This editorial appeared in the Fairbanks Daily News-Miner:
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Alaskans should know by now that there's a big financial problem with the two state-run public employee retirement systems - the Public Employees' Retirement System and the Teachers' Retirement System. The two systems are a combined $8 billion to $10 billion short of the amount of money they need to meet their obligation to state employees and the employees of participating local governments. That doesn't mean that people aren't getting their retirement checks, however; what it does mean is that the systems are not on sound footing.
The shortfall has grown by a few billion dollars in the years that legislators have been debating what to do about that gap. And so has the dollar amount that local governments, the University of Alaska, and the state government itself are required to pay into the system each year as their share of the retirement outlay.
It's with those two circumstances in mind that we applaud the continuing efforts in the Legislature to solve the problem, which isn't as sexy a topic as maybe the natural gas pipeline or education funding but which is nevertheless important to the state.
Rep. Mike Kelly, Republican of Fairbanks and for years a top voice in the retirement debate, this week introduced legislation that would commit the state to paying 80 percent of the unfunded liability for past employee service over the next 25 years, thereby removing the retirement system shortfall as an item of debate each and every legislative session. Other public employers, like local governments, would be responsible for 20 percent.
Separately, employee contribution rates would increase 5 percent, with that money to be used only to pay for that employee's benefits. It would not, under Rep. Kelly's bill, be used to pay down the unfunded liability.
Other bills have been proposed this legislative session to solve the problem, which is weighing down local governments with increasing annual mandatory payments. Money that increasingly goes into the retirement system is money that isn't going into other government services or into the classroom. Some support paying off the debt in a shorter time period than Rep. Kelly proposes, and others support allowing bonds to be issued to pay off or reduce the debt.
Gov. Sarah Palin, too, seems to recognize the seriousness of the problem. In January she put forward an education funding bill that provides $207 million from the general fund to pay the retirement system cost increases of Alaska's school districts in fiscal 2008.
No, it may not be sexy stuff, but straightening out the finances of the state retirement systems is terribly important to governments of all sizes in Alaska. Gov. Palin and legislators of both parties should continue to give this issue the attention it deserves.