Top legislators are saying Alaska needs to put some of its huge savings into its underfunded retirement plans, but have yet to reach agreement on how or how much.

Senate Finance Committee Co-chairman Bert Stedman, R-Sitka, last week recommended the state use some of its available billions to pay down Alaska’s $11 billion in unfunded liability for its Public Employee Retirement System, or PERS, and Teacher Retirement System (TRS).

He recommended the state contribute “north of $1 billion and probably south of $4 billion.”

The unfunded liability is the difference between what the state expects the money now in the retirement trust funds to be worth in the future, and the amount of benefits it will have to pay.

Under state law, the budget each year must pay down a portion of the unfunded liability so it is eventually paid off, an amount now in the hundreds of millions a year.

Stedman said that contribution would “help the future operations of the state by lowering the contribution needed to the unfunded liability (by) the operating budget.”

House Speaker Mike Chenault, R-Nikiski, Monday said he’s likely to support something like that, suggesting an amount in Stedman’s range.

He called $2 billion “maybe the top end we’d put into it at this point in time.”

Either amount would be good news for the state, said Sen. Dennis Egan, D-Juneau, who has been seeking to strengthen the retirement plans.

“Two billion dollars at least, but I’ll take anything,” he said.

“Anything that goes into the retirement system is going to help us,” he said.

That’s because the money won’t be needed for years, and will likely earn substantial investment returns over time.

“The more money that goes into the fund, we make money in the end, or at least save it,” he said.

Chenault was skeptical, however. During the recent market decline, the Alaska Permanent Fund and his own personal portfolio both declined, but then they went back up when the stock market rebounded while the state’s retirement savings did not.

“PERS and TRS went down and I haven’t seen where it’s come back up yet,” he said.

Chenault questioned the management of the PERS and TRS trust funds asking, “why theirs went down and stayed down.”

That’s not the message that Department of Revenue Commissioner Bryan Butcher gave the Legislature, however.

Earlier this year he told the House Finance Committee the state’s Treasury Division, which he oversees along with the Alaska Retirement Management Board, actually exceeded the Alaska Permanent Fund’s investment returns last year.

And the Permanent Fund’s returns of more than 20 percent were themselves stellar.

One concern some lawmakers have with contributing billions to the funds is actually overfunding he plans, Egan said. That can lead to unsustainable benefit increases or contribution reductions.

One solution there, Egan said, is a plan by Sen. Johnny Ellis, D-Anchorage, to put the extra contribution in a special fund where its earnings could be used to reduce the unfunded liability only so long as it is needed.

• Contact reporter Pat Forgey at 523-2250 or at patrick.forgey@juneauempire.com.