Recent Events: SB 141 and PERS/TRS
22 July 2006This message that follows was recently released by the Alaska Public Employees Association. The Association has played a leading role in the struggle to preserve retirement security in Alaska, and to preserve the ability of the public sector in this state to remain competetive to recruit teachers, police, firefighters, and other key positions. Thanks also to the Retired Public Employees Association for their persistent efforts on behalf of retirees in Alaska, and for helping to distribute information on this extremely important topic.
—– Original Message —–
From: “Cindy Spanyers” cspanyers@apea-aft.org
To: cspanyers@apea-aft.org
Sent: Monday, July 03, 2006 12:34 PM
Subject: Breaking news: Court Denies Injunction on defined contributions; Procurement Contract SunsetsBreaking News:
Superior Court Judge Larry Weeks denied the request by unions to issue an injunction against the state and block the implementation of defined contributions until the IRS determined the status of the plans. The decision was released this morning.
APEA/AFT, ASEA/AFSCME Local 52 and the Alaska Correctional Officer
Association filed suit because the plan passed in 2005 (SB 141) will likely not receive approval of the IRS, putting employees and employers at risk of paying taxes and penalties. Ice Miller, the State of Alaska’s tax consultant, wrote in April that there were serious flaws with the Savings Plan type of accounts being set up for new employees. Ice Miller is a firm in the lower 48 that specializes in representing management keeping workplaces “union free” by taking unions to court in strikes and during organizing drives. They also have a small section specializing in pension plans meeting IRS standards as well as representing the employer against any suits by beneficiaries.The State of Alaska themselves had said the current plan restricts the ability to offer occupational death and disability benefits for members and that the state cannot offer optional PERS retirement to police and fire injured in the line of duty.
The employers will likely have to pay taxes to the IRS and, likely, penalties. In addition, the state’s new plan does nothing to address the unfunded liability.
In his decision, Judge Weeks wrote,
“It is not within the proper scope of judicial review for this court to decide whether SB 141 is fair or unfair, wise or unwise, or whether it has gone far enough in accomplishing a public purpose. This court must focus its analysis on whether plaintiffs have demonstrated irreparable harm and whether defendant can be reasonably protected…
“If the State or political subdivision promises a tax deductible program and does not deliver on that promise the State or subdivision may be subject to paying as required by the promise…
“Nevertheless, the conundrum does not meet the test required by the law for a temporary restraining order or preliminary injunction.”
In other news, the pilot program to privatize procurement services ended June 30th. In 2003, the legislature voted to privatize procurement for three years claiming it would save the state money. The exact opposite happened with the same services costing nearly $1 million more than under the work of state employees. A bill to extend the program one more year–to 2007–was rewritten by the senate to expand the program. When they failed to muster the votes, they returned to the original form to extend the program another year and it passed the Senate along party lines.
But there was a major problem: eight senators voted against the effective date, thus putting the contract to Alaska Supply Chain Integrators in limbo.
Senator Kim Elton quickly asked Legislative Legal Services for an opinion where significant doubts were raised about ASCI continuing the contract with the legislation extending the contract not yet in effect. The program officially ended June 30th.Our thanks and gratitude to Senator Elton and his caucus colleagues for advocating for monetary savings and retaining critical functions of government.
Read the Memorandum in Support of the Public Employees’ Law Suit. It outlines many of the key issues, and it has the great benefit of not being written in “legalese.”
ldw