Public employee pension bill leaves Senate Finance, lacks adequate fiscal note, which won’t be ready for a month

Ken Alper, left, aide to Sen. Donny Olson, explains to Senate Finance why there is no up-to-date actuarial fiscal note on a bill that would cost the state possibly billions of dollars in the future.

Once the go-to-gal for the GOP, Sen. Cathy Giessel of South Anchorage was the darling of the Democrats on Wednesday afternoon.

She was the star of a reception with AFL-CIO Alaska President Joelle Hall, celebrating the movement of Giessel’s bill, SB 88, out of Senate Finance, which means it will get a floor early this session. Unions have flooded the Alaska Capitol this week to make sure it does keep moving.

Giessel is now the AFL-CIO’s water-carrier, at least in the Senate.

Sen. Cathy Giessel, left, is hugged by AFL-CIO President Joelle Hall for managing to get SB 88, defined pension plan for state employees, out of Finance Committee without adequate fiscal notes.

SB 88 is written for state and local public employees: “An Act relating to the Public Employees’ Retirement System of Alaska and the teachers’ retirement system; providing certain employees an opportunity to choose between the defined benefit and defined contribution plans of the Public Employees’ Retirement System of Alaska and the teachers’ retirement system; and providing for an effective date.”

While existing public employees would have the option of choosing between defined benefits (old-style pensions) and 401K contribution plans, anyone new coming into the Alaska State and teachers employment systems will go into the back-from-the-dead defined benefit program.

It would almost certainly put Alaska in the red and hurt its bonding capacity. Alaska is the only state considering going back to pensions, while other states are sunsetting them. The Alaska defined benefits plan was closed to new entrants in 2006, just before it collapsed under its own weight. States that have these public employee pension plans are going bankrupt. 

Sen. Burt Stedman pointed out in the committee hearing that the fiscal notes are inadequate.

“I’m just struggling here trying to figure out, because we’ve got dueling actuaries, and we’ve got these fiscal notes. What do we use for thes fiscal note? We should be able to — we’re dealing with 100,000 people, I think — we should be able to put a hopefully a finer point on it. I don’t know what documents to rely on,” he said.

There was dead silence for several seconds. Stedman was the senator who helped get rid of the old defined benefits program and he is co-chair of the Finance Committee, along with Sen. Click Bishop, who favors reviving defined benefits from its grave.

Olson, who was chairing the meeting, bought up to the witness stand his aide, Ken Alper, who has been trying to get an income tax passed on Alaskans and now is endeavoring to reinstate the costly defined benefit plan that would drive up the state’s retirement costs. He gave a lengthy soliloquy but did not answer the question of why the fiscal note was not ready.

Alper said there is a regular agency fiscal note, but that the fiscal notes attached to the actuary are dated May, 2023 and written for the Senate Labor & Commerce Committee’s version of the bill. He said it will be updated, but not until the Finance Committee votes the bill out of committee.

“Because of the nature of the analysis, it’s expected to take over a month,” he said. The sponsors had all summer to update it, but neglected to do so, evidently.

With 11 sponsors who are in the Senate Democrat-dominated majority, the bill will have passed the Senate and be in the House for consideration before the actuary fiscal note is ready.

The 11 cosponsors on the bill are: 

Democrats: Senators Jesse Kiehl, Scott Kawasaki, Loki Tobin, Bll Wielechowski, Elvi Gray-Jackson, Forrest Dunbar, Matt Claman, Donny Olson

Republicans: Senators Cathy Giessel, Click Bishop, Gary Stevens

Audio is available for the Wednesday Senate Finance Committee deliberation and vote at this link.

Video of the hearing can be found at this link.


    • Let me give a go as a realist! None of this is out of the ordinary for these kind of people. If you had higher expectations, Avenger, that in itself speaks to your naiveness!

      • I have lower expectations, not higher.

        But it amuses me to watch the AK GOP cheerleaders attempt to defend the indefensible.

        Reminds me of the Kevin Bacon character in Animal House screaming “all is well” while Faber riots.

  1. Ask yourself why these powerful and cash rich unions don’t just create their own self financed defined benefit pension program completely independent of the state? Maybe even financed by employee & employing government co-pays. It’s because it’s too expensive in the long run and way too risky being responsible for coming up with that money every month no matter how their investments are doing.

    So instead, they want the people of the state of Alaska to be the underwriters of this plan via their PFD’s, income taxes & even increases in local sales and property taxes. Remember, local employing municipalities must make continuing payments to support this system too. That means local taxation of people who do not have defined benefit pensions & who likely do not make as much compensation & benefits as public employees, to keep a constitutionally mandated (once enacted) program afloat. This is exceptionally expensive.

  2. Honestly the state would probably be better off keeping the defined contribution plan and put its employees in Social Security. Social Security + 401k’s work good enough for the private sector. Then the state won’t have the liability associated with a pension, but it’ll still be competitive with private sector retirements.

    • Social Security is living on borrowed time. We’re already being groomed to accept a reduced benefit in as little as 10 years from now. Why would anyone want to work for the state when their future retirement would be even more in jeopardy?

  3. Young people are leaving Alaska because the cost of living is so high and there is more opportunity in the lower 48. This does nothing to solve living here until you reach retirement age

  4. Going to take much more than a month….will probably take about 114 days. Yeah, 114 days 9hours, and 12 minutes. Luckily that will be just enough time time to slam it through at 11:58 pm before the session ends and still claim a proper fiscal note was attached.

