By SUZANNE DOWNING
On the first day of the legislative session, a routine media availability revealed a clear divide inside the Alaska Senate Majority over whether the state should restore defined benefit retirement plans for public employees and teachers.
The Senate Majority caucus, a bipartisan coalition dominated by Democrats, is not unified on the issue, as illustrated by contrasting remarks from Republican Sens. Cathy Giessel of Anchorage and Bert Stedman of Sitka.
Giessel argued forcefully that Alaska’s current retirement structure is undermining the state’s ability to recruit and retain qualified workers. She said agencies are struggling with inexperienced staff, leading to costly mistakes.
“We are lacking qualified workers, and new staff who are inadequately trained have made errors that have cost the state millions of dollars,” Giessel said. “This is an issue we need to address.”
Giessel also focused on teachers, noting that many do not participate in Social Security.
“Teachers don’t have Social Security at retirement,” she said. “That is something we need to address” if Alaska wants better government and a stronger workforce.” She declined to admit her husband is a part of that retirement system.
Her comments reflected growing pressure from unions and some lawmakers to revive a costly defined benefit pension system, which Alaska closed to new employees in 2006 in favor of defined contribution-style plans.
But Sen. Stedman pushed back sharply, warning that reopening defined benefits would saddle the state with enormous long-term financial risk.
There is an $8 billion backpack in the old defined benefits program, Stedman said, referring to the unfunded liability still owed by the state. That’s money that still has to be paid in and the Legislature made virtually no progress on that in the last decade.
Stedman cautioned that underfunding pensions extends their life in unhealthy ways, pushing costs further into the future.
“When you short-fund it, you extend its life, and extending its life is not a good idea,” he said. If it doesn’t get funded properly, it gets pushed into the future. “We thought health care would be the problem and pensions would be okay. We fixed health care. The pension is the problem.”
He also corrected what he called a misleading narrative that lawmakers are considering cuts to existing benefits.
Nobody wants a diminishment in benefits, Stedman said.
Stedman said multiple bills dealing with retirement systems are still in play, countering the idea that the Legislature is focused on a single proposal, as Giessel had stated.
He emphasized that Alaska’s existing retirement offerings are already among the strongest in the country.
“Alaska is actually 11th in the nation for long-term retirement for teachers,” Stedman said. “We have a very flush retirement plan. It’s very strong. I’m not advocating diminishing it.”
Stedman pointed to the Supplemental Benefits System (SBS), describing it as highly advantageous for many state employees.
“If you ask workers in this Capitol about their supplemental benefits, they won’t answer, because it’s extremely lucrative,” he said.
As an example, Stedman described a Department of Fish and Game employee who worked for 30 years and ended up with $1.4 million in an SBS account. He said the average retiring teacher has zero.
“Who would walk away from that?” he asked.
Stedman also challenged the argument that teachers are locked out of Social Security.
“It is true that teachers are not in Social Security, and that is of their own accord,” he said, alluding to the fact that this is a union issue. He added that some school districts are considering opting into the system.
“I personally think the SBS system by the state is far superior, but districts can make that selection,” he said.
He added that if teachers were to move into SBS, the cost to the state would be substantial, estimated at $60 to $70 million.
Stedman said groups like the National Education Association should be upfront with educators about the trade-offs.
“The NEA needs to put that in front of teachers and have a discussion,” he said. “Teachers need to get off the dime, get into Social Security or get into SBS.”
6 thoughts on “Day-one divide: Alaska Senate Majority split on restoring defined benefits”
I’d like the ability to opt out of social security and into something similar to the Supplemental Benefits System. It’s hard to take anyone serious who thinks social security and it’s impending insolvency is a good option that anyone would chose.
In order to retain his position as a plutocrat in the Senate, I predict that Senator Stedman will eventually cave on this issue. Holding on to power is always the essential goal.
Here we go again, the unions and the ‘gimmies have their hands out on the first day! Stand strong !
But, they aren’t worried, or serious about the restoration of the ..”statutory”.. PFD
Power and control. And propagate voters by giving them goodies. It’s the leftist way. Except for the pfd. That is just their cash cow.
Defined benefits are not reality. Government is supposed to be in ‘parity’ with the private sector. Name any private sector employer with ‘defined benefits’. It is getting so disgusting with government positions being so far above private sector positions in all areas – pay, leave, health insurance, retirement benefits. I do not begrudge good pay and benefits but our governement employment sector should not be so crazy over the top over the private sector. Giessel the weasel – sorry but the moniker is more and more appropriate – is one big gaslighter, not to mention she is a liar presenting herself as a Republican when she is a full blown socialist. Return social security to all government employees, provide retirement options and the healthcare that would be expected to be provided by any large employee. They should not be above and beyond the private sector. Period. Lastly, it seems our legislature is becoming more and more the proverbial ‘fox guarding the henhouse’.