for the Alaska public sector. Email your legislators as union money is putting pressure on them in Juneau every day!

  7. HB55 is an extremely conservative defined benefit. It is modeled after Washington’s public safety defined benefit which is over 100% funded and requires more employee contributions to make up the shortfall in the unlikely event it goes underfunded. Its far less expensive than rehiring and retraining first responders at $200K plus just to lose them to Outside where they move for a pension. At least check a fact or two.

    • Doesn’t matter how conservative it is. It increases pensions for one group of unionized public employees at a time all state pension obligations in Alaska are underfunded. As such, it violates the Rule of Holes: When you find yourself in one, quit digging. Cheers –

  8. For those who are against public safety officers earning a defined benefit retirement, what do you propose? The current system is not working. Alaska DOC is offering a 10 K sign on bonus for corrections officers and other parts of DOC are offering probation officers a sign on bonus also. State Troopers are difficult to recruit and retain. APD used to be a difficult department to get hired on, but now they are always recruiting. All of the money spent for bonuses, recruiting, and retention costs a lot to maintain. The retirement plan is one part of the problem, the lack of support nationwide, dealing with scum of the earth day in and out, and other political crap. Yes, those who choose to enter that line of work choose it, or it chooses them. The job risks are real and there has to be an answer to see that those who deal with the criminal class are justly compensated.

  9. This pension plan is for law enforcement officers who’ve earned it.

    At least the far liberal left is honest about their disdain for Law Enforcement. You flag waving conservatives say you “back the blue” and then blast the one republican who decided to put his money where his mouth is…and actually back the blue by supporting a return to pensions.

    • Back the blue, oh wait that means funding the police? breaking …. must read now calling for defunding the police and fire turns out the dems had it right! /S

  10. Frédéric Bastiat also said “Waste is Waste.” I wasted one vote on Josh Revak after he lied to my face in my driveway about defending the Permanent Fund Dividend. I won’t waste it again.

  11. I’ve been here for a while. I remember before the fancy public pensions. I remember why we got them. It was because private industry was booming and everybody was getting recruited into the private sector and we wanted people to want to work, for us, in the public sector. Now we have a different scenario. We had elections resulting in anti American government policies like no oil wealth allowed. (First it was: “Let’s make private wealth impossible”; now it is “Let’s deny any possible wealth” is the Democrat mantra). The problem now is overgrown government and excessive public sector jobs. Public policy should be now to do some pruning.

  12. I will just add this…I’m a first responder/law enforcement. Alaska has a huge retention problem. It’s not because of poor working conditions or defund the police movements. We have a 5 and out program here. Alaska hires first responder/law enforcement officers brand new. There is a labor intensive hiring process, they are trained, sent to academies, retrained, receive certifications, etc. All this time their Pers IV grows and grows. At 5 years they are fully vested, can resign, and take the full amount with them. We have now lost a fully trained. seasoned officer. The process starts over. We have lost hundreds of officers over the years, what does this cost?

  13. Put his own money behind it. If there is a shortfall let him and those who vote for it cover the differences.

  14. Public safety employees in Alaska don’t pay into social security and therefore won’t be able to collect guaranteed monthly income in retirement. That’s why I left and went to work in another state – I wasn’t about to run out of 401k money in my 60s or 70s and be completely broke.

    HB55 has been designed to avoid the issues of the last pension system and save the state money. The savings in recruitment and training costs will save the state money and result in better service to the public as more experienced employees stay past the 5 year mark. As much as people love to rag on social security, it’s a daunting feeling when you aren’t covered by it and have a very real chance of being completely broke in retirement if you live too long.

    Again this would be a different story if we were covered by SS like the rest of America, but they chose to opt out of it decades ago and to my knowledge there is no going back on that decision. I consider myself a conservative but sometimes common sense warrants exceptions to the standard party philosophy. This is one of those cases because a rotating door of employees who leave after their 5 year 401k vestment is not working for Alaska.

  15. Josh Revak is a scum bag. He is a shifty politician promoting an agenda that benefits himself. He is a cheater and a liar. Shame on him. This latest move of Revak will cost all of us and make our PFD smaller.

  16. Great, well researched article Suzanne. I will not be voting for Revak. The last time I checked Alaska’s long term pension obligations exceeded $70 billion dollars. That is what we have to pay for the old, defined benefit system(s) until the last person dies in 70 years or so.

    These system were/are a fiscal disaster for Alaska.

    • The unfunded liability for paying pension dollars towards PERS and TERS retirees will still needt to be paid by the State. If and when it goes to court regarding payment or lack thereof being claimed by the State, the judge may look at the State and say: pay the unfunded liability out of the Permanent Fund. You have billions of dollars there.

Comments are closed.