By WILLY KEPPEL
I know this won’t be a popular take, but I’ve got to disagree with both friends and foes when it comes to the idea of returning to a Defined Benefits retirement system for public employees. Two of my friends are teachers, and they’ve made their case for what they call the “golden parachute.” I still can’t get on board.
I’m a supporter of the Defined Contributions system — and for good reason. We’ve been down the Defined Benefits road before. When oil money was flowing and the state was flush with cash, bureaucrats and union leaders teamed up to create overly generous pensions, promising the world without a plan to pay for it. It became a spiral slide to financial ruin, and by 2006, common sense finally prevailed in Juneau. Defined Benefits were scrapped in favor of a more sustainable system: Defined Contributions.
Now, the unions want to drag us back, telling lawmakers it’s affordable, it boosts employee loyalty, and it’s necessary to attract workers. But none of those claims are backed by evidence. In fact, data from other states show they’re simply not true. What we’re hearing now is smoke and mirrors: magical math and political pressure campaigns dressed up as policy arguments.
Meanwhile, the education system itself is bleeding students and families are voting with their feet. Alaska now has 22% of students in homeschooling or charter school programs. In Anchorage, more than 6,000 students have left the school district, and instead of closing all six schools they considered in 2022, they only closed two, then turned another into a Native charter school, which drew even more families out of the system.
This isn’t a funding issue. It’s a failure to adapt. The public education model is becoming a dinosaur, too slow to evolve while parents seek better options. The bureaucracy, DEI-focused curricula, and declining performance have pushed people away. The formula isn’t broken because of inflation — it’s broken because families no longer trust the product.
And while all this happens, state leaders are still raiding the Permanent Fund Dividend, the last vestige of wealth Alaskans actually see, to prop up a failing system. According to a UAA ISER study by economist Matt Berman, using PFD cuts to fund government is the most regressive tax imaginable. It hurts poor and working-class families the most and drives people out of Alaska. That’s not just a theory; it’s $20,000 per child lost when a family leaves the district. That’s not inflation. That’s a government-created death spiral.
We need to do what any business would do when the customer base shrinks: cut costs. That starts with school closures where enrollment no longer justifies the cost. It also means reducing administrative bloat by consolidating Alaska’s 53 school districts down to 10 or fewer. And let’s get real about those so-called “vacant” positions in Anchorage. Over 200 “ghost” teaching jobs still get pink slips each year. If they’re unfilled, they’re unfunded positions, and they should be cut.
Yet every time we turn around, the unions are demanding more — more money, more benefits, more staff — while performance declines and enrollment collapses. And the Legislature? They’ll slash the PFD in a heartbeat but won’t touch the bloated education budget
Just this week, legislators who say they support the 75/25 PFD split, like Senators Lyman Hoffman and Bert Stedman, turned around and backed an 83/17 split instead. That’s nearly $180 million taken from each of their Senate districts. That’s money ripped out of the hands of every man, woman, and child in favor of a top-down “we know best” approach that keeps failed systems on life support.
And don’t get me started on campaign finance “reform.” Every proposal limits how much you and I can donate, while leaving union and PAC money untouched. No wonder Alaska’s collapsing. No wonder families are leaving for more affordable states.
See Spot run. See Spot run away.
That old first-grade reader rings painfully true today: Families are running, and it’s the system that refuses to change that’s chasing them away.
So no — I won’t support going back to Defined Benefits. I won’t support more empty promises from unions. And I won’t support a school funding model that punishes families, fails students, and protects bureaucrats.
We need reform. Not regression.
Willy Keppel is a longtime trapper and fur trader in Western Alaska.
I’m with you Willy. Thank you for spelling it out in clear succinct sentences to all who are responsible for creating this dismal situation in the state budget, the legislature and in our public school system.
Well stated Mr. Keppel, thank you. Now the rest of us need to start hounding our representatives.
And yet here we are, increased funding to education without any accountability, $1,000 dividend instead of the $3,900 dividend for each and every eligible applicant. Crickets from voters who will vote them back into office without political consequences.
Now the legislators can coast on their tax-free per diem and $84,000/120 days (more or less with the emphasis on less days actually worked) of “work” in Juneau until next session. Take a break, you worked so hard during those 120 days.
Willy,
Thank you for your perspective. I believe you are spot on.
