The Democrat majority in the Alaska House passed House Bill 78 on Monday, repackaging a defined benefit pension system that was shut down in 2006 after it left the State of Alaska with billions in unfunded liabilities — liabilities still in the billion in 2025.
Despite repeated warnings from independent fiscal analysts and economists, the bill pushes forward a financially risky restructuring of Alaska’s public employee retirement system.
HB 78 allows current employees in the defined contribution system to opt into the older defined benefit tier, effectively recommitting the state to decades of guaranteed payments without certainty that future funds will be available to cover them.
The Reason Foundation, an independent public policy think tank, projects the bill could create as much as $11.4 billion in additional liabilities. That projection is based on investment return assumptions of 7.25%, a figure that exceeds the average returns Alaska’s pension funds have actually achieved since 2001, which sit at just 5.8%. If those elevated return expectations aren’t met, the gap would likely fall on state taxpayers because the Alaska Constitution considers this a nonnegotiable obligation.
Supporters of HB 78 struggled to offer clear evidence that the measure will deliver the recruitment and retention improvements it promises. Alaska already maintains a lower turnover rate for public employees compared to other states with defined benefit systems, including Texas and Utah. A 2021 survey commissioned by the state found that public employees ranked retirement benefits well below other factors like pay, workload, and student behavior.
HB 78, pushed by Rep. Chuck Kopp, a Republican who caucuses with Democrats, ignores both historical context and fiscal responsibility. The 2006 pension reform was enacted precisely to stop the unchecked growth of long-term liabilities that threatened the state’s financial foundation. By reintroducing a similar system now, opponents say, the legislature is risking a repeat of that crisis.
Despite efforts from House Republicans to raise these issues and propose safeguards, the Democrat Majority advanced the bill. The legislation now heads to the Senate, where its financial implications are expected to face further scrutiny, but where the Democrats — and their union handlers — are solidly in charge.