    • Scott, you are so right this is the game plan in the majority caucus’s with .Oh bipartisan support ! This is the sinking ship of government today. VOTE THEM ALL OUT THIS YEAR!

  5. If they pass this garbage, the spineless one needs to veto it straight up. The people that are on the last gravy train live out of state too.

  6. There goes the rest of your PFD. Stunning how fast they can prioritize and get pay raises, benefits, increases, pensions they want for themselves, etc., through and spend, spend, spend for anything that benefits themselves in lightening time, bot not a full PFD for regular Alaskans. You little people only get the crumbs they leave you when they are done with what they want. There is no PFD money for you, not enough money for that, only sales taxes, income taxes, etc., for you to pay for more things they want. They need more money, on and on, more bureaucracy and programs to increase and spend on.

  7. Govt employees should not even be represented by unions. it is the fox in the henhouse and pure grift. donate to me and I will give you all the taxpayers money.

    • The Founder of the New Deal, advocate for private sector unions, well known right-wing nut (sarcasm), and only three term President of The United States Franklin Delano Roosevelt is quoted as saying in his letter to Mr. Luther C. Steward who was the President of the National Federation of Federal Employees:
      “All Government employees should realize that the process of collective bargaining, as usually understood, cannot be transplanted into the public service. It has its distinct and insurmountable limitations when applied to public personnel management. The very nature and purposes of Government make it impossible for administrative officials to represent fully or to bind the employer in mutual discussions with Government employee organizations. The employer is the whole people, who speak by means of laws enacted by their representatives in Congress. Accordingly, administrative officials and employees alike are governed and guided, and in many instances restricted, by laws which establish policies, procedures, or rules in personnel matters.”

  8. This needs to die in the House. I can’t imagine it getting to the Governor but if he had to veto, I don’t think the votes would be there to over ride. The current system is underfunded by several billion dollars. This bill would ultimately increase that liability. If a client asks an actuary what their projection is they will respond, ‘what do you want it to be?’ We’ve known for a long time that Bishop and Stevens are not conservatives but Giessel’s transformation is truly bizarre.

    • Once a weasel, always a weasel. I’m just thankful we’re not listening to her old partner, Senator Imathief crying “the greed of it all” when a super minority member points out that the only unattached funds left are the people’s 25% of their PFD. Which by sheer coincidence is 1.2 billion dollars, just the amount they need for their defined benefit package now.

      The last round of Defined Benefits is in the Red, $6 Billion plus of unsecured funds.

  9. So, if a bunch of conservatives flood the halls of our capitol, we are extremists or terrorists. But, the unions can flood the halls of our capitol and it is business as usual! ‘Unions have flooded the Alaska Capitol this week to make sure it does keep moving.’

    • This is why no one in government wants to see the capital moved to Southcentral. Because then we could flood the halls. Very few citizens in Juneau are opposed to this bill.

  10. So does this mean that Giessel’s husband who works for AKDOT will get the Defined Benefit retirement? Seems like a serious conflict of interest.

  11. Bring it back. Then perhaps we can get enough good candidates to apply for the Troopers who are lacking many positions.

  12. I was a state employee from 2008 to 2019. I have sat in meetings and listened to the reasons to return to the defined benefit system. The only real reason that would be beneficial to the State of Alaska is that they will attract more qualified employees and increase retention. We can agree that the more compensation you offer the more qualified employees they will attract and retain. (Of course, that is tempered by there is no advantage to hire people at a compensation level beyond what the job requires.) If it is to the state advantage to offer more compensation, then why not just raise the pay? Pay for it today rather than push it off on a future generation. When I left State employment the State owed me nothing and I owed them nothing. I took my money and left and our kids will owe me nothing.

    • Kevin that’s a BIG IF “If it is to the state advantage to offer more compensation, then why not just raise the pay? Pay for it today rather than push it off on a future generation.”
      With no data to support it! Enjoy your retirement on us!

  13. The worst part of SB88 is that virtually every public employee union will demand participation. And, of course, there is not a state executive or elected person who will say no to the unions. Allowing the unions to participate in a defined benefit plan makes it a mandatory subject of bargaining. PERS 1, 2 and 3 succumbed to the weight of collective bargaining.

    There is absolutely no evidence that employee recruitment or retention has any correlation with pension benefits. SB88 is a gimmick from legislators for reelection with union support.

  14. According to readily available information, the State of Alaska still has an approximate $5 BILLION DOLLAR* unfunded liability for its current Defined Benefit Retirees (PERS & TRS combined). So we want to add more fuel to the unfunded liability fire with more DB retirees? Say goodbye to the AK Permanent Fund as we know it to pay for it if this matter ever goes to court.

    *Based on the most recent valuation report dated June 5, 2023, the System’s DB Pension Plan has a funded ratio (actuarial value of DB Plan assets divided by actuarial liabilities for benefits) of 68.1% and an unfunded actuarial accrued liability (actuarial liability minus actuarial value of DB plan assets) total of approximately $5.13 billion. June 30, 2023. ‘

  15. Anything a public sector union is for…is good for them and bad for us. DB systems are collapsing under the weight of their loftiness and we will pay the bill. Anything public sector unions are for; I’m against.

  16. Yep, the senate doesn’t believe it has to have its ducks in a row. No fiscal notie, no passie, if the House has the spine.

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