You’ve clarified my thoughts Mr. Keppel. Thank you. Very well stated. Ms. Coulombe lost my vote today with her support to overturn Gov. Dunleavy’s HB57 veto. Looking forward to hearing from her challenger.
My extended family will be supporting her challenger as well.
Julie was a huge disappointment this year on several items she failed on.
This is a great example of having your heart in the right place, but not knowing what you’re talking about. It’s a demonstration of Boomers being illiterate mouthbreathers. Thanks for being the weak men who created hard times.
“………It’s a demonstration of Boomers being illiterate mouthbreathers……….”
Still dreaming up stories for “My Little Pony”, Bronius? Maybe if you had published your sensational literature when Boomers were toddlers, they could have been as literally advanced as you are now……….
To me the major downfall of the defined benefits is that you are taking an unknown liability and dumping it on the next generation. I worked for the State for over ten years as a tier 4. When I left, I took my money, and the State owned me nothing and I owed the State nothing. Our accounts were settled the day I walked out the door. If you need to recruit better or increase retention the solution is simple. Increase the pay and the employee can put more money into his or her retirement account and have more disposable income. I just don’t see how the State paying its way as it goes rather than dumping uncertain financial obligations on our children is not the superior position.
Excellent, to many are ignoring the facts and we are going to have the worst education system and no PFD very soon. The legislature doesn’t know best, infact they don’t know anything.
Say what you will, but if you ask around and/or poll people, the vast majority of people will prefer the Defined Benefit model. It just makes things more predictable, and lets professional money managers do what they do best. Most people are not very good at it, either.
* LLMs enter the conversation *
Ha. You can always tell my comments by the typos that LLMs don’t make.
I suppose it depends on whom you ask. Most public employees prefer a defined benefit plan and why not? They have the certainty of the defined benefit plan while the rest of us assume the market risk that for their DB plan while nearly all of the rest of us have to accept a defined contribution retirement plan for our own retirement and assume that market risk as well.
Politicians get the public employees vote in exchange for their support of a DB plan and the rest of us are left holding the bag when the plan’s projected earnings fall short. And they always do because the politicians invariably understate the cost of funding the plan by overestimating investment returns and lowballing current pension contributions to avoid telling the public how much its really going to cost.
That’s why we still have a left over $7 billion unfunded liability from the earlier DB plan. Who is going to pay that?
Well, my company provided me with a nice DB plane, and they seem to be managing it very well with no unfunded liability problem.
And for decades beforehand, this is what most every program offered.
Wall Street has forced the offload of the risk to the retiree instead of the employer. That’s what has happened.
So it’s possible to do.
Your thesis is as imaginary as your credibility.
What happens in 10-20 years when the State can no longer afford to pay out pensions?
Why would they not be able to pay the defined pensions? Could it be that they can’t live within defined bounds?
Correct.
However, it is not the people receiving the pensions that are the problem. It is the politicians that push for them, and any other luxury spending that catches their eye.
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If the State were to only pay out pensions for 20 years maximum, and cap the amount, any legislature in the world could plan for the expense. But, they don’t. it is a lifetime benefit, and the amount increases every year. And eventually there is not enough State revenue to cover the expenditures. So, politicians raise taxes, and cut necessary services, and borrow in order to ensure they get re-elected. Net result, the Stat is heading toward bankruptcy.
Taxes, and more taxes.
They are already talking a sales tax, but if that passes, income taxes will be next, than personal property taxes, etc… etc… etc…
Politicians are the only people in the world that can purchase a luxury item, then demand a raise from their boss because they cannot afford that luxury item.
In fact, both systems are managed by professional money managers. The age-related default investment option adjusts risk over time according to proximity to retirement age. Defined benefit employees that don’t stay long enough subsidize the lifers. Defined contribution employees that move on can take it with them. Point: defined benefit is not magic, and is poorly suited for a modern mobile workforce. The only folks that will hire-on or stay longer in a defined benefit system are those that are older and/or have run out of choices and prefer to run out the clock.
The vast amount of people are idiots.
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Tell you what, whidbey. Name a city or State with a pension scheme that is not facing fiscal difficulties, raising taxes, and talking about bankruptcy. One city or state please.
Can’t say, but my private company DB pension is fully funded so it is possible to do.
So, you can cite no actual government (read that as taxpayer) funded pensions that are successful. Got it.
