[{"_1":2,"_100":-5,"_101":-5},"loaderData",{"_3":4,"_26":27},"root",{"_5":6,"_17":10,"_18":19,"_20":21,"_22":10,"_23":-5,"_24":-5,"_25":10},"user",{"_7":8,"_9":10,"_11":10,"_12":-5,"_13":-5,"_14":15,"_16":-5},"roles",[],"isAuthenticated",false,"isPremium","planName","subscriptionStatus","featureFlags",{},"insightsBudget","isDevelopmentHost","userPreferences",{},"recaptchaSiteKey","6LcvOJcUAAAAAHsB-gPGfGktcRlKpH7OTIU_dMTD","isImpersonating","impersonation","affiliateStatus","isFreedomPortal","routes/v2/article/layout",{"_28":29,"_30":31},"notFound",true,"relatedArticles",[32,76,88],{"_33":34,"_35":36,"_37":38,"_39":40,"_41":42,"_43":44,"_45":46,"_47":48,"_49":50,"_51":52,"_53":54,"_55":56,"_57":58,"_59":60,"_61":62,"_63":64,"_65":66,"_67":68,"_69":70,"_71":72,"_73":74,"_75":74},"mediaId",6089945,"mediaKeyId","2870719-62c2c62b1745cd5b18325093830dfdbc","parentId",2870719,"title","Actuary says shared-risk DB in HB78 likely raises near-term state costs but could narrow with member transfers and lower discount rates","audioSeconds",2442,"startMs",548000,"endMs",2990000,"viewUrl","/Search/View?dp=1&key=2870719-62c2c62b1745cd5b18325093830dfdbc&start=548&end=2990","thumbnailUrl","https://assets.pipeline.soar.com/2870719-62c2c62b1745cd5b18325093830dfdbc/thumbnail_548000.jpg","articleUrl","/articles/6089945/Alaska/Actuary-says-shared-risk-DB-in-HB78-likely-raises-near-term-state-costs-but-could-narrow-with-member-transfers-and-lower-discount-rates","mediaUrl","https://secure.pipeline.soar.com/6089945-9bdd4696d6807cf2abe4aaa4804b01ab/orig.mp4?Expires=1775168326&Signature=JQbLGVvuAJT~x6TAv~PLGTy19egppzJFL13BysdCS0xuVP8IEqt~F9nHED7a9Z5XVuNkv6mbsoPGt33hrjY9XfIIYnvMzhrNMtocaLS~MFVxTl83CK8CuKhz8pZlbl3mbq2eU89HvRLh~oR5jyE7XmfGSgbBHFkxN-VP9Pxn9vRoJ5Cyh3mgJyHAoxzvQKl-ZHRAkAEm1xwIY0CVb89Fg4MKQJ8EU7ylbmrcb9F-gk61y0OjFOTvtzX2OUAINAMeEIMdurNgtix7OACINpVBgrwZtZyx1ak5o2opXpFRbCDZ-pB-JwVXfSKeY6QKh-YCzpNgbYQSiTpTAahU07KaAQ__&Key-Pair-Id=KUT5TJCACFTXG","author","Alaska Legislature","date","2025-04-03T00:00:00Z","article","The House Finance Committee heard an actuarial presentation on House Bill 78, the bill that would offer a shared‑risk defined‑benefit retirement plan to current and future public employees. Gene Kowarski, CEO and consulting actuary with Chiron, presented cost scenarios, turnover assumptions and an initial assessment of economic impacts.

Kowarski said the analysis used the actuarial assumptions currently applied for Alaska by the state actuary (Gallagher) and that the firm produced four scenarios showing different mixes of current DC members transferring into a DB option and different turnover assumptions. \"We're using a 7 and a quarter percent interest rate\" for the main present‑value calculations, Kowarski said during the presentation.

Why it matters: a change in retirement plan design affects employer costs, employee retirement security and broader state finances. The committee’s members pressed for clarity on the assumptions behind turnover, discount rate and whether the analysis normalized per‑dollar investments between plan types. Several members said retention improvements could substantially change the state cost picture.

Details of the actuarial presentation

Kowarski outlined why actuarial assumptions differ between DB and DC plans: DB plans show lower ultimate turnover and earlier retirements in many data series, while DC plans have higher turnover after five years. He said the turnover assumptions used were those Gallagher applies to Alaska and are based on select‑and‑ultimate tables (higher turnover in early years, lower 'ultimate' turnover later).

