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Juneau hearing draws wide testimony on HB 78 to restore defined-benefit option for public employees
Summary
Hundreds of minutes of testimony at the Senate Labor and Commerce Committee hearing on Jan. 28 centered on House Bill 78, which would make a defined-benefit retirement option available to new public employees; proponents said it would improve retention, while fiscal analysts warned it could add billions to state costs under some investment scenarios.
The Senate Labor and Commerce Committee heard extensive public testimony on House Bill 78 on Jan. 28 in Juneau, a measure that would restore a defined-benefit (DB) retirement option for new public employees and alter how retirement risk is shared between the state, employers and workers. Chair Senator Bjorkman opened the hearing and took invited and online testimony before setting the bill aside for further consideration.
Proponents — including teachers, school administrators, union officials and advocacy groups — said a DB option is critical to recruiting and retaining experienced public employees. "We have rampant vacancies, a revolving door of workforce," Heidi Bridal, executive director of the Alaska State Employees Association, said, arguing that pensions would "return stability and predictability to our state workforce." Educators said the lack of DB coverage and Social Security makes it harder to attract and keep teachers, especially in rural districts. Jacky Hanson, a Craig City School District superintendent, said Tier 3 teachers currently have "no pension option," creating challenges for rural schools.
Fiscal objections came chiefly from outside analysts and free-market groups. Zachary Christiansen of the Reason Foundation told the committee that actuarial modeling by his team shows HB 78 could cost Alaska "an additional $1,400,000,000 over the next 30 years" in a best-case scenario and "up to as much as $7,000,000,000 over the next 30 years" under more conservative return assumptions. Americans for Prosperity and other speakers echoed concerns that poor investment returns could leave the state with substantial added obligations.
Supporters countered that the state's actuary and the Alaska Retirement Management Board (ARM) have modeled alternatives and that safeguards in the bill reduce the chance of creating legacy-style unfunded liabilities. Chuck Cobb, the House bill facilitator, told the committee the state's actuary "model[s] for ups and downs in the markets" and that, in its 25-year modeling, it did not find a realistic pathway for the bill to introduce new liability of the kind that harmed the state in earlier decades.
Local-government concerns were also raised. Nils Andreassen, executive director of the Alaska Municipal League, urged changes to reduce employer burdens: removing an archaic 2,008 salary-floor provision, creating a faster mechanism to pause participation for employers who fall behind on payroll remittances, and exempting small employers from burdensome termination studies when they cannot afford to remain in the system.
The committee did not vote on HB 78 at the hearing. Chair Bjorkman closed public testimony and "set [the bill] aside for further consideration" at a future meeting. The next scheduled committee meeting will continue consideration of HB 78.
What happens next: The committee will revisit HB 78 at its next meeting, where members may ask for additional actuarial analysis, proposed amendments, or sponsor-driven changes. No formal motion or vote on passage occurred at the Jan. 28 meeting.
