Audit the PERS/TERS Disaster
11 September 2005It’s like closing the barn door after all the horses have escaped, but it is a start. Last week Rep. Mike Kelly called for a legislative audit of the state’s pension retirement systems to determine how the programs ended up with a $5.7 billion shortfall. It appears as though a number of Rep. kelly’s constituents think criminal hanky-panky may be at the root of the problem. Rep. Kelly, a Fairbanks Republican, made the request last week in a letter to Rep. Bruce Weyhrauch, chairman of the House Ways and Means Committee, which is conducting public hearings around the state on how to address the systems’ unfunded liability.
Mastering the art of understatement, Rep. Kelly observed in his letter that “there are people that feel the Legislature hasn’t sufficiently explained how we got into this situation.” Moreover, in hearings last week, members of the House Ways and Means Committee heard from state analysts that they will likely have a $1.5 billion budget surplus next year due to high oil prices. Hmmm. Did the Governor and legislature act a wee bit too quickly in their effort to destroy the retirement systems for the state’s public workers?
During the Committee hearing, David Teal, director of the Legislative Finance Division, said Legislators could use the surplus to pay off part of the shortfall. “You do have money to pay some of the unfunded liability, but not enough to erase it,” he said. It turns out that only $3 billion is the responsibility of the state, because the remaining $2.7 billion falls to local municipalities and school districts, and the state gets funding for about half of its public pension debt from the federal government and other sources. Consequently, the surplus would best be used to pay down deficits in the pension systems for municipal employees and teachers, Teal said. So, the problem of the “unfunded liability” is really a lot less than we have been led to believe? It sure would be handy to have all the facts before we destroyed retirement security for all of Alaska’s future public workers.
Find out more by taking a look at an earlier article that appeared in the ACPP blog. In addition, some of the best factual criticism I have seen regarding the legislation that destroyed PERS and TERS can be found on the NEA-Alaska web site. See in particular the December 2004 analysis, the April 23, 2005 testimony by NEA-Alaska Executive Director Tom Harvey, and the testimony given by John Alcantra, GR Director, NEA-Alaska
July 14, 2005.
It is certainly time for an audit, and it is time to hold legislators accountable for bad public policy decisions made on the basis of ideology rather than what is in the interest of working Alaskan Families.
Lawrence D. Weiss Ph.D., M.S.
President of the Board, ACPP