Legislature(2025 - 2026)BELTZ 105 (TSBldg)
01/28/2026 01:30 PM Senate LABOR & COMMERCE
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| Audio | Topic |
|---|---|
| Start | |
| HB78 | |
| SB198 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 78 | TELECONFERENCED | |
| *+ | SB 198 | TELECONFERENCED | |
HB 78-RETIREMENT SYSTEMS; DEFINED BENEFIT OPT.
1:33:46 PM
CHAIR BJORKMAN announced the consideration of CS FOR HOUSE BILL
NO. 78(FIN) am(efd fld) "An Act relating to the public
employees' retirement system and the teachers' retirement
system; and providing certain employees an opportunity to choose
between the defined benefit and defined contribution plans of
the public employees' retirement system and the teachers'
retirement system."
1:35:00 PM
CHAIR BJORKMAN opened public testimony on HB 78.
1:35:20 PM
NILS ANDREASSEN, Executive Director, Alaska Municipal League,
Juneau, Alaska, testified with concerns on HB 78.
[Original punctuation provided.]
Thank you for this opportunity to provide testimony
today. HB 78 has a direct and significant impact on
local governments, who as employers are a minority
within PERS but bear the consequence of the State's
decision making. This means that for the promise and
potential of strengthened recruitment and retention,
our members also feel the weight of the net pension
liability that accrues when the State doesn't get it
right, and a high actuarial rate that limits other
kinds of investments that they might make in
employees. Yes, the State carries the burden beyond 22
percent - a compromise that acknowledged that local
governments had no control for the conditions that
created the unfunded liability - but we often talk
about how, for many local governments, they can't
afford to stay in, nor get out.
With that in mind, AML would like to offer three ways
in which this committee could alleviate the challenges
that employers face and improve the conditions in our
communities.
First, we would encourage you to remove the provision
that establishes the 2008 salary floor. This
anachronistic measure was intended to stabilize a
system in freefall but at this point leaves employers
little flexibility to adjust their payroll based on
circumstances that have changed in the last 18 years.
The effect is that if an employer reduces their
payroll below that 2008 number, they continue paying
as if they were stuck in time. This would make much
more sense as something like 75 percent of a rolling
3-year average. It allows the system to withstand
shocks and for employers to adjust based on lost
revenue, governmental efficiencies, etc.
Second, there are many reasons for employers to become
delinquent in payments, but for those who truly can't
afford to remain in, the accrual of payments is
considerable and for some insurmountable. Law
currently requires these employers to be exited from
the program, but this process somehow hasn't been as
efficient or effective as it needs to be. Ultimately,
what is needed is for a mechanism that more quickly
halts accrual, which means the employer stops
collecting or being responsible for collecting and
remitting soon enough that debt doesn't accrue beyond
their means. It could be something like, if an
employer falls behind in more than two payrolls it is
required to pause participation in PERS until it can
remedy the situation. For current delinquencies, they
make up so little from a systems perspective that if
you waived - or the State assumed - their liability,
it would be better than letting it continue to grow.
1:37:33 PM
NILS ANDREASSEN continued with his testimony of HB 78:
Finally, we understand that termination studies are
well-intended from a systems perspective but they are
also a barrier to local decision-making. Especially
for small employers, whose few employees are likely
not going to affect the actuarial rate or net pension
liability much at all, the State's actuaries could
determine a threshold under which termination studies
don't apply. You could give discretion to the
department to exit employers who simply can't afford
to remain, nor leave at this point, so that they can
address their local circumstances without the burden
of a liability that would otherwise continue for years
to come but without a public benefit within that
community.
Thank you again to the bill sponsor for being willing
to consider these issues along the way. To reiterate,
we're willing to work with you to:
-Remove the salary floor - it doesn't help the system
20 years on
-Allow communities facing delinquency to exit the
system, and
-Create an offramp that doesn't always require
termination studies.
