The Alaska State Legislature changed to the current retirement system in 2005 in response to an alleged $5 billion gap between what the state was collecting and what it needed to pay for the state’s pension fund. The state’s actuary had miscalculated how much money would be needed, then hid the miscalculation from the state. The state sued the actuary, but that didn’t solve the issue with pensions.
Rather than adjust pension payments to cover the gap, the Legislature ended the pension program and created a new “defined-contribution” system, similar to a 401(k). We still paid benefits to people who had already earned them, but starting July 1, 2006, new state employees were put into the new defined-contribution system.
Many Alaskans warned that the new retirement system would make recruitment more difficult — and unfortunately, they were right. Recruitment and retention issues plague state agencies, including police, fire and emergency medical services. During the past 20 years, the cost to train and equip a new state trooper has skyrocketed. These high training costs, coupled with difficulty hiring and retaining new recruits, is beginning to have a long-term impact on public safety in our communities.
Alaska has become the training ground for other states. We invest millions in our public safety officers with hiring bonuses, training academies, and advanced certifications for the first 2-3 years of their career. Yet most leave the state in five years or earlier for secure pension plans. And they don’t need to go far. Washington State’s police-officer pension program has guaranteed payments and better medical coverage than Alaska offers.
The average annual nonretirement separation rate for Alaska’s public safety employees is between 4%-6%. This rate is across the Departments of Public Safety and Corrections down to municipal police and fire agencies. With approximately 3,400 Alaska public safety employees and a minimum first-year cost of $120,000 per employee, just 2% (68 employees) separating from employment costs Alaska $8.2 million per year, with a five-year cost of nearly $41 million.
The legislature is considering House Bill 55 — a hybrid between a pension (defined benefit system) and the current defined contribution system that will help address our recruitment and retention issues. House Bill 55 represents a nearly one-third total expense reduction from maintaining the status quo and utilizes best practices from other states, including Utah, Wisconsin, South Dakota, Colorado and Ohio.
We are the Republican and Democratic representatives for West Anchorage, and we are united in working to pass House Bill 55 this year. It will improve public safety and support our public safety officers who answer the call to keep us safe each and every day. Providing them with a fair retirement plan is a smart way to say “thanks” for keeping us safe.
Rep. Sara Rasmussen, R-Anchorage, represents Anchorage’s Sand Lake/Kincaid neighborhoods in the Alaska House of Representatives. Rep. Matt Claman, D-Anchorage, was elected to the state House of Representatives in 2014. He has served on the Anchorage Assembly and also as acting mayor of Anchorage.
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