By LUCAS SMITH
At Saturday’s Alaska Senate District E constituent meeting, attended by Senator Cathy Giessel (District E), Rep. Chuck Kopp (District 10), and Rep. Ky Holland (District 9), legislators were questioned about a pension plan some intend to resurrect for State employees.
It wasn’t that long ago that the legislature took action to address a funding shortfall for the prior state pension plan, which was unsustainable. The Legislature ended the defined-benefits pension program and replaced it with a 401(k) retirement plan.
This year, the Legislature struggles to identify revenue to fund basic state programs like education.
Sen. Giessel’s recent public position on natural resource development is that Alaska is not a “colony to be pillaged.”
This suggests Sen. Giessel may not support even a modest expansion of natural resource development. But, even if she did, certainly the democratic colleagues of her caucus wouldn’t support such expansion.
At the meeting, Giessel was asked, “What is the simple funding solution to the obvious issues with reinstating a pension plan for the public employees of Alaska?”
Giessel first addressed her position about Alaska not being a place to plunder. She clarified that she envisions Alaska taking over the role of ensuring adequate regulation and controls exist to protect air and water quality. Presumably, this effort would require enabling legislation, a new state agency or expansion of existing agencies, new regulations, enforcement rules, and compliance mechanisms.
Giessel did not provide specific details about her vision for expanding environmental controls over Alaska’s resource development industry. Giessel did, however, express concern over Alaska’s history of experiences with entities plundering Alaska’s resources citing examples like the Klondike gold rush era and the fishing industry’s past practices prior to statehood.
Giessel attributed problems with Alaska’s prior pension plan to a math error committed by an actuary. Her proposed pension plan, she claims, is fully endorsed as a practically fail-safe plan following a review by current state-employed actuaries – barring extraordinary circumstances, of course.
Furthermore, two additional actuaries have reviewed and provided similar endorsements. One of these two additional reviewers is rumored to be a former state-employed actuary himself.
Some have placed the price tag on Giessel’s new pension proposal at over $9B. Senator Giessel believes her plan is a bargain claiming an annual cost of only $45M to $50M and a net savings to taxpayers after accounting for attrition and the associated administrative cost to handle personnel related expenses.
An indicated feature of the new pension plan is that contributions may depend in part on market performance, which helps reduce the possibility that the state could face future pension funding issues.
Questioned later in the constituent meeting about dealing with the Alaska Department of Transportation and Public Facilities, Giessel accused the DOT&PF of being impossible to work with, and said the only way to deal with them is to cut their budget, which she says is exactly what the Senate Finance Committee has done.
Giessel says she had identified an additional $4M reduction, but that reduction had been sidelined.
Cutting the DOT&PF budget, of course, would only make it more challenging to access Alaska’s vast resources necessary to generate new revenue and fund things like a new state employee pension program. It should be noted here that Giessel’s husband is a longtime DOT&PF employee.
There was also a suggestion that the proposed pension plan is cheaper than the current defined contribution plan. If this is true, State employees might question whether Giessel’s plan is truly an increase in benefits to state employees, or a bait and switch. We may never truly discover this, given Giessel’s propensity to disguise herself as both a Republican and a progressive Democrat.
Meeting handouts highlighted how 40.7% of state revenue is from the federal government, 37.3% of state revenue is from Investment earnings, with only 13.8% coming from petroleum. Still, a handful of constituents cheered the idea of increasing and creating new state taxes. Senator Giessel presented her plan to generate new revenue by taxing S-Corporations while painting the majority owner of Hilcorp as an aristocratic polo-club lounger.
If it is true that you get more of what you subsidize and less of what you tax, the writing is on the wall. We can clearly see where Giessel’s plans will lead us.
Lucas Smith is a resident of South Anchorage.
When it comes to pensions — there’s a reason they don’t exist in the private sector anymore.
Pensions attract the wrong people. The people that become deadwood. Pensions encourages people who have low-productivity and low concern for the mission to hang on and stay in a job they hate.
In my 20 years of public service, the best employees were not there of the pay and benefits— but the worst ones were.
I could barely suffer 7 years of public employment. You’re a better man than I.
