Alaska Governor Sean Parnell is pushing to transfer $3 billion out of the state’s rainy day fund and into its pension funds, which rank among the unhealthiest in the country. The plan, released today as part of Parnell’s 2015 budget, aims to pay down a portion of the unfunded liabilities which plague the state’s retirement system.
Pensions & Investments reports:
Under the governor’s proposal, $1.88 billion would go to the $14.3 billion Alaska Public Employees’ Retirement System and $1.12 billion to the $6 billion Alaska Teachers’ Retirement System. Both pension funds are administered by the Alaska Retirement Management Board, Juneau. The contributions would increase the funded status of the plans by 10 percentage points each to 73% and 63%, respectively. It also would lower the overall unfunded liability to $8.9 billion.
If the Legislature approves the injection of assets, future contributions through 2035 would be $500 million per year, reducing annual payments by an average of about $400 million per year through fiscal year 2030.
The plan is radical, but the state’s retirement system is in dire straits: Alaska’s pension funds are only 59.2% funded, according to a MorningStar report. The same report found that Alaska has racked up $10,325 in unfunded liabilities for every person living in the state, a liability per capita ratio that ranks as the worst among all 50 states.