Legislature(2025 - 2026)BELTZ 105 (TSBldg)
02/09/2026 01:30 PM Senate LABOR & COMMERCE
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| Audio | Topic |
|---|---|
| Start | |
| SB81 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | SB 121 | TELECONFERENCED | |
| += | SB 81 | TELECONFERENCED | |
SB 81-PUBLIC EMPLOYER PENSION CONTRIBUTIONS
1:35:19 PM
CHAIR BJORKMAN 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."
[At the last hearing of the bill the committee adopted a
conceptual amendment to SB 81, work order 34-LS0110\A.]
1:36:37 PM
MARGEAUX, LJUNGBERG, Staff, Senator Bert Stedman, Alaska State
Legislature, Juneau, Alaska, presented a brief summary for SB
81. She said the legislation would remove the existing 22
percent cap and allow the Alaska Retirement Management (ARM)
Board the flexibility to set a rate that better aligns with the
actuarially determined rate.
1:37:22 PM
SENATOR DUNBAR asked if SB 81 effectively eliminates the
existing 22 percent statutory cap, then why does the bill not
include a repealer.
1:37:50 PM
DAN WAYNE, Legislative Counsel, Alaska State Legislature,
Juneau, Alaska, answered questions regarding SB 81. He stated
his belief that SB 81 does not eliminate the cap. Instead, SB 81
states that, "notwithstanding (a) of this section, the annual
employer contribution rate may not be less than the rate
sufficient to allow payment of the employer normal cost; an
amount calculated at the rate certified under AS
37.10.220(a)(8), and the employer contributions required under
AS 39.30.370 and AS 39.35.750."
1:38:44 PM
SENATOR DUNBAR stated his understanding that the
"notwithstanding" language, combined with line 2, on page 2,
creates an exception that effectively renders the 22 percent cap
a dead letter in many circumstances. He asked why this approach
was taken instead of repealing the 22 percent cap outright, and
are there situations where the cap would still apply.
1:39:25 PM
MR. WAYNE answered that the 22 percent cap would remain in
effect, while adding SB 81 adds a safeguard under AS
39.35.255(a) requiring that, regardless of the calculated rate,
the contribution must be sufficient to cover the three specified
costs listed on page 2 of the bill.
1:40:15 PM
SENATOR DUNBAR referred to SB 81, page 2, and asked whether the
three items listed serve as the only factors that determine the
rate or whether additional factors might hypothetically push the
price above 22 percent but face disallowance. He requested
examples of situations in which the 22 percent cap would still
apply despite other influencing factors.
1:41:05 PM
MR. WAYNE replied he does not know how to answer the question.
he stated his belief that the 22 percent cap remains in effect
and that [AS 39.35.255](d) is intended to ensure the three
requirements on page two are funded.
1:41:32 PM
SENATOR DUNBAR asked for clarity stating if the rate is under 22
percent, the cap is irrelevant; if the cap exceeds 22 percent,
the cap does not applymaking the 22 percent effectively a dead
letter unless other costs are typically included beyond the
three items listed in the bill.
1:42:23 PM
MR. WAYNE replied that the committee might need to ask the
Department of Retirement and Benefits whether the policy needs
to have AS 39.35.255(d)(a).
1:43:08 PM
SENATOR DUNBAR commented that the presentation by Senator
Stedman indicates that SB 81 effectively eliminates the 22
percent cap. He said rather than repealing the cap, SB 81
creates such a broad exception that the cap can never apply,
which is confusing and inelegant drafting. While it may
accomplish the policy goal, the statute becomes misleading to
the public, the approach is unclear and difficult to follow.
1:45:04 PM
CHAIR BJORKMAN continued with public testimony from the last
meeting on SB 81.
1:45:28 PM
CHRIS NOEL, Mayor, Denali Borough, Healy, Alaska, testified with
concerns on SB 81.
[Original punctuation provided.]
For the record, my name is Chris Noel, and I serve as
Mayor of the Denali Borough. Thank you for the
opportunity to testify on SB 81.
The Denali Borough understands the state's revenue
shortfall and the pressure it creates. SB 81 would
allow the state to increase (or decrease) the Employer
contribution for PERS and TERS, allowing it to shift
the costs of the unfunded liability onto local
governments and school districts. This is at a time
when costs continue to rise and state support has
remained flat or declined depending on the program or
department.
The borough has regularly advocated for maintaining
the 22 percent employer contribution cap and
appreciates the Committees consideration of the
municipal impact of breaking away from the cap.
Changing to an annual Alaska Retirement Management
Board adjusted contribution would impose additional
complexity and shift the unfunded liability onto
municipalities.
1:47:27 PM
CHAIR BJORKMAN closed public testimony on SB 81.
1:47:44 PM
CHAIR BJORKMAN commented that SB 81 does exactly what it is
supposed to do. He read the fiscal note as follows:
[Original punctuation provided.]
This bill increases the annual employer contribution
rate by requiring an additional employer contribution
amount to be calculated at the rate certified under AS
37.10.220(a)(8) for both the Public Employees'
Retirement System and the Teachers' Retirement System.
CHAIR BJORKMAN said the committee removed the Teachers'
Retirement System from AS 37.10.220(a)(8) because teachers are
not subject to the 22 percent cap.
This bill will cause employers who participate in the
PERS and TRS retirement plans to pay more towards
liquidating past service liability of the plans. This
bill will take effect immediately [under AS
01.10.070(c).]
CHAIR BJORKMAN stated that this proposal amounts to cost
shifting from the state to local governments, even though the
problem stems from the state's past decisions, underfunding
retirement plans in the 1990s and relying on poor actuarial
assumptions. He said by deferring required contributions, the
state created the current liability, much like postponing
mortgage payments only to face higher costs later. SB 81 would
effectively undo prior agreements with municipalities, erode
public trust, and force local governments to raise taxes or cut
services, even though no alternative plan has been offered to
generate the additional state revenue needed to meet these
obligations. The state's options are limited but not impossible.
He stated he is not convinced SB 81 solves any problems, it
mainly highlights the ones the state already has.
1:53:16 PM
CHAIR BJORKMAN solicited the will of the committee.
1:53:27 PM
SENATOR DUNBAR moved to report SB 81, work order 34-LS0110\A, as
amended, from committee with individual recommendations and
attached fiscal note(s) and authorize Legislative Legal Services
to make technical and conforming changes.
1:53:54 PM
CHAIR BJORKMAN found no objection and CSSB 81(L&C) was reported
from the Senate Labor and Commerce Standing Committee and
authorize Legislative Legal Services to make technical and
conforming changes.
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