Legislature(2025 - 2026)ADAMS 519
04/04/2025 01:30 PM House FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| HB78 | |
| Public Testimony | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 78 | TELECONFERENCED | |
| + | TELECONFERENCED |
HOUSE FINANCE COMMITTEE
April 4, 2025
1:33 p.m.
1:33:02 PM
CALL TO ORDER
Co-Chair Foster called the House Finance Committee meeting
to order at 1:33 p.m.
MEMBERS PRESENT
Representative Neal Foster, Co-Chair
Representative Andy Josephson, Co-Chair
Representative Calvin Schrage, Co-Chair
Representative Jeremy Bynum (via teleconference)
Representative Alyse Galvin (via teleconference)
Representative Sara Hannan
Representative Nellie Unangiq Jimmie
Representative DeLena Johnson (via teleconference)
Representative Will Stapp
Representative Frank Tomaszewski
MEMBERS ABSENT
Representative Jamie Allard
ALSO PRESENT
Danielle Redmond, Self, Juneau; Electra Gardinier, Self,
Juneau; Randy Sutak, Self, Juneau; Jesse Slone, President,
Supervisory Unit, Local 4900, Juneau; Carole Bookless,
Self, Juneau; Representative Chuck Kopp; Representative Dan
Saddler.
PRESENT VIA TELECONFERENCE
Jan Carolyn Hardy, State President, AFSCME Retirees,
Anchorage; Robert Whipple, Member, National Education
Association of Alaska, Emmonak; Emily Moody, Self, Cordova;
Judy Gonsalves, Self, Homer; Riki Lebman, Self, Anchorage;
Jake Metcalfe, Self, Anchorage; Jess Pervier-Brown, Self,
Anchorage; Shane Hand, President, Seward Public Employees
Association, Local 6586, Seward; Ryan Frost, Managing
Director, Reason Foundation, Snoqualmie; Patrick Messmer,
Police Officer, Seward; Sarah Snyder, Self, Anchorage;
Darrell Evans, President, Anchorage Police Department
Employees Association, Anchorage; Traci Sanders, Self,
Wasilla; Donna Phillips, Alaska Nurses Association,
Girdwood; Kathleen Yerbich, Self, Wasilla; Marge Stoneking,
Advocacy Director, American Association Of Retired Persons
(AARP), Anchorage; Lindsay Layland, Self, Dillingham;
Victoria Vinson, Self, Wasilla; Shane Serrano, Self,
Anchorage; Cindy Spanyers, Self, Juneau; Ken Huckabe, Self,
Wasilla; Justin LaCoss, Matsu Education Association,
Palmer; Julia Inga, Self, Palmer; Willy Keppel, Self,
Quinhagak; Ken Griffin, Self, Wasilla; Keddie Johnson,
Self, Kenai; Louis Theiss, Self, Girdwood; Jackie Gohl,
Self, Juneau; Manda Gershon, Self, Wasilla; Seth Nielsen,
Self, Palmer.
SUMMARY
HB 78 RETIREMENT SYSTEMS; DEFINED BENEFIT OPT.
HB 78 was HEARD and HELD in committee for further
consideration.
Co-Chair Foster reviewed the agenda for the meeting. The
committee would hear public testimony on HB 78.
HOUSE BILL NO. 78
"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."
1:34:13 PM
Co-Chair Foster reviewed the agenda for the meeting.
^PUBLIC TESTIMONY
1:35:40 PM
DANIELLE REDMOND, SELF, JUNEAU, relayed that she had
previously worked as a retirement and benefits counselor
for the state. She was generally supportive of the bill.
She wanted to highlight the issue of medical benefits. She
related that many retirees had informed her that medical
benefits in retirement were more important to them than the
financial aspect. She discussed cost and access. She
informed the committee that historically retirement
healthcare costs were high but when Tier 3 was enacted the
rules for medical coverage were much clearer. In 2023,
Alaska Care was doing very well financially. She noted that
Tier 4 members had to pay for their medical coverage, but
at least it was an option. Currently Tier 4 members were
required to wait to retire until age 65 through active
employment (for one year before retirement) with at least
10 years of service to receive medical benefits. Many
retirees lost access to medical coverage as a result of the
rule. She strongly urged the committee to keep retiree
healthcare benefits.
Representative Stapp appreciated the testimony. He
understood that the bill only had a Health Reimbursement
Account (HRA). Ms. Redmond asked if they were able to buy
into the Alaska Care healthcare plan. Representative Stapp
replied in the negative. Ms. Redmond added that the HRA
plan was also forfeited if a Tier IV member retired without
the active year of employment at 65.
