Public safety employees deserve better pensions, but no one else, Sen. Pete Kelly says

The late Rep. Mike Kelly helped lead the campaign in Juneau 13 years ago to end guaranteed pensions for public employees in Alaska.

In 2005, he said he was not interested in "attracting a cop, teacher or cat skinner who decides whether to come to Alaska based on the type of retirement plan in our public sector."

"When GenXers switch jobs, they don't want to leave their retirement funds with their ex-employer to improve someone else's retirement. They want to take their hard-earned funds with them and continue to have a say in the management of those funds," he said.

The Legislature changed the rules so that public employees hired after July 1, 2006 joined a retirement system similar to a 401(k) in which the payouts are determined by market conditions and the success or failure of personal investment decisions.

Mike Kelly predicted that the hiring and retention of future employees would not be a problem, despite claims to the contrary by unions and Democrats.

The record shows that the critics were correct. Offering a weaker retirement plan did create personnel problems in Alaska. The latest confirmation comes from an unusual source—Mike's brother Pete.

For many years, the defined contribution retirement plan has made it harder to hire and retain teachers, public safety employees and high-skilled public sector workers. The problem has been acute for the public employees who do not pay into the Social Security system.

Now Sen. Pete Kelly wants to reverse the Mike Kelly plan, but only for public safety employees.  

Pete Kelly is running for re-election with heavy financial support from the business community, raising more than $71,000. His likely opponent in November is Rep. Scott Kawasaki, who has long been on the record calling for a defined benefit option for public employees hired since 2006. Kawasaki, with support from Democrats and public employees, has raised more than $48,000.

Pete says the defined contribution pension plan hasn't worked for public safety employees. He's  right.

"Since ending defined benefit plans in 2006, one of Alaska's greatest public safety challenges has become employee retention and recruitment,"  Pete said in a statement backing Senate Bill 212.

The bill would give all public safety workers hired since July 1, 2006 the option of moving to a defined benefit plan.

Pete, who has a defined benefit pension from his many years as a state employee, says the state can't afford to offer a similar benefit to other public employees hired since 2006. The state "smartly ended the defined benefit plan," he says.

There is a serious contradiction here. If it makes sense to offer a defined benefit plan to hire and retain better employees in public safety, it makes sense to do it for teachers, engineers, etc. The retention problem is not limited to public safety. 

Under Kelly's plan, the new public safety defined benefit arrangement would not be as generous as the version just before 2006, meaning higher employee contribution rates, no cost of living adjustments and more restrictive health coverage. 

Those safeguards would hold down future costs increases and make a defined benefit plan more affordable. Kelly says a study shows his plan would be more expensive than the Tier IV defined-contribution system for people hired since 2006, but less expensive than the Tier III defined-benefit group.

If the state wants to recruit and retain good employees, the Legislature needs to look beyond public safety and consider the merits of the bills backed by Sen. Dennis Egan in the Senate and Rep. Sam Kito in the House to offer a defined benefit option.

The Senate has refused to hear Egan's bill for more than a year, while Kito's bill is moving forward. 

Dermot Cole6 Comments