1:38:52 PM
JOELLE HALL, President, Alaska American Federation of
Labor/Congress of Industrial Organizations (AKAFL-CIO),
Anchorage, Alaska, testified by invitation on HB 78 and stated
that for over 20 years, the Alaska Public Pension Coalition has
warned that closing the state's defined benefit pension would
harm recruitment and retention. Those concerns have become
reality, with high vacancies, workforce turnover, and
uncompetitive pay and benefits. She said the current system
places no risk on the state but creates poor incentives and
undermines workforce stability. A defined benefit plan
encourages retention and benefits both employees and the state
by supporting effective public services. HB 78 proposes a modern
shared risk-defined benefit system, developed using national
best practices, to address these challenges. Lawmakers have
tried other solutions without success.
1:43:01 PM
CHRIS HEIDEMANN, representing self, Juneau, Alaska, testified in
support of HB 78 and urged support for restoring a defined
benefit pension for public employees. He argued it would
significantly improve teacher recruitment and retention. As a
TRS III member with nearly 20 years of service, they are only 23
percent toward a retirement goal and would need to work 44 years
to reach it. Proposed alternatives like SBS remain inadequate
and fail to help long-serving employees. With TRS III and PERS
IV members nearing retirement and facing financial insecurity,
he stressed that Alaska, currently the only state without a
defined benefit option, should restore a defined benefit
pension.
1:45:51 PM
ZACHARY CHRISTENSEN, Managing Director, Reason Foundation,
Provo, Utah, testified in support of HB 78 and stated that he
supports benefits that attract public workers while remaining
affordable and sustainable. He cautioned that HB 78, which would
reinstate a defined benefit pension for new employees, could add
significant long-term costs. He said his company's actuarial
modeling estimates an additional $1.4 billion over 30 years in a
best-case scenario, and up to $7 billion under more typical
investment returns, creating financial risk for future budgets.
He noted that Alaska's public employee turnover rate is already
lower than the national average, suggesting a defined benefit
plan may not significantly improve retention.
1:49:24 PM
JAYNE ANDREEN, representing self, Douglas, Alaska, testified in
support of HB 78 and stated that she was able to retire 11 years
ago after 21 years with the State of Alaska, joining in 1994
without prior retirement savings. She said Tier 2 provided a
defined benefit pension that created financial security. She
said during her career, recruiting and retaining employees grew
increasingly difficult as state salaries and benefits lagged
behind the private sector after pension changes. She urged
support for HB 78 and notes that retirement security allows them
to remain in Alaska, volunteer, work, and contribute to the
local economy.
1:51:36 PM
DOMINIC LOZANO, President, Alaska Professional Firefighters
Association, Fairbanks, Alaska, testified in support of HB 78
and stated that he first testified in 2005 and has since worked
with others to develop a sustainable retirement system for
Alaska's workforce. He said HB 78 reflects years of research,
modeling, and collaboration with legislators, drawing on best
practices from other states. The plan includes features such as
minimum retirement ages, required contributions (8 percent from
employees and at least 12 percent from employers), and a sliding
scale to adjust for market conditions. He said unlike previous
systems that placed all risk on employers or employees, HB 78
creates a shared-risk model.
1:55:39 PM
JENNIFER SCHMITZ, Director, Alaska Educator Retention and
Recruitment Center/ Alaska Council of School Administrators
(AERRC/ACSA), Anchorage, Alaska, testified in support of HB 78
and stated that retention, not recruitment, drives Alaska's main
workforce challenge, and retirement security plays a central
role. Replacing a teacher costs districts over $20,000, due to
onboarding, mentoring, and lost instructional momentum. She said
Alaska also faces high teacher turnover, especially in rural
areas, with 729 current vacancies statewide. Surveys of school
leaders identify the lack of a defined benefit retirement plan
as the primary reason educators leave. She said HB 78 would
strengthen retention, reduce costly turnover, and provide
students with consistent, experienced teachers.
1:58:25 PM
HEIDI DRYGAS, Executive Director, Alaska State Employee
Association/American Federation of State, County and Municipal
Employees (ASEA/AFSCME) Local 52, Juneau, Alaska, testified in
support of HB 78 and read the following testimony:
[Original punctuation provided.]
My name is Heidi Drygas, and I am Executive Director
of the Alaska State Employees Association. Prior to
this position, I had a career as a labor attorney and
served as Commissioner of Labor and Workforce
Development for Governor Bill Walker. More
importantly, I am a lifelong Alaskan, the daughter of
two proud public servants, and I have witnessed
firsthand the deterioration of our state workforce
over the past 20 years.
