Welcome, and thank you for coming this morning.  In case the members of the media are wondering who all these extra people are—they’re members of the NEA-Alaska Board of Directors.  We are gathered here this week to combine association business with meetings with our legislators.

 NEA-Alaska represents more than 12,500 teachers and education support professionals in kindergarten-through-12th grade schools.  Our members and our schools would be drastically impacted by proposals on the table now.  Proposals that would dismantle the current PERS & TRS retirement system.

 As you know, PERS is an acronym for Public Employees Retirement System.  TRS stands for Teachers Retirement System.  Our teachers are, of course, in TRS.  And our support professionals—school secretaries, custodians, food service workers, classroom aides, and many others—work under PERS. 

We don’t normally give a title to our news conferences.  In fact, we never do.  But we couldn’t resist quoting from a couple of lawmakers after they heard one of the retirement scenarios for a teacher:  Running the numbers showed the teacher with $3,000 dollars to live on after paying health insurance.  That’s $3,000 dollars a YEAR, not a MONTH.   This was a computation run by Mercer, the state’s own actuaries. 

Our quote, “Eating cat food & living Outside” came from off-the-cuff reactions to that scenario by two members of the House State Affairs Committee who realize that no retiree could live on $3,000 a year.  

I invited you here today to try to stop this train.  To try to stop this headlong rush toward a total rewrite of our state’s retirement laws.  As of this morning, we have just 20 days left in the session.  That’s not nearly enough time to do the homework that needs to be done when we’re talking about such sweeping changes to our retirement system.

We urge members of the House to slow down, take a deep breath and appoint an interim subcommittee to give this matter the time and attention it deserves.  We stand ready to roll up our sleeves and work with legislators over the summer and into next fall.

Together we can come up with a plan that meets the two goals that we both share: 

1)      To make sure Alaska’s retirement system rests on a firm financial foundation

2)      To ensure that teachers and other school employees have the safe and secure retirement that they are working so hard to achieve.

We stand ready to be part of the solution.  We have a number of concrete ideas for improving the system.  But before we get into that, I want to walk you through the problems as we see them.

1)    First & foremost—this is moving so fast that it’s making a mockery of the public process.

1.  93-page bill was introduced on March 14—just 5 weeks ago.
    

2. During the course of legislative hearings, at least ¾ of the time has been given over to explanations from the sponsors & the actuaries—precious little time for citizens to give our input.
    

3. Even more to the point—the contents of the legislation are a moving target.  When the Senate passed its version last week (SB 141), the bill had grown to 109 pages.
    

4. Frankly, we’re not sure what-all is in the Senate version, or the House version—and trust me, NEA-Alaska has spent hours and hours studying everything we could get our hands on.
    

5. There are just too many unanswered questions for this to move forward.
    

6. I have to share with you a comment made by Sharon Boko to Representative Jim Holm.  Sharon is the widow of Bob Boko from Fairbanks.  Bob was a retired teacher and administrator from the Fairbanks school district.  He served the retirement system so well on the TRS Board and most recently on the Joint Tiers subcommittee. Unfortunately we lost Bob earlier this year.
    

7.   With great courage and commitment, Sharon has continued his work.  She wrote Representative Holm:  “I feel these are comments that Bob would want me to make.  This process should take anywhere from two to four years to study & take the correct steps.”

   2)    Our 2^nd objection has to do with what’s REALLY going on here:  The state of Alaska is trying to shirk its 50-year-old commitment to its public employees and shift the burden for its retirement system to the municipalities, the university, the school districts, and the employees.

a.        System was founded on the principal of sharing retirement contributions equally among the three levels:  1/3 by the state; 1/3 by the school district; 1/3 by the teachers or support professionals.

b.      At some point the state decided to start sending its 1/3 share directly to the municipalities in the form of revenue sharing monies.

c.       Then three years ago, the state stopped the revenue sharing.

d.      This is an absolute abrogation of the state’s responsibility to its public servants.  And now the state is trying to make up the shortfall on the backs of its teachers and other hard working employees.

e.       If this goes through, teacher contributions could shoot up from the current 8.65% to as high as 25%.  Think of losing that much more from your paycheck each month. 

f.        Rather than paying more & more & more—teachers & other public employees will be forced to leave their job, and probably leave Alaska.  Think of the brain drain.

g.       And now think of what that would do to the school districts’ ability to attract and keep quality teachers & support professionals.  As a small state, we will always have to import about 75% of our teachers from the Lower 48.  We MUST remain competitive—or the impact on the quality of our children’s education would be dreadful.

h.       And I must tell you too—when you talk about increasing contributions without increasing benefits, you get into murky Constitutional waters.

i.         Now onto more specifics:

 3)    Defined contribution retirement plans—this lies at the heart of our opposition to the proposals before the legislature.

a.       Defined Contributions are bad public policy because they impoverish retirees. 

b.      Defined contributions would be a horror story for Alaska’s teachers.  Remember—we’re not a Social Security state.  Years ago, when public employees were taken out of Social Security PERS employees were offered Supplemental Benefits (SBS). 

c.       Teachers weren’t offered SBS.  So they have no Social Security, no SBS—no safety net at all.  Their entire retirement would be subject to the vagaries of the stock market and their own investment prowess. 

 4)    Last, broad category of objections is our lack of faith that anybody knows what the retirement system’s financial situation really is.

a.       Following up on our questioning of all the assumptions we’ve listed, we also have to report that just last week—at the Fairbanks North Star Borough Assembly meeting, Mayor Steve Thompson said that the city had received very poor advice surrounding the sale of the Municipal Utilities System.  Their advisor?  Mercer Consulting.

 5)    One last point on which we question Mercer’s assumptions:  teacher salaries.

a.       Mercer assumes annual increases have ranged from 3.75 to 4.5%.

b.      At NEA-Alaska we KNOW exactly what teacher salaries are because our association dues are built around them.  The increases average 1.36%.

 6)    FINALLY—we’d like to show you a few of our ideas for improving Alaska’s retirement system.

a.       Get a handle on health care costs. Lack of management has allowed Aetna to realize high profits from administrative costs while up-to-date disease management approaches have not been implemented.  Hard-nosed management could contain costs and provide better care for participants. For some time now, NEA-Alaska’s representatives on the retirement board have been pushing for cost containment measures.  We know where the savings can be found. 

 b.      Close the loopholes that allow managers and policymakers, who pay so little into the system, to receive full medical benefits.

c.       Consider using more than three years of high salary for basis of pension.

d.      Hire a credible actuary.  We can do better than continue using an actuary that brought our retirement system from over-funded three years ago to a $5.7 billion liability today.  We can’t revise the current system until we have confidence that our actuarial assumptions are valid.

 7)      Let’s sit down & roll up our sleeves.

 I’ll repeat our offer:  Together we can come up with a plan to make sure Alaska’s retirement system rests on a firm foundation and also ensure that teachers and other school employees have the safe and secure retirement that they have earned. We stand ready to be a part of the solution.