Gov. Sean Parnell said he doesn’t support allowing new state employees back into the state’s traditional pension plan, even if it’s not expected to cost the state anything.
Sen. Dennis Egan, D-Juneau, has been trying to reopen the state’s defined-benefit pension plan to new employees, who have been forced into a 401(k)-style defined contribution plan since 2006.
Parnell said Thursday even if there would be no additional cost to the state, he’d oppose allowing employees to once again join the defined-benefit plan.
The state’s retirement system currently has an unfunded liability of $11 billion, meaning it will need that much additional money beyond what its trust funds are expected to be worth over the next 25 years.
Parnell said he doesn’t want to take the risk of returning to a defined-benefit plan, even one projected to cost no more than the current defined-contribution plan.
“Putting that risk on the system for only state employees when everyone else bears that risk for themselves is something I don’t support at this time,” he said.
The state’s assumptions assume good times ahead, and if that doesn’t materialize as planned the state could see the unfunded liability grow, he said.
“I don’t see digging a deeper hole. I don’t want to do that for the people of Alaska,” Parnell said.
Egan said employees are already taking a risk going to work for the state, where they aren’t covered by the Social Security system that covers private employees.
“There is already a risk going to work for the state, we’re trying to level that risk,” he said.
Parnell also said he was not supportive of legislative efforts to provide an extra infusion of money into retirement savings to limit the plan’s future cost to the state.
Legislators have proposed amounts from $1 billion to $4 billion into retirement savings. The Senate Finance Committee on Wednesday introduced a bill creating a new pension reserve trust into which those amounts could be deposited.
Parnell said there have been more recent proposals to contribute as much as $6 billion into the retirement trust funds.
“I think that’s a dangerous progression that I don’t want to see continue,” he said.
He used terms like “throwing,” “dumping” and “locking up” to describe deposits into the pension trust funds.
The state faces threats such as declining oil production for which it may need the flexibility of having readily available cash, he said.
“It doesn’t leave us a lot of wiggle room or flexibility when the production curve continues down and oil prices go down even a little bit,” he said.
Egan said the Senate Finance Committee proposal involves creating a new reserve for the cash infusion so it could be used to pay down yearly costs, but might be available in emergencies.
Parnell also proposed switching how pension costs are calculated, switching from “level rate of pay” to “level dollar.”
Under level dollar, costs would be initially higher, but the costs would stop increasing yearly.
He said he appreciated the legislative attention to the unfunded liability problem, which he said was “putting this elephant of a problem on the table.”
• Contact reporter Pat Forgey at 523-2250 or patrick.forgey@juneauempire.com.
Comments (54)
Add commentIt's ironic that while he
It's ironic that while he rips into the state employees' retirement plan proposals, he's busy trying to screw the state out of billions in oil revenue taxes so he can fatten his own retirement. Bring back Sarah!!!
Read the constitution, Sean
Once you give state employees a benefit, you cannot reduce it, Gubernator. That's in the Constitution. So it would be unconstitutional to reduce pensions by creating a new bogus method of calculation.
That's Parnell. Steal from state employees, give away our oil to his oil company employers. Time to get rid of this ripoff specialist.
The Parnell Retirement Plan
For everyone but himself: He's not concerned about teachers, firefighters, and police, etc. having a decent retirement that they can get by on after years of dedicated service.
For himself: 'Course he's on the defined benefit plan, I betcha.
Time for leading by example?
What more needs to be said?
The first three comments have Parnell nailed by the truth. He is finally making his move as almost all political hacks have done, will do, or are doing across the country. He is stealing from the poor/middle class and giving to the rich. If Parnell had interest in helping Alaskans he would, among other things, confiscate federal lands through eminent domain and run a small gauge gas pipeline to Fairbanks and Anchorage. He would also have spurs off that line to truck liquified natural gas to more rural communities along that pipeline. If all of the big oil companies refused to build that pipeline he could hire it out to real Alaskans that have the experience in building such things. Oil companies operate with impunity in Alaska and enrich themselves immensely and then send their obedient slaves like Parnell to cry poverty for the oil companies. Parnell humiliates all Alaskans.
I suggest we...
...retire Sean Parnell at our earliest opportunity.