ASEA represents more than 8,000 employees in the
general government unit- Alaska's rank and file
workers. We are the beating heart of state service.
Alaska has seen an unprecedented outmigration of
workers for more than a decade. Growing up here, it
was a point of pride to work for the State of Alaska.
Fast-forward to the present, and we struggle to
recruit and retain workers, and it is taking a toll on
those who remain. We are asking more of state
employees and giving them less. Some employees are
doing the work of two and three, sometimes more,
employees. We are losing workers faster than we can
replace them. Our wages and retirement system no
longer attract and keep workers the way they used to.
The recruitment and retention crisis is costing us
real dollars. Fines of over $16 million from the US
Dept of Health due to a persistent, yearslong backlog
in the processing of SNAP and Medicaid applications,
massive errors in submitting the annual STIP to the US
Department of Transportation. A crisis in payroll we
couldn't even pay our own employees on time. These are
just some of the most basic of state functions that we
are failing to do. And it's simply because we cannot
attract workers. The state is paying millions upon
millions of dollars in premium pay, and contracting
out work to outside firms to stop the bleeding and
temporarily fix the problem, while violating
contractual agreements in the process.
2:00:10 PM
MS. DRYGAS continued with her testimony for HB 78:
It's hard to overstate the toll the recruitment and
retention crisis has taken on our existing workforce.
When I began my tenure at ASEA, I learned quickly the
state's response to dealing with the ongoing
recruitment and retention crisis is with a patchwork
of Letters of Agreement- exceptions to our collective
bargaining agreements to address ongoing workforce
needs.
I've signed dozens of these agreements: Incentive pay
to retain workers, recruitment pay to entice new
workers, travel premiums, and overtime pay to
employees that are otherwise overtime exempt. Letters
of Agreement are useful and necessary tools to address
ongoing issues related to the workforce. But these are
band aids and should be used sparingly. Instead,
letters of agreement, and contracting to outside firms
have been the primary tools used to address the
crisis. These tools create friction in the workforce,
as issues of disparity and concerns about fairness are
commonplace. It's like playing Whack-A-Mole- you sign
one of these agreements, and another problem pops up
somewhere else, with workers fairly questioning- "Hey,
wait a sec- why not me?"
While we negotiated a strong contract for our members
last year, wages are still far behind the increases
suggested for most classifications by the long-delayed
state salary study. And it's not clear if it will be
implemented or what the next steps will be.
Pensions for public service will return stability and
predictability to our state workforce. Providing
defined benefits is how the public sector competes
with the private sector for the best and brightest
workers. When surveyed, 89 percent of our members
support a return to a Defined Benefit Retirement
system.
I believe it is possible for Alaska to be a premier
place to live and work again. And one of the most
important steps we can take is to provide pensions for
public service. Alaskans deserve reliability and
predictability in the delivery of public services.
2:02:40 PM
WILLY KEPPEL, representing self, Quinhagak, Alaska, testified
with concerns on HB 78 and asked committee members to declare if
they accepted campaign contributions from state unions or listed
officials. He stated that, during the 2006 pension debate,
defined benefits did not improve teacher retention. Based on
conversations with teachers in Quinhagak, many prefer portable
benefits, higher wages, and access to Social Security. He urged
the committee to reject the bill due to potential costs and
instead strengthen defined contribution plans and investment
returns.
2:06:17 PM
SENATOR MERRICK directed Mr. Keppel to the Alaska Public Offices
Commission website, where he can review campaign expenditures
and contributions for any elected official.
2:06:49 PM
BRETT HUBER, State Director, Americans for Prosperity,
Anchorage, Alaska, testified in support of HB 78 and
acknowledged the sponsor's effort to address recruitment and
retention. He stated that his organization shares concerns
raised by actuaries that poor investment returns could create up
to $7 billion in future liability. The division recognizes
workforce challenges yet emphasizes that many younger workers
value portable benefits and expect multiple careers. Given these
trends and broader labor shortages since COVID, the organization
questions whether the recruitment gains justify the potential
financial risk.
