House rejects bill linking student funding to retirement reform

Posted: Thursday, March 31, 2005

The Alaska House on Wednesday unanimously rejected the Senate's changes to an education bill that makes a school funding boost contingent on reforming the state's retirement systems.

Rep. Carl Gatto, R-Palmer, the bill's sponsor, criticized the Senate for breaking his bill into two parts and using one as a lever against the other.

"I think we'll finally reach resolution, but certainly not the one the other body has offered," Gatto said.

The House earlier this month passed its bill to raise the base student allocation to $4,919 per student, increasing public education funding by $70 million.

The Senate added the contingency that the Legislature must replace teachers and public employees retirement systems' defined benefit plans for new employees with defined contribution plans.

If lawmakers fail to pass those retirement plan changes during this session, the bill reads, the funding would drop by $38 million, or $4,733 per student. That $38 million is the amount that would pay for school districts' pension cost increases.

Reforming the Public Employees Retirement System and the Teachers Retirement System has become a priority of the Republican majority this session. The PERS/TRS systems are estimated to be short by more than $5 billion mainly due to rising medical costs and wrong assumptions of investment returns, according to the administration.

The House rejected the Senate's changes to the education bill 35-0 and appointed three conference committee members to work out a compromise.

House Democrats had decried $4,919 per student as inadequate before the bill was passed March 2. Now, making even that level of funding contingent on changing the retirement systems is a "criminal abuse of this process," said House Minority Leader Ethan Berkowitz, D-Anchorage.

"I don't know how anyone in good conscience can tie a retirement system discussion to public school funding," Berkowitz said. "It's two separate subject matters."

The rules of the Legislature prevent two or more subjects from appearing on the same bill. But Senate Finance Co-chairwoman Lyda Green, R-Wasilla, said the retirement systems and education funding are inexorably linked.

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