I was fortunate to be hired away by a contractor who saw my potential. 35 years and 2 private employers later, I may not be as secure, but I am more fulfilled.
The best employees were not there for the pay and benefits? Why were they there? Why were you there? Why was anyone there? If not there for the pay and benefits, I believe we’d would call them volunteers. Are you on a pension? Do you have any intent to surrender it?
“Giessel attributed problems with Alaska’s prior pension plan to a math error committed by an actuary. Her proposed pension plan, she claims, is fully endorsed as a practically fail-safe plan following a review by current state-employed actuaries – barring extraordinary circumstances, of course.”
That’s not what AI says.
“In fiscal year 2006 (July 1, 2005, to June 30, 2006), the state faced significant financial pressure from these pension systems. The decision to switch new hires to defined contribution (DC) plans was driven by a growing unfunded liability, which had reached approximately $5.7 billion for PERS and TRS combined by 2005, according to actuarial valuations from that period. This liability reflected the gap between promised benefits and the assets available to pay them, a problem compounded by overly optimistic investment assumptions, rising healthcare costs, and longer lifespans.
“For a more concrete sense of costs, we can look at pension payments and contributions. In FY 2006, the state and participating employers were making contributions to fund ongoing benefits and reduce this liability. Employer contribution rates had spiked significantly: by 2005, PERS employers were required to contribute around 20-25% of payroll (up from 6.75% in earlier years), and TRS rates had climbed to over 30%, reflecting the urgency to address underfunding. With a covered payroll for PERS and TRS likely in the range of $1.5 to $2 billion (based on membership of over 30,000 active employees and typical state salaries), employer contributions alone could have totaled $300 million to $600 million annually by 2006. Employee contributions, typically 6.75% for PERS and 8.65% for TRS, added another $100 million to $150 million.”
Who can afford 25-30% contributions?
A defined benefit pension plan such as Giessel and Kopp advocate are only economically viable when there are more contributors than beneficiaries. When the plan has more beneficiaries then contributors the plan is no longer economically viable. That is that situation incurred by PERS and why the plan was closed to new participants in 2006. It was that realization that caused every private sector defined benefit to cease operation beginning in the 1990s. It is worthwhile to note that not a single new defined benefit plan since then was started. The most insidious damage to defined benefit plans in the public sector (ie, government) is that they are subject to collective bargaining. Any new pension plan adopted by the state will suffer from that fact.
Isn’t this how Ponzi Schemes collapse; when there are more “beneficiaries” than dupes, err, contributors?
How did Giessel go so woke? Or has she just been fooling everyone?
Dread desire for keeping and maintaining power over others.
In whatever comes next we would do well to figure a way to keep power from those like Giessel (and other sociopaths) and encourage those of us to serve when we would rather not b/c politics is a dirty business.
Can’t tell if Giessel’s contorted facial expression is out of hate and vile, or if she is experiencing severe intestinal gas.
Trying to let the big one out before the end of Session.
The Heimlich Maneuver might work.
I’d love to see a list of people saying they turned down a State job because the current benefits just don’t meet their needs. The reality is that State employees have it better, in salary, time off and benefits, than the vast majority of private employees. Let’s get a list of the CRITICALLY important State jobs that aren’t currently filled and advertise the current total employment package. Let the public see it loud and proud. Then we can talk.
Gershon, you have to know the facts and care to use AI.
The case involving the Alaska Attorney General Dan Sullivan and the actuary Mercer is a significant one, focusing on allegations of financial malfeasance related to the state’s pension funds. Here’s a summary of the key points:
The Lawsuit:
The Alaska Retirement Management Board (ARM Board) filed a lawsuit against Mercer, alleging professional malpractice, breach of contract, and unfair trade practices.
The lawsuit centered on claims that Mercer’s actuarial work contributed to significant unfunded liabilities in the state’s pension systems.
The ARM Board sought substantial damages, initially in the billions of dollars.
The Settlement:
Attorney General Dan Sullivan played a key role in negotiating a settlement with Mercer.
The settlement resulted in Mercer agreeing to pay $500 million to resolve the claims.
After deducting court costs and legal fees, the state’s public pension systems received approximately $403 million.