1:39:31 PM
ELECTRA GARDINIER, SELF, JUNEAU, relayed that she was
currently a teacher in Juneau. She spoke in support of the
bill. She shared her personal story about receiving higher
education and working to pay off her Alaskan loan that
accrued $20 thousand in interest. She worked as a teacher
for eight years. She hosted an afterschool art club and
volunteered in the community for hundreds of hours each
year. She stated that teaching was tough and was not
getting any easier. She shared that she still owed
thousands in student loans, was not eligible for Social
Security, and had a "measly" 401 K plan. She indicated that
on the west coast of the United States (US) her pay would
be $20 thousand more in addition to a pension. She wanted
to stay in Alaska and to retire here. She asked for Alaska
to show up for educators like she showed up for her
students.
Representative Stapp clarified that his earlier statement
regarding HRA funds needed to be corrected.
Representative Hannan congratulated Ms. Gardinier for her
new baby and for staying in Alaska.
Representative Josephson asked if Representative Stapp
meant there was uncertainty about whether HRA funds could
be used to pay Alaska Care Premiums. Representative Stapp
answered that HRA could be used for any type of insurance
or medical expense. The question was whether HRA funds were
eligible in the proposed plan.
1:43:39 PM
RANDY SUTAK, SELF, JUNEAU, supported the bill. He indicated
that there was obviously an issue with the current
retirement system, or the hearing would not be taking
place. He asked the legislators whether they had already
made up their minds about the topic and hoped not. He
believed that it was necessary to remain open minded and
consider the evidence, data to determine the cost to the
state versus the costs to the state and communities if a
system was not implemented. He voiced that how the state
took care of its employees and citizens was a choice. He
relayed a story from personal experience regarding a
lifelong worker who could not afford to retire but would
have if he was part of a DB plan. He pointed to the costs
to the state for people like him needing to rely on state
benefits. He observed that the legislature focus of the
bill was on how much they could afford to spend and how
much to invest. He suggested that the more that could be
invested on the frontend, meant the less the state would
have to invest on the backend.
1:47:27 PM
JESSE SLONE, PRESIDENT, SUPERVISORY UNIT, LOCAL 4900,
JUNEAU, spoke in strong support of the bill. He shared that
employees with the Defined Benefit (DB) plan were
incredibly grateful and those without wondered how long
they could justify dedicating themselves to a state that
did not reciprocate. He relayed a story from personal
experience regarding Tier I employees retiring securely.
He felt that many younger workers feared they would lack a
dignified stable retirement. He shared that his son worked
in Information Technology (IT) for the state, and he was
wondering whether he could remain in state much longer. He
believed that a person who dedicated their lives to the
state should not have to live in poverty in old age. He
stressed that a DB plan was a strong investment in the
state's workforce, institutions, and shared future. He
stated that the bill was a chance to return to a system of
shared values. He urged support of the bill.
Representative Bynum asked whether Mr. Slone was testifying
in favor of a robust retirement system with the expectation
of returning to a DB system similar to Tiers 1 through 3.
Alternatively, he asked if Mr. Slone was saying he wanted
to return to any kind of DB system. He wondered whether Mr.
Slone would be happy with a DC plan if it provided a
substantial retirement. Mr. Slone replied that there were a
lot of unknowns to be able to answer the questions. He
would need to see details. He trusted the work that was
done on the current bill.
Representative Tomaszewski asked if any of the 2,000
members of Local 4900 were private sector employees. Mr.
Slone answered that the members were only state
supervisors. Representative Tomaszewski asked for
verification that there were no private sector employees in
the union. Mr. Slone agreed with his statement.
Representative Hannan asked for verification that Mr. Slone
was aware the system in the bill was not the prior Tier 1
through 3 systems. Mr. Slone answered in the affirmative.
1:54:40 PM
JAN CAROLYN HARDY, STATE PRESIDENT, AFSCME RETIREES,
ANCHORAGE (via teleconference), testified in support of the
legislation. She indicated that the Tier IV retirement
system was based entirely on the "vagaries of the stock
market." She believed that asking Tier IV employees to work
under such a plan was "ludicrous." She voiced that Alaska
was the only state without a DB system. It was no wonder
the population of Alaska was decreasing, and employees were
being lost. She relayed from personal experience that years
ago, everyone wanted to work for the state due to union
negotiated benefits. She believed that not only was the
current federal regime working to dismantle Social Security
but Alaska was also failing to support its workers' future
by not offering its hard working, dedicated public servants
a defined benefit. She stated that the public service
unions had provided information regarding the shortfalls of
a Defined Contribution (DC) plan, which she contended was
the stock market. She stressed that Alaska owed individuals
who had served the state. She asked the committee whether
they would remain in Alaska under a DC plan or work
elsewhere and invest their savings in a DB plan in another
state.
