Alaska Gov. Sean Parnell proposed a $3 billion contribution to the state's two largest pension funds as part of his fiscal year 2015 budget plan, released Thursday.
The move is aimed at both immediately lowering the unfunded liability as well as significantly decreasing future contributions. The money would come from the Constitutional Budget Reserve Fund and not from the state's general operating fund, confirmed John Boucher, senior analyst in the office of management and budget.
The proposal would permit use of assets from only the reserve fund with the approval of a 75% supermajority from both legislative chambers, he added.
“It's not a fund we typically tap into,” Mr. Boucher said.
Under the governor's proposal, $1.88 billion would go to the $14.3 billion Alaska Public Employees' Retirement System and $1.12 billion to the $6 billion Alaska Teachers' Retirement System. Both pension funds are administered by the Alaska Retirement Management Board, Juneau. The contributions would increase the funded status of the plans by 10 percentage points each to 73% and 63%, respectively. It also would lower the overall unfunded liability to $8.9 billion.
If the Legislature approves the injection of assets, future contributions through 2035 would be $500 million per year, reducing annual payments by an average of about $400 million per year through fiscal year 2030.