What Cathy said: “Shut up you stupid plebes! I got elected, and don’t really care what the taxpayers think it want. The people funding me want pensions!”
Following Giessel’s reasoning that because the DOT&PF is impossible to work with, and that the only way to deal with them is to cut their budget…shouldn’t we be cutting virtually every single departments budget? Perhaps Governor Dunleavy will follow her advice and cut whatever budget the legislature ends up sending his way.
We’re not a colony to be pillaged is funny considering her tax and spend approach to everything.
Only she and her cronies get to pillage Alaska
Its not Alaska they intend on plundering, its the People that they plan on plundering!!
How do we keep getting fiscally irresponsible people elected into office? I hate say it, but Alaska voters don’t show up to vote and when they do, they are uninformed tools for the left.
Same reason( we keep getting people who challenge everything else government officials say, but put childlike faith in what officials say about voter turnout or election results, yes?
Lucas, I asked about protecting the PFD. Only Ky Holland addressed it and acknowledged why it’s important to folks. This teacher and mom walked away from the meeting with a feeling that those legislators saw their roles in government as being fairy godmothers for social and retirement services.
While I appreciate these good intentions, I (and I’d argue the founders of our State Constitution) know that government is pretty lousy at those things. They are only halfway decent if it is also talented at money management and have mostly responsible citizens (ex: Norway.)
Our state founders gave government a chunk of funds to manage for the public good (And they haven’t proven responsible with those, right? They are drained?). And because they knew there was a good chance of government failing at managing that responsiblity, they gave Alaska’s residents each individually a share of funds (also because private citizens didn’t get much of a chance at mineral rights).
The Fairy godmother’s gifts only last for a night. Cinderella can save herself for long term by taking personal responsiblity for what is entrusted to her. I hope some our representatives will act more like her.
We’re not a colony to be plundered, says Geissel? Where is her outrage over the Seattle based corporate factory trawl fleet that is plundering the Gulf of Alaska & Bering Sea while sending their profits Outside. Profits that come at the expense of all Alaskans who are seeing their salmon, halibut, blackcod & crab stocks severely impacted because of the bycatch problems this dirty & unsustainable fishery produces. Rivers throughout Alaska have been closed to King salmon sport & subsistence fishing, yet the factory trawl fleet is given bycatch exemptions for tens of thousands of King salmon! Geissel, Stutes & Gary Stevens outrage is as phony as a three dollar bill!
Thanks for attending and for your summary, Lucas.
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Takeaway is that The Giessel’s agenda was her warning folks she’s on a mission to Get Money and anybody who whines about PFD’s may be considered “impossible to work with” and just like with the Dotpuffs, the Senate Finance Committe might “cut their budget” too.
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(Alaska Department of Transportation and Public facilities, DOT&PF… Dotpuffs …our new BFF’s ’cause The Giessel hates ’em)
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Forget The Giessel’s entourage, she’s the organ grinder, those monkeys dance to her music. Point is, The Giessel, rather like Nancy Pelosi but without the charm, is Alaska’s only Pillager in Chief and we better accept it or the Senate Finance Committee might cut our budgets.
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Back to you, Lucas, did the show look to you like the tip of a problem we can’t fix without professional help? Maybe an Operation Greylord, Alaska style?
Looks like she could use a little more fiber in her diet.
LOL …..
More fiber = bigger Dividend.
FYI- If you work for the government and you aren’t a soldier, cop or fireman you are not a “public servant”, you are an employee. You are merely doing the job you are paid for, nothing more grand than that. This includes the state of AK legislators.
Thief, and now she shows herself as either pathetically stupid or simply a liar.
Thanks South Anchorage, you actually voted her into office, pathetic as it is, you own it. Embarrassed for you.
All we know about what voters voted for is what we’re told.
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Challenge officials about everything else, but accept with childlike faith what they say about election turnouts?
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Nobody’s that gullible …are they?
Leave them in the Senate long enough and all eventually become duplicitous old cranks. Geissel being the model the bulk follow. Is it true that she’s proposing a revised retirement program for the system her husband would directly benefit from? That would seem a huge conflict of interest albeit no worse than proposing and voting for your own pay raise though so normal for a politician.