Lawmaker calls for audit into state's pension retirement systems

Posted: Thursday, September 08, 2005

FAIRBANKS - A lawmaker has called for a legislative audit to find out how the state's pension retirement systems ended up with a $5.7 billion shortfall.

In making the request, Republican state Rep. Mike Kelly said he's heard from a number of voters concerned with possible criminal misconduct in connection with the large shortfall.

"There are people that feel the Legislature hasn't sufficiently explained how we got into this situation," he said.

Kelly made the request Tuesday in a letter to state Rep. Bruce Weyhrauch, chairman of the House Ways and Means Committee, which is conducting public hearings around the state on how to address the systems' unfunded liability.

He said an audit by the Legislature Budget and Audit Committee would answer a lot of questions.

In the letter, Kelly said that despite assurances from elected officials, some voters still wanted to know whether any of the parties associated with the retirement systems were guilty of wrongdoing which contributed to the unfunded liability.

"I think we must clearly answer that question to the satisfaction of Alaskans who will ultimately pay the price through higher taxes, reduced government services, fewer dollars available for the classroom, and reduced funds available for permanent fund dividends," Kelly wrote.

An audit would also help determine whether the systems' financial consultants, Mercer, should be replaced, he said.

Kelly said he would like to see an audit undertaken soon.

"They should start the audit process as soon as possible so we might have an answer by the time we go back to work in January," he said.

Former Public Employees' Retirement System Board member Pat Wellington said the combination of falling stock market returns and increases in the cost of health care put the systems in the hole.

"The two things happened at the same time and it took its toll, but there were no shenanigans by the boards," he said.

Weyhrauch agreed that a legislative audit was probably appropriate, but he said that the purpose of the House Ways and Means Committee hearings is to find a way to solve the shortfall in the $16.4 billion public employee and teacher retirement systems.

The committee will take public testimony on the shortfall in the state's pension retirement systems Thursday from 1 to 4 p.m. at the Fairbanks Legislative Information Office.



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