He laid out four scenarios the committee requested: 1A (current DC members transfer to DB and DB turnover assumptions apply), 1B (no current transfers; future hires enter DB under DB assumptions), 2A (current members transfer but DC turnover assumptions persist) and 2B (no current transfers, future hires enter under DC assumptions). Kowarski said his view made 1A and 2A the plausible bounds and noted experience in other systems—San Diego, for example—where many DC members retroactively moved back into a DB plan.

On projected costs, Kowarski directed the committee to the far‑right column of a 14‑year present‑value table. Using a 7.25% discount rate he identified figures in the hundreds of millions of dollars (the deck showed present‑value increases to the state on the order of several hundred million over 14 years). He said using a lower discount rate (6.5%) would raise the present value (he gave an illustrative top‑line change to roughly $610 million under a 6.5% assumption).

Kowarski also described HB 78’s built‑in risk‑sharing levers: member contribution rates may be adjusted within a band (he cited language allowing member rates to rise to 12% and not fall below 8%), and cost‑of‑living adjustments could be reduced if unfunded liabilities grow.

Committee questions and limits of the presentation

Committee members repeatedly pressed Kowarski on normalization of contributions (whether the analysis compared the same dollar amounts invested under DB vs. DC), the assumed long‑term rate of return, stress testing and whether Alaska‑specific experience (rather than national samples) was used for turnover and retirement assumptions.

Kowarski said the turnover assumptions were the state's (Gallagher) assumptions and that the primary discount/assumed return used in the presentation was 7.25%. He confirmed Chiron had done stress testing for a similar bill last year (Senate Bill 88) and said the firm could run additional stress scenarios on request, but that the committee had asked only for the scenarios presented.

Context and next steps

Representative Chuck Kopp (sponsor's office) and other members asked for modeling showing buy‑in costs for typical employees and for stress testing showing how lower returns or worse experience would affect funded ratios and contribution rates over multi‑decade horizons. Kowarski said his team could do that work but had been engaged recently and the current delivery reflected the scope requested for this hearing.

Ending

The actuarial presentation closed with Kowarski noting the potential for positive economic spillovers if the plan improved recruitment and retention—lower hiring and training costs, greater local spending by longer‑tenured employees—and a recommendation that the legislature consider a formal economic analysis to quantify those effects.

","mediaType","Video","parentTitle","04/03/2025 01:30 PM House FINANCE","oneSentenceSummary","The House Finance Committee heard an actuarial presentation on House Bill 78, the proposal to offer a shared‑risk defined‑benefit retirement plan to Alaska public employees. Gene Kowarski of Chiron presented four scenarios, saying the main present‑value estimates—based on a 7.25% discount rate and Gallagher’s turnover assumptions—put additional state employer costs in the hundreds of millions over 14 years, and that a lower discount rate would raise present‑value costs.","taxTitle","2025 Legislature Alaska, Alaska","taxId",78559,"location","Alaska","headline","","shortSummary",{"_33":77,"_35":36,"_37":38,"_39":78,"_41":79,"_43":80,"_45":81,"_47":82,"_49":83,"_51":84,"_53":85,"_55":56,"_57":58,"_59":86,"_61":62,"_63":64,"_65":87,"_67":68,"_69":70,"_71":72,"_73":74,"_75":74},6089935,"Finance committee adds $1M for Food Bank, rejects PFD cut; forwards operating bills to rules",3909,9567000,13476000,"/Search/View?dp=1&key=2870719-62c2c62b1745cd5b18325093830dfdbc&start=9567&end=13476","https://assets.pipeline.soar.com/2870719-62c2c62b1745cd5b18325093830dfdbc/thumbnail_9567000.jpg","/articles/6089935/Alaska/Finance-committee-adds-1M-for-Food-Bank-rejects-PFD-cut-forwards-operating-bills-to-rules","https://secure.pipeline.soar.com/6089935-aefed7b98dd260446f5a34a00c11e1d3/orig.mp4?Expires=1775168326&Signature=e5UrBmP8ATXjpZssnsAY5jGJk43GRHBS6iaPlTHFrLSTLTHCiDvIesOEZ9rvkVb-7n8R4NgsGynJKIdTLtENwVrrPW6zhCfENgUbGihrx3QbHGDw6VpmmQwXrIJhLOVf0eAAeL89BXfgpoFyUBuc67BRwfJKTvVvzAh2DGJbK1IC3DNMFT1e2fmVGSgsXKEtZ12rO~1RvMeOPowWJggMeRiJKf8U7cSs9kFD8S4RH5k~AjtB4hVwkCr0G4c4kMH66MMRGa9qplFOwgyXs7tOQZtH8dGv2wnhckCQQH6l5NYatOldsGHOuB-zjRYqCpbGPtJ-aP3U7ZhylugV~Tv-bw__&Key-Pair-Id=KUT5TJCACFTXG","The House Finance Committee voted on budget amendments and committee reports during its April 3 meeting. The committee adopted amendment 64, a $1,000,000 add for the Food Bank of Alaska, rejected amendment 95 (a proposal to lower the proposed Permanent Fund Dividend to $1,000), and voted to forward the committee substitute for the operating budget and the mental health trust budget to rules.

