Legislature(2025 - 2026)BELTZ 105 (TSBldg)
02/02/2026 01:30 PM Senate LABOR & COMMERCE
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| Audio | Topic |
|---|---|
| Start | |
| SB170 | |
| SB211 | |
| SB81 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | SB 170 | TELECONFERENCED | |
| *+ | SB 211 | TELECONFERENCED | |
| += | SB 81 | TELECONFERENCED | |
SB 81-PUBLIC EMPLOYER PENSION CONTRIBUTIONS
2:31:25 PM
CHAIR BJORKMAN reconvened the meeting and announced the
consideration of SENATE BILL NO. 81 "An Act relating to employer
contribution rates in the teachers' retirement system and the
Public Employees' Retirement System of Alaska; and providing for
an effective date."
2:32:00 PM
SENATOR BERT STEDMAN, District A, Alaska State Legislature,
Juneau, Alaska, sponsor of SB 81 read the following:
[Original punctuation provided.]
For the past two decades, the unfunded liability has
significantly impacted the finances of both non-state
PERS employers and the state.
SB 81 advances the state's effort to reduce the
unfunded liability by providing the Alaska Retirement
Management Board with flexibility needed to adjust the
twenty-two percent contribution rate. With input from
municipal employers, the ARM Board would have the
authority to increase or decrease rates to achieve
measurable reductions in the unfunded liability and
stop deferring costs that enable the liability to
grow.
In 2006, Alaska Retirement and Management (ARM) Board
set employer contribution rates to the full actuarial
rate.
2:33:21 PM
SENATOR STEDMAN explained that the ARM Board would set a rate
covering both the current year's required contributions and the
amount needed to retire the unfunded liability.
In 2008, as employer contribution rates surged and
placed significant strain on municipalities and school
districts, the legislature capped PERS employer
contributions at twenty-two percent through SB 125.
The state assumed responsibility for the difference
between the cap and the actuarially required
contribution, relieving local governments of excessive
financial burdens.
SENATOR STEDMAN stated that Alaska capped the rate at 22 percent
of payroll because escalating rates risked bankrupting
communities statewide, with the state covering the remaining
balance.
State assistance payments for municipalities and other
PERS employers remain entirely funded with
Unrestricted General Funds (UGF).
2:34:34 PM
SENATOR STEDMAN noted that the costs are tightening and involve
hundreds of millions of dollars. The ARM Board projected about
$207 million, while the governor budgeted $232 million for one
year, with rates expected to escalate annually.
At the local level, the contribution cap represents
twenty-two percent of aggregate payroll. Approximately
nine percent of that amount goes toward the normal
cost of retirement benefits for active employees,
while the remaining thirteen percent is applied to the
unfunded liability.
Removing the twenty-two percent cap and bringing non-
state PERS employers to the table to participate in
discussions on setting the rate would encourage both
communities and the state to pay down the liability
sooner rather than later and not try to shift the
liability from one entity to the other.
SENATOR STEDMAN stated that over the past two decades, the state
has shifted billions of dollars in costs to local governments;
SB 81 would bring all parties to the table to discuss the rate
without mandating changes to the 22 percent cap.
Continuing the policies of the last 18 years has
resulted in decades of payments toward exhausting this
liability. These extensions continue to burden our
communities, while also hindering their ability to
potentially allocate this money towards other critical
local priorities.
2:37:14 PM
SENATOR STEDMAN noted that communities may choose to prioritize
salary increases, lower taxes, or school funding, though, all
systems should participate in setting the rate. He said the goal
should be extinguishing the liability rather than passing it to
future generations.
2:39:24 PM
SENATOR DUNBAR asked whether the 22 percent cap originated in
regulation or statute, and without a repealer in the bill, how
can the board exceed that cap.
2:39:50 PM
SENATOR STEDMAN replied that if the 22 percent cap was included
in the bill, the cap would need repeal to allow flexibility.
2:40:12 PM
SENATOR YUNDT stated that the unfunded liability has been paid
for about 18 years and may continue until around 2039. He asked
whether increasing principal contributions would allow earlier
payoff, and if so, would additional funding come from the state
or local governments.
2:40:53 PM
SENATOR STEDMAN replied that addressing the liability will
require either higher investment returns or increased
contributions, and it may extend beyond 2039. He said
contribution rates have remained at 22 percent for years, and
while reductions were once expected, changes to amortization
have extended the timeline and added flexibility, with ongoing
discussions among stakeholders.
2:41:59 PM
SENATOR YUNDT noted that Alaska is spending over 200 million a
year right now and asked what percent of that is principal
reducing and how much is interest.
SENATOR STEDMAN replied that he didn't know.
