Like many states, Alaska is on the hook for billions in future retirement obligations, what's known as the "unfunded liability" for school, state and municipal retiree pensions and health care.
For Alaska, that amounts to $11 billion -- more than the entire state government costs to run for a year. But Alaska does have something that no other state has: piles of cash. The state's Constitutional Budget Reserve, coincidentally, currently holds $11 billion.
The reserve is something like the state's emergency savings account, and it doesn't include the $44 billion in the Alaska Permanent Fund nor billions more in readily available pots of money that are more akin to checking accounts.
Alaska is required each year to pay a portion of that unfunded liability. That's not a problem now, but threatens to become a big problem down the road.
Alaska leaders have looked at options such as direct payments to the trust funds, issuing bonds to augment the retirement trust funds or other options to lessen the impact of the unfunded liability on future Alaskans.
Last year the Senate appropriated $1 billion into the Public Employee Retirement Trust Fund, but the House refused to go along and the money was removed in conference committee.
Paying a billion into the trust fund now would mean that money would be invested and earn money over the years, greatly increasing its value.
Gov. Parnell and legislators have expressed reluctance to lock up money in trust funds that they might want to use for other purposes, such as capital projects, government operations or oil company tax breaks.
The entire amount doesn't have to be paid off immediately, and some say it shouldn't be. A decade ago Alaska thought its retirement accounts were flush, and reduced contributions to them. But, it turned out that they had some bad – the state says fraudulent – actuarial estimates on how much money it would need in the future.
The state's actuary settled with the state for a eye-popping half a billion dollars, but a state estimate said that bad advice might have cost the state $2.6 billion in reduced fund values.
Contact Pat Forgey at pat(at)alaskadispatch.com