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Senate Finance adopts opt‑in amendment to HB 78 after municipal testimony on employer cost cap
Summary
The Senate Finance Committee adopted an amendment creating an opt‑in for non‑state employers to join a new defined‑benefit tier in HB 78, after municipal officials warned raising the employer cap from 22% to 24% would shift substantial costs to local governments. The committee voted 5–2 to advance the bill to Rules.
The Alaska Senate Finance Committee on April 24 adopted an amendment that allows non‑state public employers to opt into a newly proposed defined‑benefit retirement tier under House Bill 78, after multiple municipal leaders and school officials warned that raising the employer cap from 22% to 24% would create significant local costs.
Beth Weldon, mayor of the City and Borough of Juneau, told the committee that municipalities have budgeted for the 22% employer cap for almost two decades and asked lawmakers to preserve that cap for existing tiers. "I respectfully ask the committee to maintain the 22% on behalf payment and honor the framework that has been in place since SB 141 was adopted," Weldon said, adding that Juneau estimates about $1,000,000 in additional annual costs to the city and roughly $300,000 to the Juneau School District if the cap is raised.
John Leach, municipal administrator for the City of Sitka, said he supports restoring a defined‑benefit option in principle but opposed forcing municipalities to participate. He warned the 22%→24% cap would cost Sitka "between 400,000 and 500,000" annually and could force further staffing cuts in a community already facing a structural budget deficit.
Nils Andreasen, executive director of the Alaska Municipal League, summarized feedback from AML members and urged a choice‑based approach. He told senators that housing authorities would likely need to lay off staff under the amendment and that school districts statewide would face roughly $7,000,000 in higher costs under the 24% figure unless accounting and governance changes were made.
Senator Stedman moved amendment T.11, and Rose Foley, staff to Senator Stedman, told the committee the amendment "creates an opt in provision for non state PERS employers to participate in the defined benefit retirement plan created by HB 78." Foley said participating non‑state employers would contribute at 24% of total base salaries for employees in the new plan or at the new plan’s normal cost plus required payments and any past service liabilities. Foley also described decision and election windows in 2026–2027 for employers and employees to convert.
Committee members questioned implementation details — including how public safety employees might move between tiers and how termination studies allocate liabilities for employers with delinquent contributions — and AML staff explained that termination costs reflect studies and net pension liabilities that can remain after an employer exits the system.
After debate the committee took a roll call vote on the amendment and recorded 5 yeas and 2 nays; the amendment was adopted. Senator Stedman then moved the finance committee substitute for HB 78 from committee as amended; after an objection and roll call the motion passed 5 yeas, 2 nays and the bill will be referred to the Rules Committee.
The committee did not adopt final statutory language beyond the amendment at this meeting; members requested forthcoming fiscal notes and actuarial analyses to be attached as the bill progresses. The committee scheduled further work in subsequent referral steps.