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Your company is free to do what they choose. If their pension scheme ends up costing them more than expected, they can raise prices and take the chance customers will go elsewhere. Or they can drop the pension plan, like most other companies are doing.
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But… what do politicians do when they establish a program they cannot fund? They take the money to fund it from the taxpayers using the threat of force. See the difference? Somehow, I suspect you do not.
“……..Name a city or State with a pension scheme that is not facing fiscal difficulties, raising taxes, and talking about bankruptcy. One city or state please………”
Why didn’t you ask about the federal Civil Service Retirement System? It will end up leaving money for Congress to play with. Congress created the new Federal Employee Retirement System in order to move federal employees into Social Security, not because CSRS was in trouble, but because they wanted 2 million more people paying into Social Security, which became a slush fund for them.
The retirement system that government bureaucrats retire under is the one that you want to be in. They won’t be using it to fund illegal immigrant services or medical benefits for narcotics addicted tent dwellers.
The CSRS ended in 1984 because it became too large to fund over the long term. Too many people were taking out, and not enough contributing. And, yes, getting all the feds to pay into SS was a benefit as well. However, ask yourself why it was so important to get 2M feds paying into SS? At the time, SS was flush with funds, and was going to be flush for decades to come?
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And, pointing out a failed government system that was replaced (and check the latest bill in Congress, is looking to get changed significantly to reduce expenditures and raise revenue) is proving my point. If I am reading the bill correctly, the contributions from the employees is going up from 0.8% to 4.4%, and the calculation for the annuity is changing to reduce it. Why? Because it costs too much to sustain.
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Other proposals on the table for federal workers is to ditch the annuity altogether, and increase Government matching into their 401(k).
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Pensions are unsustainable. They bankrupt every organization that implements them.
Texas Teachers retirement System i sound for 30 years plus, by law. Its a defined contribution plan. They’re working on the amount deducted for health coverage right now, they’re hoping to reduce the detection we pay each moth, depending on what the insurance firms charge.
Certain pension systems, when funded adequately by a decent split of both employer and employee work well. Washington State Law Enforcement Officer Fire Fighter (LEOFF) fund 1, was over a billion dollars in the black. The State seized the surplus to fund the other general employee system that was mismanaged. The LEOFF2 fund is also in the black, so much so that they boosted the annual rate by 5% for individuals that had contributed from years 15-20. The problem in many from what I have seen, have too high a percentages per year earned, particularly when medical coverage is involved. The medical insurance system has been decimated by civil law suits, and the increasing number of people who don’t pay anything being covered by increased costs being laid onto insurance bills.
Professional money managers?
You must be referring to the legislators in Juneau after a round table discussion the night before at the bar laying out their voting strategy on how they can deplete the PFD “for OUR benefit”.
‘https://en.wikipedia.org/wiki/Civil_Service_Retirement_System
The Civil Service Retirement and Disability Fund still has nearly a trillion dollars in it, even after having been raided in 2015 and 2023, and I’m one of the last participants. Just think: you can get state employees to contribute for a lifetime, then steal it like labor unions, municipalities, and Congress, and still have enough to retire your employees. It’s sorta’ like a Permanent Fund, but without the dividend, so only the Legislature can conduct the theft.
Crunchy caterpillars….
Bingo
Willy: you forgot about bankrupting the state.
These staunch conservatives have no problem cashing their unfunded State of Alaska pension checks which are billions in arrears. Easy to cut funds from issues that do not affect your pocket. Let us square up the pension fiasco and place those monies in the Permanent Fund.
The Defined Benefit Plan push by the House Majority is a Faith Based Plan.
“Now faith is the substance of things hoped for, the evidence of things not seen.” Hebrews 11:1
Amen to Willy and AK Fish! I concur.
So lets make this clear. Government workers get a guaranteed job for life, and a guaranteed retirement from the tax payer. The tax payer takes his chances in the job market and in retirement. Got it. Government workers are more valued than the tax payers who pay them. Got it. Elite much?
Are you saying government employees don’t pay taxes? Last time I checked most people who pay taxes are also receive Social Security in retirement. Until just recently my entire Social Security check would have been taken as I have a state pension, it didn’t matter that I had 80 quarters of sustainable income outside of my years in the state retirement system. Willy also forgets that the reason TRS and PERS are in debt was due to fraudulent advice given to the state pension board by Mercer. The state sued and then the attorney general at the time, and now senator, Dan Sullivan settled the case for pennies on the dollar thus sticking the debt on the people of Alaska.