1:57:27 PM
ROBERT WHIPPLE, MEMBER, NATIONAL EDUCATION ASSOCIATION OF
ALASKA, EMMONAK (via teleconference), supported the
legislation. He shared that he was a special education
teacher with 14 years of experience in the state. His prior
job was in California where he worked under a DB plan. He
communicated that his wife was also a teacher in the state
without a DB plan nor Social Security. He emphasized that
the Alaska DC system was not sustainable for educators and
without passage of the bill they would be forced to return
to California to work in a DB plan in order to retire. The
current DC plan, based on stock market performance lacked
retirement security. He shared that in his 14 years in
Alaska, he had seen how turnover disrupted schools and
negatively impacted students. He stated that the bill would
help retain teachers and improve schools. He urged support
of the bill.
2:00:01 PM
EMILY MOODY, SELF, CORDOVA (via teleconference), spoke in
favor of the bill. She shared that she was a teacher for 14
years and was in the Tier 3 system. She believed the bill
would retain existing teachers and attract new talented
teachers to the state. She argued that a teacher's entire
financial future should not rely on a 401K based on market
volatility. She felt that concerns over financial
uncertainty divided her attention away from her students
and believed the system the state created was
disgraceful." She asserted that teachers did the hardest
work with no financial rewards compared to the private
sector. She reported that 70 percent of Tier 3 teachers
could currently outlive their retirement savings. She
claimed that Alaska had the worst teacher turnover rates in
the country. She stressed the importance of retaining
teachers that had been trained at high costs to the state.
In addition, the situation harmed student achievement,
which was supported by data. She was incredibly tired of
worrying about her financial future. She just wanted to
know her hard work would pay off and that she would not
have to leave the state for better salary, benefits, and
the ability to retire. She understood that a new retirement
system came with costs, but she wanted the costs considered
against the cost of doing nothing. She stated that once all
of the Tier 1 and 2 teachers retired, it would leave a
revolving door of teachers and lost institutional
knowledge. She maintained her distress over the situation
and stated that "some things were worth paying for." She
urged the committee to pass the bill.
2:03:38 PM
JUDY GONSALVES, SELF, HOMER (via teleconference), testified
in support of the bill on behalf of herself and educators
in the state. She shared that she is a retired teacher. She
was fortunate to be in Tier 1. She had a daughter living in
Alaska who had recently done the Master of Arts in Teaching
(MAT) program in Southeast and was a teacher in a rural
community. She expressed disappointment over how the state
was unsupportive of its teachers who were struggling with
their financial futures. She urged the committee to develop
a retirement system that teachers could rely on. She hoped
the issue remained a priority.
2:06:54 PM
RIKI LEBMAN, SELF, ANCHORAGE (via teleconference),
testified in favor of the bill. She shared that she and her
husband were currently retired and described how they had
come to live in the state and their professional work
experience. She and her husband were still living in Alaska
for 50 years because they could afford to retire in the
state after professions in the public sector. She offered
that Alaska's public sector jobs were not attractive for
young people. The system was deficient in financial and
health benefits, which created more job insecurity. She
believed the bill needed to pass in order to attract and
retain people to the state.
2:08:51 PM
JAKE METCALFE, SELF, ANCHORAGE (via teleconference), spoke
in support of the legislation. He shared that he had worked
for unions and as an attorney in Alaska and was retired. He
detailed his work experience in the state and noted his
retired Tier 1 status. He supported the bill due to
retention and recruitment issues, retirement security, and
the economic benefit to the state. He relayed that when the
DB program ended, he had predicted that the recruitment and
retention issues it created. Subsequently, he learned how
bad the problem escalated in the state with deficits of
teachers, public safety, and general government workers. He
had been advocating for a DB system for 20 years. He
elaborated that many employees took their DC money and left
for another state with a DB system. He did not believe it
made any sense. He discussed the cost to train police
officers of up to $30 thousand and subsequently leave
Alaska after five years with their earned DC funds. He
thought it did not make any sense for the state. He thought
that individuals would stay working in the state under a
retirement system that offered workers dignity. He asked
the committee to support the bill.
2:13:39 PM
CAROLE BOOKLESS, SELF, JUNEAU, was in favor of the bill.
She shared that she was a teacher and just had a hip
replacement. She should have retired by now; she would be
69 years old in the current year. She was retaining her job
in the hopes of entering a DB plan if it happened. She
shared that the Division of Retirement and Benefits (DRB),
Department of Administration (DOA) had told her that the
buy in would be so expensive that it was likely cost
prohibitive. She relayed that her son was currently in the
state in the MAT program. She advised him to work in
another state with a DB plan. She stated that it was
painful to keep working so long but she did not really have
a choice. She stated that $24,000 a year was not a lot to
live on and stated that the DC system was horrible. She
stated that she would like her son to remain in Alaska.
Representative Stapp thanked Ms. Bookless for her
testimony. He asked for details regarding her conversation
about buying into the DB plan. Ms. Bookless replied that
there were recently people who were trying to get back into
Tier 1 and the buy-in was exorbitant. Based on that, she
was told that if the state went back to a DB system the buy
in would be substantial. She stated that teachers were
always optimistic, but the situation worried her.
