Alaska House to pause public sector pension bill debates before the Senate acts

JUNEAU — The Alaska House of Representatives formed a subcommittee last week to start studying the Senate’s public sector pension plan bill, once that legislative chamber passes that measure.

The House has been hearing a bill that would reestablish a pension solely for public safety workers, including police, firefighters and correctional officers. Those hearings will now be paused. The Senate majority introduced legislation earlier in the month that would create a broader pension plan to provide all state workers and teachers predictable payments upon retirement.

Anchorage Republican Laddie Shaw, who chairs the House State Affairs Committee, said Wednesday that a separate subcommittee was needed in part to study both measures because his committee already has 20-plus bills referred to it. He said that his Republican-led caucus’s concerns about costs grew louder once the Senate’s broader pension bill was announced.

“We had to throw up our hands, and the caucus goes, ‘Oh, no, no, everybody wants everything,’” Shaw said. “We’re trying to tamp down the budget.”

The House’s three-member pension subcommittee will be chaired by Anchorage Republican Rep. Craig Johnson, who recently returned to the Legislature after a six-year absence. Nikiski Republican Ben Carpenter and Juneau Democrat Andi Story are also members.

“I thought it was galling what they did,” said Rep. Andy Josephson, D-Anchorage, who is the lead sponsor behind the public safety pension bill. He said the decision to form a subcommittee to study his legislation and the Senate’s bill was “flabbergasting.”

Josephson said the move shows House Republicans have “an animus” against implementing a new pension system when the State Affairs Committee could debate the legislation itself.

Shaw and Johnson both denied the new subcommittee was created to kill or bury pension debates. Shaw said it was envisioned to take a deep look at the “extremely complex” pension bills and report back to the State Affairs Committee with recommendations for “a unified proposal.”

“We’re going to get into it,” Johnson said. “It’s a serious look at what’s going on.”

Story, who strongly supports a return to a defined benefits pension plan, said that she currently has no reason to believe the subcommittee is not a good-faith effort to improve the state’s public-sector retirement system.

“I certainly am hoping that it is a strategy to look at the two bills,” she said.

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A concern expressed by House Republicans is that a new public-sector pension could see state costs grow unsustainably. Lawmakers abolished pensions for new employees in 2006 amid a multibillion-dollar shortfall in the pension fund.

An analysis by the state’s actuary in 2021 estimated that Josephson’s pension plan for public safety workers would cost the state an additional $6 million for the next fiscal year, rising to $7.5 million per year in 2027. But an actuarial analysis hasn’t been done yet on the Senate’s bill.

Johnson said in a committee hearing that he was distrustful of any audit into the costs of a pension plan. When the state ended pensions in 2006, lawmakers were partly driven by incorrect actuarial information provided by the state’s previous actuary, to the tune of around $2.5 billion. A lawsuit ensued, resulting in a $500 million settlement payment to the state.

Anchorage Republican Sen. Cathy Giessel, who is the lead sponsor behind the Senate measure, said it was designed with safeguards meant to prevent the state from taking on a greater commitment than it can afford. The new plan would not provide health insurance for state employees upon retirement.

The bipartisan Senate majority has said reimplementing a defined benefits pension is a top priority for the caucus. A state analysis presented to the Senate last month found that most public employees covered by the current 401(k)-style plan do not have enough savings for retirement.

Republican House Speaker Cathy Tilton — who also denied that the subcommittee was designed to bury that legislative effort — said it should look at alternatives to returning to a defined benefits pension, and that “all of the options are on the table.” The Senate majority and the House minority — through Josephson’s bill — have both introduced measures to reform the state’s public-sector retirement plan, but the Republican-led House majority has not.

Carpenter, who voted against Josephson’s bill in 2021, echoed Tilton in a committee hearing that there could be options to “sweeten” the state’s contributions to the current 401(k)-style system, steering away from a return to a pension system. He said Josephson’s bill had been rushed through a previous committee “without proper scrutiny.”

Josephson bristled at suggestions his bill had not vetted enough. A previous version passed the House in 2021 on a bipartisan 25-15 vote, but it stalled last year in the Senate. It was supported by six Republicans, including Shaw, who served for five years as an instructor at the Alaska State Troopers Academy.

Senate majority members are largely reserving judgment on the House’s decision to form the pension subcommittee, but some noted it was odd procedurally to make a decision about a Senate bill that had not passed onto the House.

“The House appears to believe that they can act on Senate bills that are not in their possession. Regardless the Senate will be continuing our process and engaging with the public on this important policy,” Giessel said by text.

She said the Senate will work to establish “the best possible policy that achieves increased recruitment and retention of our valued state employees while protecting the state of Alaska from unfunded liabilities.”

Heidi Drygas, director of Alaska’s largest public employee union, echoed Giessel’s comments about the potentially “unprecedented” House subcommittee created for a bill still in the Senate. She said the union would continue to work with both legislative chambers “to make a clear-eyed decision that’s in the best interest of Alaska’s hard-working public servants.”

The Senate’s pension bill is set to get its first hearing in the Senate Labor and Commerce Committee on Monday.