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Alaska lawmakers seek public sector pension reform over persistent opposition

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Alaska lawmakers seek public sector pension reform over persistent opposition


The Alaska State Capitol in Juneau on January 21, 2025. (Marc Lester / ADN)

Alaska House Majority Leader Chuck Kopp says that if all goes as planned, the House will vote next month on a new public pension.

A bill to reinstate a defined benefit system for Alaska’s public workers — after nearly two decades without one — “will be over in the Senate’s possession before the end of March,” Kopp said this week.

Alaska’s public employees — including teachers, peace officers, local government workers and all state workers — have been without a pension since 2006, when the state instead adopted a 401(k) style retirement plan in an effort to save money.

Unions and groups representing the state’s public employees say that the change has reduced Alaska’s retention of experienced workers.

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“There is one constant theme, and that is high turnover, high vacancies, loss of institutional knowledge, loss of training dollars, and an inability to effectively deliver services because they’re constantly in a training mode,” Kopp, a South Anchorage Republican, told the House Finance Committee this month.

Kopp is working to advance legislation that was first passed by the Senate bipartisan majority more than a year ago. Last year’s Republican-led House majority refused to consider the bill, blocking its progress. But the change in House leadership this year has renewed hope that the measure could pass — despite persistent resistance from some Republican lawmakers.

Ketchikan Republican Rep. Jeremy Bynum, who previously managed the Ketchikan public utilities and served on the Ketchikan Borough Assembly, said that in his experience, retirement isn’t the driving factor in public-sector workers’ decisions to leave the state.

“There’s no doubt that retirement was part of the conversation about why somebody maybe took employment, why they might be leaving employment, but it wasn’t the primary factor. The biggest issues that drove employees where I was at away, was the cost of living in the community,” said Bynum. “It was the remoteness of being in Alaska.”

Opponents of the bill also cite its potential cost as a deterrent. They refer to the unfunded liability the state accrued before 2006, when bad actuarial information left the state with an underfunded retirement plan. The state is still paying off the liability. Though numerous measures were implemented to avoid similar situations moving forward, including requirements for additional actuarial analyses, the risk of future unfunded liabilities looms.

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The exact price of the new proposed plan isn’t known — a full actuarial analysis is underway — but Kopp said he expects the annual cost to be less than what the state currently spends on recruitment and retention efforts to fill critical vacancies, which amounts to tens of millions of dollars per year.

The state has kept critical positions filled, including corrections officers and troopers, in large part by approving annual retention bonuses on top of employees’ regular pay. Still, turnover has led to increased costs for training and filling positions.

“The lost training dollars to the state eclipse the cost of what we are going to be proposing here,” Kopp told lawmakers in a House hearing.

Opposition to defined benefits proposals in Alaska has been shaped in large part by the advocacy of Americans for Prosperity — a national conservative group funded by the billionaire Koch family — which has for years recommended shrinking or eliminating public spending on pension plans across the country.

Americans for Prosperity-Alaska has launched an ad campaign claiming that the cost of the plan could force the state to implement a broad income or sales tax. Lawmakers have said no such taxes are under consideration this year.

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Bethany Marcum, director of AFP-Alaska, previously worked for Gov. Mike Dunleavy when he was a state legislator. She said that “the expectation of savings to recruitment and retention is being greatly overestimated” and pointed to a recent analysis from the Reason Foundation that argued Alaska is “doing a better job at retaining public workers than most states.”

The Reason Foundation, which produces policy papers on retirement systems in various states, serves as AFP-Alaska’s “pension partner,” Marcum said — providing analysis to back the advocacy group’s campaigns.

Data recently compiled by the Reason Foundation showed that Alaska’s state employee turnover rate was lower than the national public sector average, but according to figures — provided to the writers by the Dunleavy administration — Alaska’s turnover rate rose rapidly between 2012 and 2022 — from 11.5% to 17.5%.

Ryan Frost, a researcher with the Reason Foundation, said it was possible that the sharp increase in Alaska’s turnover rate was due to the elimination of Alaska’s pre-2006 pension plan.

“That makes sense to me,” said Frost, who lives in Washington state. “I haven’t looked underneath the hood to see what the (defined benefit) turnover has looked like in Alaska.”

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In 2012, 36% of Alaska’s state workers were not eligible for a pension. By 2022, that figure had gone up to 73%. Recent data from the state shows that only 37% of employees who are ineligible for a pension remain employed by the state more than six years.

Kopp called AFP-Alaska’s messaging “propaganda.”

“They have a right to argue for their interest, but they are very focused on supporting the present annuity financial services industry,” said Kopp.