Representative Stapp asked if she was a former Tier 1 or 2
employee. Ms. Bookless replied in the negative.
Representative Hannan thanked Ms. Bookless for her work.
2:19:06 PM
JESS PERVIER-BROWN, SELF, ANCHORAGE (via teleconference),
supported the legislation. She shared that she worked for
the Division of Public Assistance (DPA), Department of
Health (DOH). She related that she had worked during COVID
and discussed some perspectives on working with the most
vulnerable populations. She currently was a benefits
certification eligibility trainer. She had firsthand
experience in her knowledge of the population's needs and
trends. She indicated that presently, the division had a
significant retention problem. Currently, the vacancy rate
for eligibility technicians was so high that DPA offered a
sign-on bonus and still did not have enough employees. She
relayed that she heard many technicians discussing their
low salaries and lack of benefits that were "not good
enough She was told that the Tier 4 DC system was
"crappy" by current state employees before she took her
current position and was advised to work for ten years,
leave, and return to work again before retirement. She
disclosed that the number of Alaskans who were technicians
that were currently eligible for senior benefits was
shameful. She stressed that the bill was desperately
needed.
2:23:56 PM
SHANE HAND, PRESIDENT, SEWARD PUBLIC EMPLOYEES'
ASSOCIATION, LOCAL 6586, SEWARD (via teleconference),
testified in support of the legislation. He voiced that he
echoed the sentiments of the prior callers. He referenced
the need for financial security and dignity in retirement.
He highlighted housing costs and high expenses living in
the state and the problems with state employee recruitment
and retention. He believed that there was a loss of
institutional knowledge via a revolving door of employees.
He stressed the importance of institutional knowledge for
the jobs and communities they served. He thought the state
could show its dedication to employees by adopting the
bill. He reiterated the association's support for the bill.
2:27:31 PM
RYAN FROST, MANAGING DIRECTOR, REASON FOUNDATION,
SNOQUALMIE (via teleconference), relayed information about
the work of the foundation. He spoke against the bill. He
stated that the goal of the bill was to improve recruitment
and retention but noted the importance of evaluating
whether the change would help solve the workforce
challenges in a way that was fiscally responsible. He
maintained that based on the foundation's actuarial
modeling a best case scenario showed the bill's cost at
$2.1 million over the next 30 years. A more "realistic"
scenario based on Alaka's past 23 years showed it would
cost $11 billion over 30 years. He noted that the costs
were tied to its investment assumptions. The bill's cost
was based on a rate of return of 7.25 percent, yet Alaska's
pension funds had only earned 5.8 percent annually since
2001. He recommended employing a "more realistic" rate in
the mid-6 percent, which aligned with actuarial best
practices, however, still leaving a liability of $2
billion. He contended that advocates for the bill often
stated that employee turnover and retention was a reason to
return to a DB plan. He argued that based on their
analysis, Alaska's retention was "better than most states,"
at 13.6 percent in 2023. He reported that Oklahoma
transitioned to a DC plan in 2011 and had the second lowest
turnover than neighboring states. He elaborated that
according to the foundation's modeling, more than 90
percent of new hires under the proposed DB plan would
receive lower benefits because most employees leave within
10 years. He voiced that the current retirement gap was
related to the Alaska Supplemental Annuity Plan (SBS) that
acted as an actual retirement account and offered higher
benefits than Social Security. However, Alaska teachers
were not covered under SBS and had no social security; it
created a significant shortfall. He claimed that SBS
provided $60 thousand of additional yearly income for a
teacher who worked a full career. He summarized that Alaska
was not facing unique turnover rates and the DC plans
combined with SBS was "more generous" than other states.
Representative Stapp referred to testifiers' comments
regarding the recent rapid market downturn. He thought
there seemed to be some disassociation. He asked what poor
returns did to unfunded liabilities for DB plans. Mr. Frost
answered that DB plans experienced the same downfall as DC
plans, but the liability was put on the state to make up
the shortfall.
2:33:05 PM
Representative Bynum asked if Mr. Frost could share the
foundation's research and reports with the committee. Mr.
Frost replied affirmatively.
Representative Hannan asked who had paid for the
foundation's research to evaluate Alaska's retirement
system. Mr. Frost answered that the entity was funded by
small donors across the country. He added that they chose
Alaska's system to spend its actuarial funds on.
Representative Hannan asked for the amount of costs
incurred to conduct the research in Alaska. She noted that
actuarial costs were expensive. Mr. Frost agreed it was an
expensive endeavor. He did not have the cost on hand. He
would be happy to provide the information. Representative
Hannan stated that if the committee was going to obtain the
report, she would like to know who paid for it.
