Alaska Senate Advances Legislation Aimed at Reestablishing Public Sector Pension

Juneau, Alaska – The Alaska Senate took a significant step on Wednesday in addressing the state’s struggle with recruiting and retaining public employees and teachers by advancing legislation to reestablish a public-sector pension. The bill, known as Senate Bill 88, aims to provide predictable retirement payments to tens of thousands of state and municipal workers and teachers.

The move comes as Alaska faces challenges with filling state jobs, with around one in seven positions currently vacant. This shortage has had various impacts, such as delayed snow removal in Anchorage due to a lack of snowplow drivers. The Department of Corrections even considered lowering the minimum age of correctional officers to 18 in an attempt to attract more applicants.

The debate over the pension plan has been contentious, with concerns raised about the potential cost to the state. The previous public-sector pension system for new employees was ended in 2006, and since then, public employees and teachers have contributed to a 401(k)-style system, which a state analysis found to deliver substantially smaller benefits than a pension.

Supporters of the new bill argue that a defined benefits pension plan could help reverse the outmigration of working-age residents from Alaska. They also point out that the state is the only one in the country that does not offer public workers a defined benefits plan or access to Social Security.

However, some senators remain skeptical about the new pension plan’s potential costs and risks. Sitka Republican Sen. Bert Stedman, a longtime opponent of reimplementing a defined benefits pension, expressed concerns about the plan’s potential impact on the state’s debt obligations.

Another point of contention is the potential disadvantage a new public-sector pension could pose to private-sector employers that do not offer similar benefits. There are conflicting cost estimates, with some arguing that the new pension plan could save the state money by reducing turnover of public employees and teachers, while others remain unconvinced.

The bill will now move to the House, where it faces uncertainty given the Republican-led majority’s previous hostility toward reestablishing a defined benefits pension plan. Governor Dunleavy has also expressed the need for more research to demonstrate that a new pension will attract highly qualified candidates and ensure that state debt would not increase.