Marcum said AFP-Alaska’s opposition to the defined benefit plan is driven “purely from a principled policy perspective.”

Fairbanks Republican Rep. Frank Tomaszewski proposed this year alternate retirement legislation modeled after 2023 recommendations from the Reason Foundation.

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Tomaszewski’s bill would make the existing defined contribution plan more generous exclusively for public safety workers, who tend to have shorter careers. It would also expand access to the state’s Supplemental Benefit System, which is meant to replace Social Security income, and is not currently open to Alaska educators.

Tomaszewski said he favors a defined contribution plan because it allows beneficiaries to will their accrued retirement funds to their children. A defined benefit pension ensures that the beneficiary and their spouse continue to receive monthly retirement income for as long as they live, but once the beneficiary and their spouse die, funds cannot be transferred to their surviving descendants.

Tomaszewski said that he liked the idea of ensuring that children of public sector workers have access to an inheritance.

“That money is actually yours, in your account. You can take it with you, or you can will to your children,” he said.

In the Senate, Majority Leader Cathy Giessel, an Anchorage Republican, has already said she plans to take up the defined benefit bill once it is considered by the House.

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The bipartisan majority in the Senate is expected to support the bill, but one of its members has remained opposed. Sen. Bert Stedman, a Sitka Republican, instead favors expansion of the Supplemental Benefit System.

“If we want to improve the teachers’ retirement, number one is they should be in SBS,” said Stedman.

By his calculation, allowing teachers to contribute to SBS would give them hundreds of thousands of dollars in additional retirement income.

Alaska is the only state that offers teachers neither a defined benefit pension, nor access to Social Security income.

The system requires both employees and employers — meaning school districts and local governments — to contribute 6.13% of participating employees’ salaries to the system. If the proposal were adopted, the cost to local employers would be in the tens of millions.

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“We would have to increase the school districts’ funding to incorporate something like this,” said Tomaszewski.

In an effort to persuade reticent Republicans, proponents of the defined benefits plans repeatedly describe its lack of generosity. Unlike the pre-2006 system, employees’ retirement contributions could be raised in response to underfunding in the plan; employees would get a Health Savings Account instead of access to state-sponsored health insurance; and there would be no cost-of-living adjustment for retirees who choose to stay in Alaska.

“This is structurally so different that it’s barely recognizable. It would be like comparing a rotten apple on an old tree to a robust pear on a living tree. They’re both fruit, but it ends there,” Kopp told the House Finance Committee in a hearing for House Bill 78.

Still, Kopp said this “fiscally conservative” bill will be an improvement on the state’s current defined contribution system, which leaves most public sector workers ill-prepared for retirement and without any incentive to remain in the state beyond the initial five-year vesting period, according to an analysis conducted last year by the state’s retirement division.

“I’m actually glad that people recognize this bill is not generous,” said Kopp. “It’s almost incredible that our current system is so bad that our employee groups across the state uniformly support this bill as being better than what we have.”

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Daily News reporter Sean Maguire contributed to this report.





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Alaska

'Come to the dark side': California inmate used lawyer in Alaska fentanyl empire, feds say

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'Come to the dark side': California inmate used lawyer in Alaska fentanyl empire, feds say


Before he worked for what he allegedly called “the cartel,” Justin Facey’s law career was unremarkable.

Facey’s modest solo practice was based in a gray Anchorage office building, where he shared space with personal injury attorneys, a chiropractor and a financial advisor. His website advertised expertise in defending run-of-the-mill cases: DUI, domestic violence, theft, assault.

But in 2023, Facey took on a client who changed his firm’s fortunes — and brought him under the eye of the U.S. Drug Enforcement Administration. Agents were monitoring the phone of a California inmate who was suspected of trafficking huge amounts of drugs to Alaska when they read a text message that Facey allegedly sent to a fellow lawyer.

“Come to the dark side,” he wrote in the message, which was cited in court documents. “I just signed a lease on a HUGE new office space. Three attorney offices, plus a paralegal bullpen, reception area, etc.”

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Prosecutors say Facey broke the law working for Heraclio Sanchez Rodriguez, who has been serving a life sentence in California since 1998. Last week, Facey, 44, was charged with maintaining a “drug-involved premises,” as well as possessing a shotgun, rifle and two handguns while selling meth and fentanyl.

A lawyer for Facey, who has pleaded not guilty, didn’t immediately provide a comment.

From his prison cell in Monterey County, Sanchez, 58, used contraband cellphones to direct one of the largest drug trafficking organizations in Alaska history, federal authorities say. More than 60 people are accused of colluding with Sanchez to smuggle fentanyl, methamphetamine and heroin from Southern California to Alaska, where the narcotics were sold at staggering markups.