There is nothing in Citizenkane’s comment that even remotely hints that government employees do not pay taxes. Where did you get that idea?
Citizinkane’s words. Government workers are more valued than the tax payers who pay them. Got it. Elite much?
1. That is taken out of context. If you cannot identify sarcasm, you really should not be participating in a comment section of a news site.
2. Still do not see where Citizenkane says government employees do not pay taxes.
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That obviously sarcastic statement you took out of context says nothing about how many (or how little) government workers pay in taxes. If you saw anything of that sort… your reading comprehension skills are abysmal.
I agree with all 100%. Unions should not be allowed to contribute to campaigns, especially public employee unions. The focus by unions is power and control, not wise spending of the public dollar. They have their place at the bargaining table on behalf of members, and that should be the limit of their influence, not buying politicians. We have too many union owned ‘elected’ officials in Juneau. It is wrong and needs to change.
No one should be able to contribute to a campaign. It just causes corruption. People should make their case at first with their own money, we vote who should run and the state pay for a campaign that is a defined amount of money. It is the only way. Who ever donated the most to the winner gets what they want from the representative, that is just how it is. We can’t just say unions cannot give money but people or companies can. Read a history book. Before unions people were mistreated. The american dream exits because of labor unions. I am not saying that today they do great things but they are a necessary evil. Be careful or we all may get what we ask for if we take them away.
Only rich corporations should be able to own politicians! Repel Citizens United and know who is financing our politicians.
If I asked you to prove you know nothing about Citizens United, without actually saying you are absolutely clueless about the Supreme Court decision, you could not have written a better statement.
The municipalities and the state robbed the pension system with the retire rehire program. The pension system acquired folks over 50 which means higher medical costs associated with aging. So municipalities and the state in essence had the pension system pay for their employees medical insurance. Our former mayor used his ASD wife’s health insurance as many in the private sector still do. Public employees health insurance is family insurance not individual insurance. Plus Hickel and Knowles had further early retirement schemes and our current governor put millions directly into the underfunded system.
Damn good bit of writing……..and logic.
Thank you.
Thank you for sharing your perspective. I appreciate your candor and the depth of your concerns. There’s no question that Alaska’s public systems—education and retirement included—need careful, honest scrutiny. That said, I want to offer another side to the Defined Benefits (DB) conversation, especially as someone who works closely with the people who keep our schools running every day.
Let’s start with the core issue: Defined Contributions (DC) have not solved our recruitment and retention problems—they’ve made them worse. Since Alaska moved away from DB in 2006, we’ve seen:
Skyrocketing vacancy and turnover rates across public service sectors, especially education, public safety, and healthcare.
New employees leaving within 5 years at alarming rates, citing instability and the lack of long-term security.
Increased training and onboarding costs due to constant churn.
This isn’t theoretical. It’s playing out in real schools, rural clinics, and emergency services across the state. Alaska is now the only state in the country without a DB option for public workers, and we’re bleeding talent because of it.
You mentioned states where Defined Benefits caused financial issues. Fair point—but that’s not the full story. Modern DB plans are not the blank-check promises of the past. Proposals being advanced today are actuarially sound, include employee contributions, and are designed to avoid unfunded liabilities by law. We’re not asking for the past—we’re asking for a sustainable, competitive tool to retain skilled workers who serve Alaska.
As for cost: High turnover isn’t free. When we lose experienced educators or first responders after 3-5 years, we pay for that—financially, academically, and socially. A well-managed DB plan can actually save money over time by reducing churn and preserving institutional knowledge.
Regarding education more broadly: Yes, there are serious issues—declining enrollment, changing family needs, and trust gaps. But undermining school staff and gutting benefits won’t fix those problems. If anything, it pushes more skilled workers out of the system when we can least afford to lose them.
And on the topic of unions: Unions aren’t perfect, but they fight for things that benefit entire communities—livable wages, safe working conditions, retirement security, and transparency. What’s often labeled as “more demands” is really a push to hold the system together while it’s under stress.
We agree on one thing: Reform is needed. But not all reforms move us forward. Abandoning secure retirement, disinvesting in public education, and turning away from experienced professionals will only accelerate the challenges we’re facing—not solve them.
Thanks again for starting the conversation. I’d be happy to continue it—with facts, data, and the stories of real people who serve Alaska every day.
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