Representative Tomaszewski asked Mr. Frost the repeat the
turnover rates he provided. Mr. Frost replied that in 2023,
Alaska's public employee turnover rate was about 15
percent, and the national average was 18.1 percent. He
added that the overall turnover rate for teachers was
around 20 percent, and the U.S. average was about 18
percent. He detailed that in Anchorage, it was 16.4
percent.
2:37:24 PM
Co-Chair Josephson stated that in 2022 the foundation
concluded that some employees would be better under DB
plan. Mr. Frost answered that a teacher working for 29
years in Alaska would be better off in a DB plan and for
general employees anyone working more than 25 years was
better off in a DB plan. He elaborated that for police and
firefighters it dropped down to the 23 year mark when the
DB plan would be more generous.
Representative Bynum asked for clarification regarding what
plan was being compared; Tiers 1 through 3 or HB 78. Mr.
Frost clarified he was speaking about HB 78 provisions.
2:39:39 PM
PATRICK MESSMER, POLICE OFFICER, SEWARD (via
teleconference), supported HB 78. He related that he worked
as a police officer for the past 25 years. He had seen the
effects of the Tier IV system decreasing the number of
employees. He had experienced firsthand since 2006, the
issues with recruitment and retention and how it impacted
the police department. He indicated that less employees
remain until retirement. He offered that it caused a public
safety issue and made it more dangerous "out on the
street." Alaska police officers were assaulted at a 5 times
higher rate than the national average. He indicated that
Seward's police did not accrue SBS along with the Tier 4
retirement. He observed that younger officers did not have
a way to retire under Tier IV. He shared that he would
retire within the month under Tier 3 and planned to open a
small business. He would not have been able to open a
business or remain in the state without the pension. He
stated that tier 4 had been devastating to law
enforcement recruitment and retention.
Representative Tomaszewski asked if Seward police could be
in SBS. Mr. Messmer replied that SBS was not currently an
option, and the city would need to opt into the program. It
would take a collective bargaining agreement to make the
change.
Representative Bynum asked about the potential impacts at
the local level of additional costs for the DB plan in HB
78 if the state did not pick up the additional cost. Mr.
Messmer did not know the answer. Representative Bynum asked
about Seward's capability to cover additional costs for the
plan or whether the state would need to make up the
difference. Mr. Messmer replied that he not qualified to
answer the question.
2:44:27 PM
SARAH SNYDER, SELF, ANCHORAGE (via teleconference), favored
passage of HB 78. She shared that she worked for the
Department of Health under the Alaska State Employees
Association (ASEA)/AFSCME Local 52 since 2020. She
referenced testimony by Mr. Frost related to retention and
turnover. The data provided by Mr. Frost was not what she
had experienced in DOH. She deduced that the department had
two-thirds less employees since 2020. She relayed that the
state was being sued by the federal government due to the
large backlog, and the reason was not cyberattacks or
outdated equipment as reported but it was a result of being
significantly understaffed. She emphasized that people were
not staying, and the institutional knowledge was lost. She
shared that based on what she had experienced with her
coworkers that individuals worked for 5 years and quit. She
shared that one Tier 3 coworker who had worked for 30 years
would be retiring soon. Everyone else she worked with had
been there 5 years or less. She thought it was important to
acknowledge facts and that anecdotal evidence was not the
same as hard research, but she wanted to inform the
committee that the information cited by the prior
testifier's study did not match her work experience.
2:47:55 PM
DARRELL EVANS, PRESIDENT, ANCHORAGE POLICE DEPARTMENT
EMPLOYEES' ASSOCIATION, ANCHORAGE (via teleconference),
supported the bill. He shared that he had been a police
officer for over 30 years in the state and was a Tier 2
employee. He relayed that when he started the police
department had 1,500 to 2,000 applicants for each academy.
Currently, they received 130 to 150 applicants per academy
resulting in roughly nine new officers on the street in the
fall in Anchorage, however, by the end of June 10 officers
would leave or retire. He stressed that the department
could not keep up with attrition. There were over 60
vacancies presently. He noted the many factors for the
difficulties in attracting recruits. However, he believed
that one factor under the state's control was to provide
financial security for public safety retirees. He
delineated that the bill for the cost of training new
officers was well over $200,000. Anchorage was losing
police to the lower 48 states; they moved to another state
for a DB plan with the benefit to their new employer of
being trained by Alaska. He relayed a story from
professional experience about how difficult it was for a
single officer to survive on the Tier IV plan. He pointed
to the volatility in the stock market in the past couple of
weeks and was grateful for his pension. He spoke with his
officers who shared that they wanted a pension. He
addressed Mr. Frost's statements and data. He guessed that
Mr. Frost did not live or work in Alaska. He argued that
Alaska should not be content with being on par with
national averages. He believed that Alaska should look to
surpass other states in recruitment and retention.