Sanchez has pleaded not guilty to charges that he trafficked drugs, laundered money and had two women kidnapped, murdered and buried in the Alaskan wilderness.

Facey acted as consigliere to Sanchez and, after his law license was suspended in February, became a drug dealer himself, prosecutors wrote in a motion seeking to jail the attorney pending a trial.

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According to prosecutors, Facey began working for Sanchez in June 2023, around the time that the DEA tapped the prisoner’s cellphone.

Agents intercepted text messages in which Facey and Sanchez talked about using a private plane to spirit away an underling who had narrowly avoided arrest in Anchorage, prosecutors wrote in the bail motion.

Facey said he knew a pilot who could fly her to Montana. “Let me contact my people to be ready to take her out the country,” Sanchez replied.

The attorney later thanked Sanchez for having a package of fentanyl delivered to his home, prosecutors wrote. “I feel funny not paying — we can credit it for when you need some legal work done, if you want?” Facey wrote in a text message.

The lawyer and prisoner also allegedly discussed using laundering drug profits. In a text message cited by prosecutors, Facey complimented Sanchez for using “girls” as a “little revenue laundromat.”

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Sanchez is accused of ordering the murder of Sunday Powers, an Alaskan woman who was caught at an airport carrying $20,000 of Sanchez’s money.

With Sanchez as a client, Facey bragged about his newfound wealth to “anyone in the Anchorage community who might listen,” prosecutors said in the bail motion.

In a text message, Facey allegedly wrote: “The cartel has retained my office for all their Alaska needs. So there’s guaranteed revenue, in cash, at the full hourly rate for the forseeable future.”

Facey said after he got a member of “the cartel” acquitted, “There was a knock on my door. Package sitting right there when I opened it. Inside was a watch manufactured by a very reputable purveyor of timepieces, two ounces of legit Bolivian flake and a brochure for the suite level at the Venetian.”

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Imprisoned in California since 1998, Heraclio Sanchez Rodriguez is now accused of leading one of the largest drug trafficking networks in Alaska’s history.

Despite the boasts, Facey’s practice was collapsing. Clients filed 13 “grievances” and six payment disputes with the Alaska state bar about Facey, who had an ounce-a-day meth habit, prosecutors wrote in the motion to keep Facey jailed.

Facey also engaged in “compulsive sexual misconduct,” prosecutors wrote. An unnamed witness told authorities the lawyer was a “pig” and “disgusting slob” who extorted sex from her in exchange for legal representation, according to the motion to prevent his release.

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After his license was suspended, Facey turned to selling drugs, according to prosecutors. By April, he told associates in text messages he was facing eviction. He posted in a public Facebook group for R.V. owners, writing, “Heya! I’m right in the middle of an unexpected, abrupt major life and career implosion, and I’ve decided to embrace the silver lining.”

He was thinking of selling everything he owned but his R.V., he wrote. Accompanied by his daughter and granddaughter, he’d leave Alaska “with no specific plan in mind but to roam the earth for a bit,” he wrote, “until something or somewhere grabs our attention.”

Facey is now in jail after a judge tentatively denied him bail. His lawyer will argue for his release in a detention hearing scheduled for Thursday.



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University of Alaska president reports $50M in grants frozen under Trump administration, warns of cuts to staff

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University of Alaska president reports M in grants frozen under Trump administration, warns of cuts to staff


Buildings on the campus of the University of Alaska Anchorage, photographed Tuesday, March 31, 2020. (Loren Holmes / ADN)

The administration of President Donald Trump has suspended and canceled more than $50 million in funding at the University of Alaska, university President Pat Pitney told the Board of Regents this month.

Pitney also warned regents at the board’s two-day meeting last week in Fairbanks that the statewide system faces the possibility of future staff cuts in programs that receive high levels of federal grants.

The statements came as the regents approved the coming fiscal year’s operating and capital budgets.

The operating budget’s $352 million in unrestricted general funds represents an increase from last year. But it does not keep pace with rising costs, Pitney told regents.

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Constrained state funding is also adding to pressure on the university, Pitney told the regents.

On the bright side, enrollment is growing with help from the Alaska Performance Scholarship and the university’s affordability, she said. (Alaska legislative leaders have recently approved a plan that could lead to a draw from the account that pays for those scholarships to help close a $200 million budget shortfall. The decision, and the budget bill, currently sits on the desk of Gov. Mike Dunleavy, who could potentially veto the item.)

“The Board has intentionally adopted a budgetary approach that balances fiscal restraint with specific investments in our university system, and that approach continues to yield positive results, including institutional stabilization and enrollment growth,” Board Chair Ralph Seekins said in a statement from the university.

