Parnell said the state will meet the obligation, which currently stands around $11 billion. He said he'd rather see that done with cash, rather than "dumping" in billions of dollars in savings that would essentially be off-limits if the state got in a financial pinch.
Parnell said the state also risks losing value of the money if the stock market tanks again.
Sen. Johnny Ellis, D-Anchorage, has proposed creation of a pension trust reserve fund and transferring $2 billion from the Constitutional Budget Reserve Fund to that new fund. The Senate Finance Committee is expected to take up the pension issue. Committee co-chair Bert Stedman has said an infusion of equity greater than $1 billion and less than $4 billion could be considered.
Separately, Parnell said he doesn't support a Senate bill that would give public employees the option of choosing between a retirement account, like a 401(k), or earning a traditional pension. In 2005, the Legislature passed a measure taking the state from a defined benefit, or pension, program to defined contribution, or 401(k)-style, benefit. Union leaders have said this was a mistake, and has hurt employee retention.
Bill supporters are trying to get the measure as "revenue-neutral" as possible, so as not to cost the system any more. But Parnell said cost-neutral is "cost-neutral today" and assumes good economic times ahead.
Flawed assumptions contributed to the current situation, as did a market crash in 2009, he said, and "putting that risk on the system for the benefit of only state employees, when everyone else bears the risk themselves, is something that I don't support at this point."
"I don't see digging a deeper hole. I don't want to do that to the people of Alaska," he said.
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