Adopted amendment: Food Bank funding

Chair Josephson moved amendment 64 to add $1,000,000 for the Food Bank of Alaska. After discussion and public testimony excerpts read into the record, the committee called the roll. The membership vote was: yes—Representatives Jimmy, Johnson, Hannan, Tomasevski, Stapp, Galvin, Bynum, Foster and Josephson (9); no—Representatives Allard and Shroggy (2). The clerk recorded the motion as adopted 9‑2. The amendment directs an additional one‑time appropriation to the Food Bank of Alaska; the committee record shows the group and partners distribute food to dozens of communities across the state and had raised operational concerns tied to SNAP processing backlogs.

Rejected amendment: PFD reduction

Chair Josephson next moved amendment 95, which would have set a $1,000 permanent fund dividend for eligible Alaskans (the committee substitute contained a larger dividend tied to current draft language). The roll call was: yes—Representatives Galvin, Hannon, Shroggy and Josephson (4); no—Representatives Johnson, Stapp, Allard, Bynum, Tomaszewski, Jimmy and Foster (7). By a vote of 4‑7, amendment 95 did not pass.

Committee reports and forwarding motions

A co‑chair moved to report committee substitute 62 (operating) as amended and authorize staff to make technical and conforming changes; the motion passed on a recorded vote of 6‑5 (yea: Hannon, Jimmy, Galvin, Foster, Shroggy, Josephson; nay: Johnson, Allard, Bynum, Tomaszewski, Stapp). The committee also voted to report the mental‑health trust budget (HB 55) and authorized technical edits; that measure was approved without objection and will be sent to rules for calendaring.

Why it matters

The $1 million award to the Food Bank of Alaska responds to ongoing SNAP processing backlogs and local food insecurity reported in multiple communities. The PFD vote reflects the committee’s tradeoffs among statutory dividend expectations, the permanent fund draw limits and an operating budget the committee must balance. Forwarding of the budget bills advances the measures to the next stage in the legislative calendar.

Ending

Committee staff will prepare technical edits for the reported bills. The committee adjourned and announced public testimony on House Bill 78 scheduled for the next day at 1:30 p.m.

