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
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.
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
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."
Edited by Mary Kauffman, SitNews
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