Egan is worried about the
Egan is worried about the Social Security system? is he kidding? SBS is a far superior retirement system than SS and it always will be. SS wont be around for the majority of those who have put money into it for years. What the tier 4 employees have now is the same as most every other state and private companies have for retirement. Why should firefighters, police, teachers... have a superior system of retirement than anyone else? Working for the State of Alaska is still a much better deal than private employers or worse... not working in this economy.
I think all these sniveling
I think all these sniveling state employees should show the Gov. who the boss is, & just quit!
It would be interesting to see just how many paper pushers the state could do with out.
@Tikitime: Social Security is
@Tikitime: Social Security is solvent for the next 25 or so years, at which point it'll still be able to pay benefits, just reduced by about 25%. So even if nothing is done over the next quarter of a century, everyone who pays into it will receive something out of it.
I don't get it.....
...Call me naive, but I just don't get this war on middle-class working people. Not to mention the resistance of the governor to pay down the debt. Isn't that just passing the buck to our grandchildren, or whatever the debt mantra of the Republicans is?
It's not like the unfunded liability is a surprise - it's simple math - x number of employees, x number of years to retire, etc. They know it's coming.
If you have people working for you for 20, 30 years, and you promise them x for all those years of service, then you provide x, period. To not provide it because you'd rather build a new bridge or whatever to get votes that year is simply criminal.
RNC marching orders
Parnell is just following the RNC model of ineffective governance. You rely on the national policy to edict what you do in office. That way you keep you profile in the RNC files under good-old-boys-and-girls.
If he was honestly concerned about the PRS & TRS deficits he actually be promoting some plan to reduce the existing debts. For no matter what the future holds the debt is not going to go away becasue Parnell ignores it. As long as the debt remains on the books Alaska is paying a higher rate on its bonds when the analyst review the existing liabilities and assign bond issuer ratings.
Parnell is trying to make
Parnell is trying to make Governor Scott Walker look good. Too bad his retirement can't begin for a few more years. The guy is in way over his head.
This "unfunded liability" was
This "unfunded liability" was caused by mismanagement of the pension plans by Marsh & McLennan Cos. The state was going to sue. I am wondering what happened. Does anyone know.
Parnell is really wrong here.
Most private compaines that are worth anything have better plans than what Parnell wants for Alaska State employees.
Other issues
The state's costs have risen in so many other areas that there is a real pinch right now. Health care costs have taken the largest bite out of budgets along with energy costs for all the facilities. Health care reform (not goofy Obamacare), cheap, clean energy (natural gas), and review of all leases the state is getting robbed on could take a huge chunk out of this liability.
Our state should be investing
Our state should be investing in its employees before spending any more money on new road systems.
It will cost the state hundreds of millions to extend the road system in Juneau past Eagle Beach - this IS wasteful state spending.
Who is at the end of this road and will benefit?
Goldbelt Inc. is one, they own most of the land out at Echo Cove, also the Alaska Miners Association group wants the road built for "private" members that have mining claims out there.
So once again private companies are benefiting over the public, over public employees.
Banditrider - the "Affordable
Banditrider - the "Affordable Care Act" acutally works to reduce health care costs for individuals, families and the state.
Thats not goofy, it's reform that is needed to reign in the soaring costs of health care of the Health Insurance industry.
The only thing goofy is this Governonr wanting to spend billions on roads over the welfare of Alaskan families.
Rather than the Governor spending "our" billions on his Roads-to-Resources plan,
"our money" should be invested in our state employees and fix the wrong here.
But Parnell just doesn't want to.
@madison89
What exactly do you do?
Sniveling State Employees?
So if people speak up to improve their situation they are sniveling?
Baditrider-
If you needed more after Foltoper's comment, here's another link for the ACA. Medicare Advantage enrollment under it so far is up 10%, premiums down 7%.
http://tpmdc.talkingpointsmemo.com/2012/02/did-health-care-reform-hurt-m...
Additionally- if the Governor
Additionally- if the Governor feels that the pension system in this state is so fundamentally flawed...I invite him to join the Teir IV 401 system. If you really want to make a difference Gov. lead by example and give up your pension before demanding that people under you give up their OPTION for a pension.
elected officials
elected officials can sign a waiver and choose to opt out of PERS if they so wish, I somehow doubt Parnell has done that.