Co-Chair Josephson thanked Mr. Evans for his testimony and
believed his testimony was compelling. Mr. Evans thanked
the committee.
2:52:52 PM
TRACI SANDERS, SELF, WASILLA (via teleconference), spoke in
support of the bill. She shared that she was a Tier 3
educator and taught financial literacy classes. She
communicated that she had numerous conversations with tier
3 educators who felt uncomfortable investing in the stock
market on their own. She discussed that many teachers pay a
1 percent fee to have a financial professional manage their
savings and the effects of the compounded costs of the fee
over time on their savings. Teachers were better able to
perform for students without the financial stress and
worry over their retirement funds. She suggested that
employees could be given the choice of a DB or DC
retirement plan. The DB plan supported many desirable goals
like recruitment, retention, and competent job candidates.
She believed that many teachers would welcome the return of
the shared risk DB plan. She asked the committee to
consider the two resolutions by the Alaska Retirement
Management Board (ARMB) regarding the Tier 3 healthcare
component. She noted that it was not addressed in the bill.
Representative Stapp asked for clarity on the resolutions.
Ms. Sanders answered that the first resolution addressed
the requirement that an employee must work 12 months prior
to reaching Medicare age to access their healthcare
benefits with at least 10 vested years. The resolution
wanted to eliminate the 12 month mandate. She furthered
that the second resolution reduced the highest years for
medical eligibility from 30 years to 25 years. She recalled
that the actions would barely increase contributions from
employers to less than half a percent.
2:58:51 PM
DONNA PHILLIPS, ALASKA NURSES ASSOCIATION, GIRDWOOD (via
teleconference), testified in support of the bill. She
shared that she was a registered nurse and was recently
retired. She spoke to the cost of training hospital and
public health nurses. She believed that it would increase
recruitment and retention and retain institutional
knowledge.
3:00:43 PM
KATHLEEN YERBICH, SELF, WASILLA (via teleconference), spoke
in support of the bill. She shared that she was a teacher
and that she came to teaching later in life and had assumed
she would have a retirement. She had learned early on that
was not the case. She did not mind working hard but found
it very difficult to manage a 401K. She discovered that the
proposed plan was a shared risk plan; the employee,
employer, and state shared the burden. She believed
teachers should get a good retirement. She thought the
system in the bill was fair. She thanked the committee.
3:04:03 PM
MARGE STONEKING, ADVOCACY DIRECTOR, AMERICAN ASSOCIATION OF
RETIRED PERSONS (AARP) ALASKA, ANCHORAGE (via
teleconference), testified in support of the legislation.
She stated that older Alaskans deserved to retire with
independence and dignity. She commented that all
individuals of all ages were faced with a crisis where the
goal of achieving an adequate retirement was more
difficult. She indicated that DB plans increased retirement
security and reduced the reliance on social safety nets. A
National Institute of Retirement Security found that older
households without a pension were 9 times more likely to
live in poverty. Without a DB plan, more Alaskan public
employees may come to rely on public assistance. She
believed that the lack of a DB plan put the state at a
significant disadvantage in terms of recruitment and
retention and maintaining a qualified work force. She
stressed that DB plans were the norm for people working in
public service.
3:07:20 PM
LINDSAY LAYLAND, SELF, DILLINGHAM (via teleconference),
favored the legislation. She shared that she was a first
year teacher and there was no major incentive for her to
remain in the job after five years because there was no
guaranteed pension. She was born, raised, and educated in
Alaska and was teaching in her hometown. She was frustrated
by the situation. She thought it would be too difficult to
stick with teaching in Alaska. She could get a better job
and retirement with other employers in her community. She
observed tremendous teacher turnover due to the current
retirement program. She was hopeful the legislature and
governor saw the value in education and in retaining high
quality home grown teachers. She emphasized that it was
particularly challenging to be in education. She thanked
the committee.
3:10:09 PM
VICTORIA VINSON, SELF, WASILLA (via teleconference), spoke
in strong support for the legislation. She shared that she
was a Local 52 union member and state employee with one
year of service and a long road to retirement. She stated
that the change could have a direct impact on her future
and the future of many others. She believed that a DB
system would give her piece of mind that she would be able
to retire with dignity and stability after a long career.
The current plan had no retirement guarantees due to market
volatility. She was a dedicated hard worker who loved her
job and working for the state. She wondered if the
committee members would advise a young person at the
beginning of their career to remain in the state with the
existing DC plan. She believed that adopting a DB plan was
about keeping dedicated and experienced workers in
community offices, and about supporting fellow Alaskans by
providing critical services. She strongly felt that it
would improve recruitment and retention, despite the prior
statements from Mr. Frost. She asked the committee to
support the bill.