","On April 3 the House Finance Committee adopted amendment 64 to add $1,000,000 for the Food Bank of Alaska, rejected amendment 95 to reduce the proposed PFD to $1,000, and forwarded committee substitutes for the operating and mental‑health trust budgets to rules. Roll call tallies were recorded for the amendment votes and committee reports.",{"_33":89,"_35":36,"_37":38,"_39":90,"_41":91,"_43":92,"_45":93,"_47":94,"_49":95,"_51":96,"_53":97,"_55":56,"_57":58,"_59":98,"_61":62,"_63":64,"_65":99,"_67":68,"_69":70,"_71":72,"_73":74,"_75":74},6089940,"Alaska Municipal League warns net pension liability, layered amortization strain local budgets",634,4380000,5014000,"/Search/View?dp=1&key=2870719-62c2c62b1745cd5b18325093830dfdbc&start=4380&end=5014","https://assets.pipeline.soar.com/2870719-62c2c62b1745cd5b18325093830dfdbc/thumbnail_4380000.jpg","/articles/6089940/Alaska/Alaska-Municipal-League-warns-net-pension-liability-layered-amortization-strain-local-budgets","https://secure.pipeline.soar.com/6089940-2a97ad8fbfbc401bae63c99a1dbfca93/orig.mp4?Expires=1775168326&Signature=Q74dvy36CGs-0lyyRuxne6WfbMfGVkc-v5sn1t9pjoJjlL6t~xW6-35a98Tz8qF0ny8MNoEmRXmJBR7icQD6qYvsAyrLgv6aJnjVjV3nb~~jASuGIWmaaV~cdDABA26b-h-TE-dzlS7xTHy0Fkoxqoi3tWsAEBYP8A4aS4HY9VVaPz9kFoE9DhQyLwcOKE5oPtBXVy0dyLj-H0M58v4R5--lx9AOv~qOZpftk9JVbw-6axBd3LVzF3ceOvzKSUiQQFuri9ROAOihfjzhu~PC3rfUwZ~3G60uV9NXLl3rM3Biho1gwpkJ5xyz4Mpj9RNvMra~BP9i9gGz9VluW6-1mA__&Key-Pair-Id=KUT5TJCACFTXG","Nils Andreasen, executive director of the Alaska Municipal League, told the House Finance Committee that the state's long history of blended accounting, changes to amortization methods and other policy choices have shifted substantial pension costs onto nonstate employers and local governments.

Andreasen said employers and municipalities have been carrying past service costs that result from earlier actuarial errors and policy choices. He told the committee the move in funding policy from level‑dollar amortization to level percent of payroll deferred near‑term payments and raised total long‑term costs. He described a mix of symptoms: a 2008 salary‑floor rule that forces contributions based on 2008 payroll levels for some employers, dozens of seriously delinquent employers with compounded interest and the practical effect that small employers may be unable to participate or afford their ongoing liabilities.

Why it matters: many local governments, school districts and other nonstate employers participate in PERS and TERS and are directly affected by past service amortization choices, delinquency penalties and system design. Andreasen said the state’s share of payroll makes decisions at the state level particularly consequential for smaller employers.

Key points Andreasen made

Normal cost versus actuarial rate: Andreasen presented calculations showing large gaps between the normal cost plus past‑service cost and the actuarially required employer rates for certain tiers; for example, he cited a combined rate for a PERS Tier 1 employee that would reach 47.41% (normal cost plus past service) versus an actuarial rate the state reported as lower, generating material differences employers must absorb.

Delinquency, salary floor and small employers: He highlighted a list of employers with missing payroll filings and large accrued interest (some listings ran into many thousands of missing payrolls), noting that the 1.5x penalty and compound interest can make remediation effectively impossible for very small communities. He suggested removing or reforming the 2008 salary floor, easing high penalties, creating earlier triggers and off‑ramps for stressed employers, and providing a more active state role to help small employers address liabilities.

Amortization policy and funding method history

Andreasen traced a multi‑decade history that began with separate employer accounting in the 1960s, the creation of a blended retirement reserve account in 1971, subsequent actuarial errors in the early 2000s and corrective actions that included the state's 2014 amortization choices. He said the state had re‑amortized liabilities multiple times and that layered amortization moved roughly $2 billion of costs past the previously targeted pay‑down year (2039 in documents the AML cited), increasing amortization burden for employers.

Recommendations and tools

He suggested tools other states use—employer incentive funds, rate projection tools and tailored member‑redirect options—and urged the legislature to work with participating employers to design mechanisms that reduce the immediate burden on small jurisdictions and create realistic exit options. He also called for tighter reporting and a five‑year audit of terminated employer liabilities.

Ending

Andreasen closed by urging the committee to consider structural fixes in any pension‑reform discussions and noted the AML’s willingness to work with the sponsor of HB78 to include employer protections and operational remedies in future drafts.

","The Alaska Municipal League told the House Finance Committee that long‑running actuarial decisions, layered amortization and a 2008 salary floor have left many nonstate employers carrying deferred pension costs. The group urged clearer reporting, exit pathways for small employers and fixes to delinquency penalties.","actionData","errors"]

Article not found

Actuary says shared-risk DB in HB78 likely raises near-term state costs but could narrow with member transfers and lower discount rates

Finance committee adds $1M for Food Bank, rejects PFD cut; forwards operating bills to rules

Alaska Municipal League warns net pension liability, layered amortization strain local budgets