SENATOR YUNDT stated that it would be helpful to see an
amortization analysis showing how much is going toward principal
versus interest, and how additional contributions would reduce
the timeline.
SENATOR STEDMAN noted that large contributions do reduce the
liability and payments, but continued extension of the
amortization period prevents fully catching up. He said the
liability was about $6.5 billion in 2015 and expects it to reach
around $7 billion in FY25.
2:43:46 PM
SENATOR YUNDT asked what is the liability today if the unfunded
liability was $6.5 billion in 2015.
2:43:53 PM
SENATOR STEDMAN replied that the FY25 figure is not yet
available, though it's expected to reach around $6.5 to $7
billion.
2:44:10 PM
CHAIR BJORKMAN stated that in his presentation last week, the
House Majority Leader presented the committee with the same
amount of $6.5 to $7 billion.
2:44:30 PM
SENATOR STEDMAN stated that the liability dropped from about
$8.3 billion to $6.5 billion after a $3 billion contribution,
though large balances and compounding make the debt difficult to
reduce.
2:45:07 PM
SENATOR YUNDT asked who decided to extend the amortization
schedule, when was the schedule finalized, and in what year did
the amortization occur.
2:45:19 PM
SENATOR STEDMAN replied that the Alaska Retirement Management
Board has repeatedly recommended contribution levels, which are
submitted through the administration for the budget. For FY27,
the board recommends about $270 million, while the proposed
budget includes $232 million; legislative action is still
pending. He said these amounts address only the unfunded
liability, not ongoing benefits, and surplus funds from other
areas, like health care, cannot be used for pensions.
2:46:59 PM
SENATOR YUNDT stated that last year's contribution was $218
million, this year's recommendation is $270.2 million, and the
governor's proposed budget includes $232 million. He asked
whether the contributions cover only interest, or is the
principal being reduced.
2:47:20 PM
SENATOR STEDMAN replied that there is concern that the problem
has been repeatedly deferred, with little progress despite
significant spending overtime. He said unfunded liability has
persisted for decades, largely driven by pension costs, not
healthcare, which is now in surplus. State intervention was
necessary to prevent local governments from failing, though
liability remains an ongoing challenge.
2:48:52 PM
CHAIR BJORKMAN stated that the issue is whether to fully fund
pension contributions now, per ARM Board recommendations to meet
a 2039 payoff, or continue underfunding and extend the liability
into the future. Historically, lower contributions have worsened
the problem due to compounding. SB 81 would allow increased
contributions, including from local governments who are
currently capped at 22 percent, to pay down the liability more
quickly.
2:50:49 PM
SENATOR STEDMAN stated that the ARM Board can adjust
contribution rates, shifting costs between local governments and
the state. Without action, the unfunded liability will continue
burdening current and future workers throughout their careers,
paying for benefits accrued decades ago.
2:51:59 PM
CHAIR BJORKMAN solicited a motion.
2:52:01 PM
SENATOR MERRICK moved to adopt Conceptual Amendment 1.
CONCEPTUAL AMENDMENT 1
BY SENATOR STEDMAN
Delete Section 1, lines 5-12
2:52:12 PM
CHAIR BJORKMAN objected for purposes of discussion.
2:52:18 PM
SENATOR STEDMAN stated that the state covers all unfunded
liability for teachers (TRS), so the 22 percent cap does not
apply there; the issue is concentrated in PERS. He said this
reflects state responsibility for education costs, which is why
the state assumed the unfunded liability rather than leaving it
to local governments.
2:53:05 PM
CHAIR BJORKMAN removed his objection; found no further objection
and Conceptual Amendment 1 was adopted.
2:53:26 PM
SENATOR DUNBAR noted that SB 81 expands the ARM Board's
authority. He asked if the 22 percent cap still exists in
statute, how can the board exceed it, and if the cap was
repealed in 2021, why is no repealer needed now.
2:54:07 PM
SENATOR STEDMAN replied he will get back to the committee with
an answer and noted that if SB 81 needed a repeal it would have
been put in by legislative legal.
2:55:17 PM
CHAIR BJORKMAN opened public testimony on SB 81.
2:56:00 PM
CYNNA GUBATAYAO, Manager, Ketchikan Gateway Borough, Ketchikan,
Alaska, testified in opposition to SB 81 and read the following:
[Original punctuation provided.]
Good afternoon, my name is Cynna Gubatayao Smith, I am
the Assistant Borough Manager for the Ketchikan
Gateway Borough. Regarding SB 81, the 22 percent PERS
cap was negotiated in 2008 under the PERS
restructuring plan which was intended to address the
unfunded liability while giving municipalities a
predictable cost-share.