2:09:15 PM
JACKIE HANSON, Superintendent, Craig City School District,
Craig, Alaska, testified in support of HB 78 and reiterated the
testimony of Mr. Heidemann.
2:11:17 PM
MARGE STONEKING, Advocacy Director, American Association of
Retired Persons (AARP) Alaska, Anchorage, Alaska, testified in
support of HB 78 and stated that AARP advocates retirement
security for older Americans. Research shows households without
pensions face poverty at nine times the rate of those with
pensions. She said Alaska's lack of defined benefit pensions
weakens retirement security for public employees and harms
recruitment and retention, which affects public services.
2:14:12 PM
GORDON GLASER, representing self, Anchorage, Alaska, testified
in support of HB 78 and stated that as a long-term state
employee, he said the defined benefit pension created a modest
and secure life for his family. He noted that the state
struggles to hire and retain staff, harming public services.
Thousands of employees live decent lives, contribute to their
communities, and support families.
2:16:54 PM
EMILY MOODY, representing self, Cordova, Alaska, testified in
support of HB 78. She said the lack of retirement security harms
recruitment and retention and forcing educators to leave Alaska.
She stated that retirement stability supports public education
and protects teachers from poverty after long careers.
2:20:51 PM
ERICA BURR, representing self, Fairbanks, Alaska, testified in
support of HB 78. She emphasized that defined benefits are
essential for recruiting and retaining skilled educators who
support Alaska's children and communities. She said teacher
shortages force districts to hire abroad with potential of less
committed teachers. Sustainable, rewarding careers attract and
keep talent, ensuring students receive consistent, high-quality
education. She urged investment in people and supports
reinstating defined benefits.
2:23:32 PM
CHAIR BJORKMAN closed public testimony on HB 78.
2:24:01 PM
CHAIR BJORKMAN noted differing actuarial analyses: those from
legislation supporters, neutral state fiduciaries, and groups
opposing public employee pensions. He asked Representative Kopp
to explain the reasons for these differences and what they
entail.
2:24:39 PM
REPRESENTATIVE CHUCK KOPP, District 10, Alaska State
Legislature, Juneau, Alaska, answered questions regarding HB 78
on behalf of the sponsor. He responded that the Reason
Foundation lacks actuarial expertise and relies on external
entities motivated by 401(k) annuity profits, whereas the state
actuary's primary duty is preventing pension liabilities. He
noted that the state actuary's 25-year modeling, which accounts
for market downturns like 2008, indicates HB 78 poses no
realistic risk of new liability. While other contracted
actuaries may align with their clients' interests, the state's
trusted actuaries confirm that the safeguards within HB 78 make
new liabilities highly unlikely.
2:28:14 PM
CHAIR BJORKMAN asked how HB 78 would affect Alaska's annual cash
flow, compared with current practices like Memorandum of
Understandings (MOUs), letters of agreement, and overtime, based
on the state's actuarial analysis.
REPRESENTATIVE KOPP replied that HB 78 would generate net
positive revenue for the state. Actuaries estimate annual costs
of about $80$90 million, far below current spending driven by
staffing shortages. He said premium pay alone has risen from $80
million in FY20 to over $200 million projected this year due to
vacancies, overtime, and constant training of new staff.
Workforce turnover also causes operational errors, missed
federal funding opportunities, and loss of experienced mid-level
employees. He concluded that stabilizing the workforce through
HB 78 would reduce these costs.
2:31:49 PM
CHAIR BJORKMAN held HB 78 in committee.
| Document Name | Date/Time | Subjects |
|---|---|---|
| SB198 ver. A.pdf |
SL&C 1/28/2026 1:30:00 PM |
SB 198 |
| SB198 Sponsor Statement ver. A.pdf |
SL&C 1/28/2026 1:30:00 PM |
SB 198 |
| SB198 Sectional Analysis ver. A.pdf |
SL&C 1/28/2026 1:30:00 PM |
SB 198 |
| SB198 Supporting Documents ARM Board Resolution 2025-01.pdf |
SL&C 1/28/2026 1:30:00 PM |
SB 198 |
| SB198 Supporting Documents ARM Board Resolution 2025-02.pdf |
SL&C 1/28/2026 1:30:00 PM |
SB 198 |