By SUZANNE DOWNING
April 25, 2026 – The Alaska Senate Finance Committee on Friday advanced House Bill 78, a proposal to reopen a defined benefit pension option for public employees. The committee sent the measure to the Senate floor for a fast-moving process expected to start Monday.
But the version that cleared Finance is not the one that left the House.
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In a series of amendments adopted over multiple hearings culminating Friday morning, the committee reshaped the bill in ways aimed at controlling long-term costs while still restoring a pension-style option for teachers and public employees.
At the center of the Finance rewrite is a new cap structure and expanded authority for the state’s retirement board, reflecting ongoing concern about the severe financial exposure that comes with returning to a defined benefit system. The old defined benefits program still owes $7 billion, and it hasn’t been functioning since it was discontinued in 2006.
Analysis: HB 78 would reopen Alaska’s pension risk just as governments push for more spending
Among the key changes:
The committee increased the employer contribution cap for non-state PERS employers (municipalities) from 22% to 24%, a move designed to reduce the amount of cost that could be shifted to the state if liabilities grow faster than expected.
It also built in flexibility for employees, allowing contribution rates to adjust within a set range, generally between about 8% and 12% or more, rather than locking in a fixed rate in statute. That authority would rest with the Alaska Retirement Management Board, which was given broader discretion under the amended bill to manage the system’s financial health.
Another change adds a minimum service requirement before medical benefits vest, requiring at least 12 months of employment before eligibility begins. The Finance version also includes technical provisions governing how employees may move between retirement “tiers” while preserving accrued benefits.
Taken together, the amendments reflect an effort by Senate Finance majority members to make the bill palatable to conservatives: responding to union demands while trying to avoid a repeat of the unfunded liability problems that led the state to close its pension system to new hires two decades ago.
After adopting the committee substitute incorporating those changes, the committee voted to move HB 78 out of Finance with a “do pass” recommendation and accompanying fiscal notes.
HB 78 now heads to the Senate floor at a time when lawmakers are facing mounting pressure to address budget shortfalls.
Even with the Finance Committee’s cost controls, the bill could expose the state to long-term financial risk if investment returns fall short or actuarial assumptions prove overly optimistic.
The Monday floor session will start with introduction of the bill and testimony about whether the state is willing to return, even partially, to the pension model that nearly bankrupted the state nearly two decades ago.
7 thoughts on “Senate Finance rewrites HB 78, advances defined pension bill to Senate floor for Monday”
It needs an amendment that says all debt owed by municipalities be paid up front, before this current DB could go into effect.
Good luck getting the municipalities to pay up.
Sure, why not? Let’s piss away the money that will be streaming into state coffers from high oil prices into another unfunded government pension plan! What could possibly go wrong!
If they manage somehow to push through defined benefits, the Democrats will immediately pivot to the need for a state income tax. It will be pitched as a way to ensure “stability” or to protect the PFD. The large RINO contingent of the state Republican party will either join right in or quietly provide moral support in the background.
The first time a municipal employer, school district or employee sues the state over changing the contribution rates as a “diminishment” under the constitution, any new system will be permanent as-is regardless of the language in the statute. Besides, pensions are an old-timer’s thing. The modern workforce values flexibility and portability over a gold watch. Just ask. Whose brilliant idea was this, anyway? Old folks?
If the government employees want a defined benefits plan they should get it from their unions. Just like the trade unions do. That way the state is not on the hook for downturns in the market like happened last time. The state reimbursed the pension plans with state money but not my 401k.
Jackson – Amen to that!
We worked very hard to get rid of defined benefits in the 1990’s. It was simply not sustainable and actually has very little to do with whether or not an public employee remains in Alaska. Alaska’s wavering economy does more to encourage people to relocate than the defined benefit plan. This expense is unnecessary and must be avoided!