Our Borough has dutifully paid its share of the NPL
ever since. Our community's current share of the PERS
NPL is now over $57M for the Borough, City of
Ketchikan, and the School District. That's for a total
community of about 13,500 people and whose population
is declining.
The original 2006 amortization period for paying off
the unfunded liability was set at 25 years, to end in
2030. In 2018, that date was extended to 2039, with
much discussion and huge debate. In an April 29, 2025,
presentation to the House Finance Committee, Gallagher
told the Committee that the unfunded liability is not
projected to reach full funding until 2048. That in
itself is already a major cost shift to the
municipalities.
Since 2016, the Ketchikan Gateway Borough Assembly has
adopted multiple resolutions opposing any attempts to
cost-shift by increasing the PERS & TRS contribution
limits. The Assembly reaffirmed that position as
recently as Dec 1, 2025, and I am now conveying to you
the Assembly's opposition to increasing the
contribution limits.
2:58:02 PM
STEVE CARRIERE, Council Member, City Council of Dillingham,
Dillingham, Alaska, testified in opposition to SB 81. He stated
that Dillingham has relied on about $188,000 annually in state
assistance, with some years exceeding $250,000. He said the
money is essential for a small, declining community and losing
that predictable support would be difficult to manage.
2:59:36 PM
DONNA ADERHOLD, Council Member, Homer City Council, Homer,
Alaska, testified in opposition to SB 81. She stated that
increasing the 22 percent PERS contribution unfairly shifts
costs from the state to the municipalities. She said that she
recognizes the seriousness of the issue and emphasizes that
municipalities should be included in any discussions about
changes.
3:01:18 PM
CHAIR BJORKMAN closed public testimony on SB 81.
3:01:24 PM
At ease.
3:02:28 PM
CHAIR BJORKMAN reconvened the meeting and stated that the
committee will submit questions to the Department of
Administration and the ARM Board to clarify their intentions, as
well as what is currently allowed and enforceable under statute
driving policy decisions.
3:03:14 PM
CHAIR BJORKMAN held SB 81 in committee.
| Document Name | Date/Time | Subjects |
|---|---|---|
| SB170 Draft Proposed CS ver. O.pdf |
SL&C 2/2/2026 1:30:00 PM |
SB 170 |
| SB170 Summary of Changes ver. T to ver. O.pdf |
SFIN 2/24/2026 9:00:00 AM SL&C 2/2/2026 1:30:00 PM |
SB 170 |
| SB211 ver. A.pdf |
SL&C 2/2/2026 1:30:00 PM |
SB 211 |
| SB211 Sponsor Statement ver. A.pdf |
SL&C 2/2/2026 1:30:00 PM |
SB 211 |
| SB211 Sectional Summary ver. A.pdf |
SL&C 2/2/2026 1:30:00 PM |
SB 211 |
| SB211 Fiscal Note-DCCED-CBPL 01.30.26.pdf |
SL&C 2/2/2026 1:30:00 PM |
SB 211 |
| SB211 Supporting Documents-Legislative Audit Reports Link Page.pdf |
SFIN 2/17/2026 9:00:00 AM SL&C 2/2/2026 1:30:00 PM |
SB 211 |
| SB81 Sponsor Statement ver A.pdf |
SL&C 3/3/2025 1:30:00 PM SL&C 4/4/2025 1:30:00 PM SL&C 2/2/2026 1:30:00 PM |
SB 81 |
| SB81 ver A.pdf |
SL&C 3/3/2025 1:30:00 PM SL&C 4/4/2025 1:30:00 PM SL&C 2/2/2026 1:30:00 PM |
SB 81 |
| SB81 Sectional Analysis ver A.pdf |
SL&C 3/3/2025 1:30:00 PM SL&C 4/4/2025 1:30:00 PM SL&C 2/2/2026 1:30:00 PM |
SB 81 |
| SB81 Presentation to SLAC 04.04.25.pdf |
SL&C 4/4/2025 1:30:00 PM SL&C 2/2/2026 1:30:00 PM |
SB 81 |
| SB211 Draft Proposed CS ver. N.pdf |
SL&C 2/2/2026 1:30:00 PM |
SB 211 |
| SB211 Summary of Changes ver A to ver N.pdf |
SL&C 2/2/2026 1:30:00 PM |
SB 211 |
| SB81 Fiscal Note-DOA-DRB 01.31.26.pdf |
SL&C 2/2/2026 1:30:00 PM |
SB 81 |
| SB170 Public Testimony-Letter-Diamond Game 02.01.26.pdf |
SL&C 2/2/2026 1:30:00 PM |
SB 170 |