3:12:46 PM
SHANE SERRANO, SELF, ANCHORAGE (via teleconference),
supported the bill. He shared that he was lucky to be a
state employee for over 25 years. He maintained that
current DC employees should not have to rely on luck for
their retirement. He observed a far greater than 20 percent
turnover in his work section and often some were in the
most critical and challenging jobs. Employees in those jobs
could easily find work in the private sector. He asserted
that lacking any incentive beyond the first five years of
work, the state was effectively incentivizing employees to
leave the state and subsidizing other states. He offered
that he worked in law enforcement for the state and there
were many technical jobs that took years for a person to be
trained. He did not believe a DB plan would cost the state
much more especially when factoring in healthier
communities and other benefits when the state retained and
employed qualified people. He expressed his strong support
of the bill. He commented that the bill would not benefit
him personally, but he wanted to speak for all of the
qualified employees he trained, and he witnessed in sadness
leaving the state after 5 years for a DB job.
3:15:51 PM
CINDY SPANYERS, SELF, JUNEAU (via teleconference),
testified in support of the legislation. She was a DB
retiree and was grateful for her retirement benefits. She
believed the state had an obligation to ensure current
public servants had a retirement benefit. Her work with a
public employee labor union post-retirement put her in
touch with countless employees hired after 2006 who had
learned they had much less for retirement. She observed
that their accounts were difficult to understand, and
financial growth was slow. Recruitment and retention had
become almost a crisis in the state due to the outmigration
of younger Alaskans, including her 27 year old son. There
were uncertainties with savings and the current stock
market plunge added to uncertainty and fear. The markets
dropped substantially in 2008 and 2009 causing participants
to lose substantial sums; however, the DC participants lost
far more. She shared that April 4 [1968] was the day Dr.
Martin Luther King was assassinated and she reflected on
his words regarding the labor movement bringing hope and
progress. She emphasized that DB pensions helped provide
economic stability in her life and in the community through
retiree spending and philanthropy. She maintained that the
next generation of public sector employees deserved a
retirement.
3:19:56 PM
KEN HUCKABE, SELF, WASILLA (via teleconference), spoke in
opposition to the bill. He voiced that the market was in a
free fall and the price of oil was at $60 per barrel. He
discussed the high costs of the retirement plan and
believed it put a cost on all Alaskans. He suggested an
amendment making benefits calculated on base pay and
consider extending service requirements. He felt that it
was embarrassing for educators to refer to themselves as
public servants and stressed that they were public
employees. He thought that the state was setting themselves
up for more problems in the future. He felt that it did not
appear the state could afford to pay for the bill in the
future.. He emphasized that private sector employees could
not afford to retire. He was strongly opposed to the bill.
3:23:29 PM
JUSTIN LACOSS, MATSU EDUCATION ASSOCIATION, PALMER (via
teleconference), testified in strong support for the bill.
He voiced that Alaska was facing a significant staffing
crisis and especially in education and public safety with
high employee turnover and recruitment challenges. He
believed that solving the challenges was paramount for
the ability to provide quality state services Alaskans
depended on. Instituting HB 78 with a shared risk component
was crucial in mitigating the crisis. Research demonstrated
that DB plans significantly reduced employee turnover and
fostered a more stable experienced workforce. He
acknowledged the startup costs but wanted them carefully
weighed against the sustained benefits of the bill. He
related that estimates presented in the Senate Finance
Committee showed potential cost savings of $76 million
annually from reduced turnover. The data did not account
for direct employee contributions savings or the
significant indirect economic benefits of improved public
services attracting investment and fostering improvements
in the quality of teaching and public safety. He believed
that the plan was a tangible solution to state's current
employment issues. He thanked the committee.
3:26:16 PM
JULIA INGA, SELF, PALMER (via teleconference), opposed the
legislation. She believed that the bill was not affordable.
3:26:35 PM
WILLY KEPPEL, SELF, QUINHAGAK (via teleconference), opposed
the bill. He stated that the House Finance Committee passed
a budget with a $1.9 billion deficit the previous day. He
stated that the bill meant the funds would be taken from
the poorest Alaskans in the form of a reduced Permanent
Fund Dividend (PFD). He suggested paying the full PFD. He
stated that the "regular folks" outnumbered union members
by over 650 thousand people in the state. He reminded the
committee the unfunded liability for the DB plan was $7
million. He supported increasing DC contributions and
putting all employees back into Social Security. He voiced
that everyone was having a hard time retiring and the state
should consider equal treatment for Alaska's greatest
numbers. He wondered where the state would come up with the
funding to pay for the bill.
3:29:32 PM
KEN GRIFFIN, SELF, WASILLA (via teleconference), did not
support the bill. He stressed that the state did not have
the money for another DB plan. He expressed his frustration
and believed that the bill was a moral hazard. He thought
that the proposal was irresponsible with the people's
money. He believed that it was not the state's job to take
care of people's retirement. He knew many people who were
doing fine managing their retirement on their own. He
stated the main reason people were leaving was that the
state was funding government and passing a bill that would
compound the problem. He listened to all of the committees
daily. He underscored that the state was completely broke.
