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Senate holds on PERS bill; will hear TRS bill this week

Groups Concerned With Statewide Impacts of the Proposed PERS/TRS Bills on Education

 

April 05, 2016
Tuesday AM


(SitNews) Juneau, Alaska - The Association of Alaska School Boards & Alaska Council of School Administrators expressed their concerns Friday with the impacts the proposed bills SB207 and SB209 will have on education statewide. The groups say the proposed bills will increase the rates paid by employers in the TRS and PERS system significantly. Since their news conference, based on recent analysis by Buck Consultants projecting lower than expected state assistance rates, the Alaska State Senate decided on Monday not to move forward with SB 209, pertaining to employer contribution rate increases for the Public Employees Retirement System (PERS).

As a result of the state’s $3 billion cash infusion to these retirement systems, Buck Consultants’ draft valuations for PERS and TRS show improvement in their funded ratios. The analysis also determined that recent actual health claims were lower than expected for health care cost growth trends.

“The state carried local government and school district costs during a period of high revenue to improve the health of the system, and Buck’s analysis proves that investment paid off,” said Sen. Anna MacKinnon (R-Eagle River), co-chair of the Senate Finance Committee.

The Senate Finance Committee will discuss the SB 207 fiscal note in hearings this week with the first hearing scheduled for today, April 5th, at 1:30 PM. In addition to a $228 million appropriation in the Senate’s version of the operating budget, SB 208 would make funds previously designated for the Alaska Performance Scholarship program available to school districts to mitigate the increase in rates.

“The state has paid multiple billions on behalf of local governments to keep the Teachers Retirement System from bankruptcy,” said Sen. Pete Kelly (R-Fairbanks), co-chair of the Senate Finance Committee. “Now we are asking them to help shoulder some of the costs, and we are even willing to pay a portion of those costs for the next five years. As the state faces a $4.1 billion dollar deficit, we are still going the extra mile to protect local governments.”

According to the analysis, the state’s projected costs for PERS dropped from $100 million in FY17 to $34 million in FY18, while TRS costs dropped from $116 million to $90 million within the same timeframe.

SB 207, pertaining to employer contribution rates for the Teachers Retirement System (TRS) will be heard in the Senate Finance Committee later this week.

According to the Association of Alaska School Boards & Alaska Council of School Administrators , four years from now (by FY20) as scheduled these bills would result in a 7% reduction in K-12 education funding, at the same time overall costs continue to increase, including: health insurance, energy and transportation, as well as labor costs as a result of negotiated agreements - rights granted by the Alaska Legislature.

The information provided by the Alaska Senate Finance suggests that funding equivalent to $141 in Based Student Allocation funding would be provided to offset the increases in FY17; however, this does not yet appear in any bill. There is a suggestion of additional funding in future years, but there could be no guarantee after the first year. No additional detail has been provided, according to the Association of Alaska School Boards & Alaska Council of School Administrators.

School districts in Alaska have no ability to raise taxes to pay for education according to the Association of Alaska School Boards & Alaska Council of School Administrators. That responsibility has been assigned to municipalities. However, in the case of REAA’s the taxing authority is the legislature. Municipalities have the option, within the limits of the foundation formula, to raise taxes to pay for education. REAA’s however, do not have that ability and rely solely on the legislature for their funding. Through these costs shifts, REAA’s would be mandated to absorb nearly $7.4 million in additional costs in FY17, rising by an additional $1.5 million in each of the next two years and over $900 thousand in FY20.

"Make no mistake: this is a cut - a major cut - to students, teachers, schools and districts," said the Association of Alaska School Boards & Alaska Council of School Administrators in a news release Friday.

Municipalities get a double whammy because they are cut directly and when school districts are cut, the only place they have to turn is to their local government stated the Association of Alaska School Boards & Alaska Council of School Administrators.

Quoting the Association of Alaska School Boards & Alaska Council of School Administrators' news release, "If legislators want to mitigate the cost of the retirement system, why not make a direct deposit to unfunded liability? The state is responsible for the retirement system that generated these costs."

"Finally, and most importantly, the size of this proposal is a staggering cut to kids, teachers and schools. It is inaccurate to state that on the one hand the BSA is not being cut or is even being increased $50, when on the other hand the cut through these cost-shifting proposals is equal to $332 in BSA. These levels are a roll back to funding levels of 7 years ago, and a roll back of commitment to Alaska's students," stated the release.

According to the Association of Alaska School Boards & Alaska Council of School Administrators, statewide school districts will see cost increases as follows under this plan:

· FY17 - $54.8 million – Based Student Allocation funding (BSA) equivalent = $219

· FY18 - $65.3 million – BSA equivalent = $261, compared to FY16

· FY19 - $75.7 million – BSA equivalent = $303, compared to FY16

· FY20 and beyond - $83 million – BSA equivalent = $332, compared to FY16

NOTE: BSA = Based Student Allocation funding through the school district foundation funding formula.

Again, the Alaska State Senate decided on Monday not to move forward with SB 209, pertaining to employer contribution rate increases for the Public Employees Retirement System (PERS).

A hearing is scheduled for Tuesday, April 5th at 1:30 PM by the Senate Finance Committee regarding SB 207: "An Act relating to increasing employer contributions to the defined benefit plan in the teachers' retirement system."



On the Web:

SB 209 - "An Act relating to increasing employer contributions to the defined benefit plan in the Public Employees' Retirement System of Alaska."
http://www.akleg.gov/basis/Bill/Detail/29?Root=SB%20209

SB 207 - TEACHERS RETIREMENT. EMPLOYER CONTRIBUTIONS
http://www.akleg.gov/basis/Bill/Detail/29?Root=SB%20207

 

 

Edited by Mary Kauffman, SitNews

 

Source of News:

Source of News:

Alaska Senate Majority
www.akleg.gov

Association of Alaska School Boards
www.aasb.org

Association of Alaska School Boards
www.alaskaacsa.org

 

Representations of fact and opinions in comments posted below are solely those of the individual posters and do not represent the opinions of Sitnews.

 



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