What is PERS and why does it matter?
The topic of PERS and the strain it puts on State and local funding continues to crop up as news stories develop.
The Public Employee Retirement System (PERS) and Teacher Retirement System (TRS) are the State’s public employee pension and healthcare plans.
The State has underfunded and, in the past, not funded at all these benefit systems which has resulted in a more than $11 billion “unfunded liability”—the difference between the expected availability of money for retirees and the anticipated costs for the many years of upcoming State retirement benefits.
Benefits increased years ago in an effort to incentivize employees to stay on when oil production was at its peak and public agencies were losing employees to the pipeline jobs. Those benefits have gone down, however.
Every municipality in Alaska, from its schools to boroughs to publicly owned hospitals currently pays 22 percent of its employee’s salaries into these retirement systems.
Gov. Sean Parnell recently proposed to the State legislature a one-time transfer of $3 billion from the State’s savings into its retirement trust funds, which would create a lower annual fixed payment from the State in an effort to pay off that debt.
But the proposal has meet resistance from Republican leadership in the Alaska House of Representatives, where some lawmakers want to make municipalities increase their PERS payments by 2 percent—which, in the case of PMC, equates to roughly $100,000 more in PERS costs.
This also puts more financial pressure on local governments that will likely receive less state funding in the future.
Decisions on what direction to go with the State’s PERS/TRS unfunded liability will be made during the last several weeks of this year’s legislative session that ends at the end of April.