I know people like Madison love to hate State employees (why I dont know when they do shop at local business and provide income for private businesses) but PERS is not soley a state employee plan. Many City's, Boroughs, colleges, schools, hospitals, medical centers throughout the state are under PERS as well. What people & our Gov dont understand about "unfunded" is beyond me. Unfunded means at some point it will go bankrupt. That in itself should cause major concern for people in the state. I do also wonder how a Governor can under-fund schools for our kids, and ignore a growing pension liability all the while saying our state has enough money to fork over billions in tax breaks to oil companies whose profits have been at record levels. Parnell must be taking notes from the Scott Walker playbook. Perhaps its time for Alaskans to show the same
mo-jo that Wisconsites are showing against their corrupt governor.
Amen Kiki!
Amen Kiki!
Defined Benefits be Damned
"Parnell also said he was not supportive of legislative efforts to provide an extra infusion of money into retirement savings to limit the plan’s future cost to the state."
The Governor is very honest here -- He totally disagrees with the State's defined benefits for eligible retirees. Moreover, he does not care if the system goes broke and can be fixed.
Even if the Constitution protects retirement benefits we are in for a tough fight on this one.
I thank the Governor for his honesty and remind him there is a job opening in Wisconsin.
.
My mom has worked for the
My mom has worked for the state of Alaska for almost 30 years now and her biggest gripe through all those years has been all the useless do nothing people she has to deal with. Her boss makes 100k plus a year and spends 1/2 her day online looking at clothes and stupid cat pictures. Another gal in her office is absent 1/4 of the time, always late and has te be supervised. These are not low end positions. these are range 17+ people. A guy I fish with admitted only doing about 3 or 4 hrs of real work a day and he was another 100k plus a year job.
A state job should not be the best job in Alaska. The hardest working people I've seen in a Gov building was the mail crew.
I don't think that 70% of State Employees could make it in the for profit world. Most that I've seen would be fired before their 90 day eval was up.
@ Arcadies
Just because your mom and her friends were lazy does not say anything about that 70% of state employees that you refer to. And what 90 day eval are you talking about?
Greece here we come!
Just saying! waaaaa waaaaa waaaa
@ Arcadies
Shame on you for talking about you mother that way.....
@Madison I bet you will be the first to complain that you didn't
get you welfare check from the State of AK.....no paper pushers left to help your welfare status.
Arcadies, Where your mom
Arcadies,
Where your mom works / worked sounds just like here and I work at a "private company". In fact I've been reading the empire all morning and my boss does not care. We work when there is work to do.
My salary, which also includes great benefits, is passed off on to consumers even when I am reading the empire.
Are you at work?
I'm sorry people, but what
I'm sorry people, but what don't you get about a government not producing anything. Where in the heLL do you think all the funds come from for public sector employees? It's called income redistribution - or taxpayers if you wish.
And all this crap about private employees having better retirement plans - that's just ignorant. Find me any private worker (unions don't count) that puts a pittance into the benefit plan for x number of years and then is able to collect a defined benefit when he retires - and has his healthcare covered besides.
And big deal if Parnell agrees to pay down the liability by any amount. The loses to the "pot of taxpayer money" are increasing exponentially, no matter what Egan says.
Thank goodness for Parnell and his ideas of trying to grow the economy by building roads or encouraging oil exploration - atleast he gets the idea of a market economy.
Keep up the whining public sector workers because the money is not there to fund your union retirement benefits and the next option is lay offs.
@Calypso: if layoffs are the
@Calypso: if layoffs are the next option, please remember that this will also reduce services to YOU. I don't understand how can you say government doesn't produce anything (false) and then in the same post talk about building roads.
You need to perform a self-diagnostic on your logic circuits. I think you may have a couple of faulty transistors, because this error you made is reproducible, as it consistently shows up in your posts.
Well said PP- and further
Well said PP- and further more Calypso...something to the tune of 90% of the state's revenues (which make up the capital budget) are made up of taxes on OIL COMPANIES so stop your "my taxes pay your salaries" bs...it holds no water.
oil company profits
Calypso, so maybe you can explain a little why you think there is no money to fund retirement benefits but yet we have money to give tax breaks to the tune of $2 billion per year? Shell, the company that has been running ads on tv saying how much they need the money, had a 54% increase in profits from 2010 to 2011. What about current retirees. They plan retirement based on what they are told they will get. They have house payments, bills, etc just like you do. So according to you its fine that the state just stop paying retirement benefits? I hope you understand if that happens, this town will be gutted with people walking away from homes they cant pay for, business going under from losing that income, etc. Better yet, why dont you just say who you work for and if you hate public sector money so much, those employees can do you a favor and stop doing business with you.