He pointed out that federal money and savings were not
revenue. He did not support growing government. He stated
the legislature was not looking out for its citizens. He
stressed that if the state wanted to stop people from
leaving Alaska it needed to build up its private sector. He
wanted the state to act like a Republican conservative
state and not a federal enclave. He asked the legislature
to choose conservatism.
3:33:54 PM
KEDDIE JOHNSON, SELF, KENAI (via teleconference), testified
in opposition to the bill. He stressed that Alaska was in a
budget crisis with a budget shortfall of $650 million over
the next few years due to spending outpacing revenue for
years. He mentioned that school districts were grappling
with large deficits due to flat state funding, declining
enrollments, and less federal money. He believed that it
was no time to add more financial risk, which DB plans
added to because of payouts regardless of investment
performance. He stated that 16 years ago Alaska switched to
a 401k style retirement system to avoid financial
instability. He supported a dependable retirement system,
not one that could spiral out of control and drain the
state's funds. He maintained that the cost of DB plans
could force more state cuts and was a "tradeoff the state
could not afford. He urged the committee to reject the
bill.
3:36:55 PM
LOUIS THEISS, SELF, GIRDWOOD (via teleconference),
supported the legislation. He shared that he was a senior
and worried about adequate police protection, public
healthcare, state road safety, teachers, and state workers.
He was aware that Alaska was the only state that lacked a
DB plan for state employees. He provided an example from
personal experience concerning the closing of a trooper
station in Girdwood in 2017 resulting in the need to hire
Whittier policing paid for by property taxpayers. He
thought that it exemplified forfeiting services that
troopers could provide. He wanted the state to be
competitive and grow. Without state services, the state
would not grow economically. The state had to provide
services that attracted people to the state. He thanked the
committee.
3:39:41 PM
JACKIE GOHL, SELF, JUNEAU (via teleconference), spoke in
support of the HB 78. She shared that she worked for the
Office of Children Services (OCS) for 13 years. She had
moved to Alaska as a volunteer with AmeriCorps and had
stayed. She was a tier 4 employee and did not have a
defined benefit. She had married a person with a DB plan
and remained in Alaska specifically because of his DB
benefit. She noted that all of her job advancement was
predicated on someone leaving the state. When her husband
retired, it would likely be the best option for them to
take her 401k and move to another state to work; however,
if she had a defined benefit, it would make sense for her
to remain at work. She referenced other testimony in
opposition to the bill. She pointed out that even people
calling against the bill were painting a negative picture
of working without an adequate retirement. She felt the
bill was necessary.
3:43:00 PM
MANDA GERSHON, SELF, WASILLA (via teleconference), opposed
the bill. She shared that she worked part-time for the Mat-
Su School district. She stated there used to be a pension
in Alaska but ended in 2006 because the state could not
afford it. She noted employees in the system were paying
6.75 percent and more for Public Employees' Retirement
System and the Teachers Retirement System (TRS). She asked
why the bill was being offered when it had not been
affordable in the past. She referenced the budget deficit
at present and did not think the bill would work. She
believed the state's economy needed to be diversified. She
remarked that taking the PFD away would mean an increase in
welfare. She stressed the state should focus on needs and
not on wants. She hoped for business revenue. She thought
more teachers and police could be retained if they were
paid better and were offered other benefits. She did not
believe they needed to be throwing their money at a pension
system.
3:46:21 PM
SETH NIELSEN, SELF, PALMER (via teleconference), spoke in
favor of the bill. He shared that he was born and raised in
the state and considered himself a conservative. He
observed unsustainable turnover in his state job and in his
family members teaching and government services jobs. He
reiterated that the turnover was due to skilled people
leaving after 5 years to work in the private sector or
other states. He understood the budgetary concern and he
also was thinking about it. He believed there needed to be
new ways of generating revenue in Alaska. He believed that
the state botched prospects for a gasline. He did not
believe the Permanent Fund should be used for government.
He agreed the budget needed to be fixed, but the state also
needed to also retain quality employees.
Co-Chair Foster provided the email address for written
testimony.
HB 78 was HEARD and HELD in committee for further
consideration.
Co-Chair Foster reviewed the schedule for the following
meeting.
ADJOURNMENT
3:51:35 PM
The meeting was adjourned at 3:51 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB 78 Public Testimony Rec'd by 040425 am.pdf |
HFIN 4/4/2025 1:30:00 PM |
HB 78 |
| HB 78 Letter of Support_AACP 4.8.25.pdf |
HFIN 4/4/2025 1:30:00 PM |
HB 78 |
| HB 78 Public Testimony_rec'd as 4.11.25.pdf |
HFIN 4/4/2025 1:30:00 PM |
HB 78 |