“As the state budget environment contracts and uncertainty at the federal level remains, the board will continue working” with university leaders to maintain progress on student enrollment and success, he said.

Canceled and frozen grants

About $5.6 million worth of federal grants have been canceled, said Jonathon Taylor, a spokesperson for the university, in an interview last week.

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The cancellations include a $2.5 million grant over five years for the Alaska Native Science and Engineering Program, Matt Calhoun, the program‘s executive director, said in a notice.

The National Science Foundation grant is one of the program‘s largest grants, the notice said.

The cancellation was “unexpected and untimely” and required canceling the program‘s summer Acceleration Academy, he said. Five other summer programs remain in place, he said.

ANSEP will look for new funding sources to strengthen the academy in coming years, Calhoun said in the letter.

Another $50 million in federal grants is frozen, Pitney told regents.

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They include a $46 million, 10-year grant from the Department of Homeland Security for the Arctic Domain Awareness Center-ARCTIC Center of Excellence housed at the University of Alaska Anchorage, Taylor said.

In October 2015, Dr. Helena Wisniewski, then-executive director of the Arctic Domain Awareness Center, points out features of the Integrated Intelligent System of Systems for maritime situational awareness and response support in uncertain Arctic environments after a ribbon cutting ceremony in the ConocoPhillips Integrated Sciences Building at the University of Alaska Anchorage on Oct. 21, 2015. (Bill Roth / ADN archive)

Initial projects for the program include detecting emergency calls from mariners and researching renewable and nuclear energy options, the university said in a statement last year. New and existing academic programs were also planned through an interdisciplinary Arctic Security graduate degree and student fellowship program, the statement said.

Pitney told regents the program is in wait-and-see mode.

The university is working with the Department of Homeland Security to find a way to allow the grant to continue, Taylor said.

About $21 million in previously frozen federal grants for a variety of other programs has been reinstated, he said.

The university receives $270 million in federal funds annually, Pitney said. About $220 million of that is associated with research and academic grants. The rest is associated with student aid, Pitney told regents.

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“Everything in the rhetoric puts all that at risk,” she said, referring to language in presidential executive orders and agency notices. “That also has to go through a congressional process. It will go through court processes.”

“But we can kind of see the pressure coming,” she said. “I mean, we can clearly see the pressure coming. There’s no ‘kind of’ about it.”

‘Fewer employees’

The university works on 1,200 grant-funded programs supported largely by the federal government, often on multi-year timelines, Pitney said.

The university is fairly confident that the vast majority of those 1,200 grants will continue, she told regents.

“And so we have a runway as an institution up here,” she said.

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“It’s the 250 new grants every year we think is where we’re going to see the difference,” she said.

The number of new grants could fall to perhaps 200 or 100 annually, she said.

Pat Pitney, University of Alaska president, makes comments at UAA’s Health Sciences Building on May 19, 2022. (Marc Lester / ADN)

Also possible is that average award amounts might drop substantially, she said.

That would change the university workload.

Pitney said, “it would be nice to be able to report that we see no staffing changes in our horizon, but that’s just not practical. And I’d rather let people know that the expectation is changes are going to be happening.”

The changes, if needed, will be more concentrated in “highly leveraged units” that receive large amount of federal research money, such as the International Arctic Research Center at the University of Alaska Fairbanks, the Alaska Coastal Rainforest Center at the University of Alaska Southeast in Juneau, or the College of Health in Anchorage.

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“There will be fewer employees here next year than there are now” because of the federal cuts and pressure from state funding, Pitney said.

Staff with one program at the International Arctic Research Center, the Alaska Center for Climate Assessment and Policy, recently have raised concerns that the program’s existence is endangered by potential Trump administration cuts to scientific research.

[Trump administration cuts endanger critical science programs in Alaska, researchers say]

Despite the “noise in the federal environment,” the university in the coming fiscal year is looking at a “relatively modest” reduction of around $2 million to $3 million in indirect cost recovery associated with federal awards this coming fiscal year, Pitney told regents.

Indirect cost recovery provides reimbursement for university costs that are not directly related to research, such as lab equipment or administrative support.

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In a best-case scenario, funding levels in this area would be maintained, Pitney said.





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Major new Air Force training center in Alaska will help boost defense of North America

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Major new Air Force training center in Alaska will help boost defense of North America


An Air Force F-22 takes off from its home base at Joint Base Elmendorf-Richardson Tuesday, May 2, 2017 during the Northern Edge training exercise. On the tarmac are F-16s and F-15s. (Loren Holmes / Alaska Dispatch News)

Work will start this summer on a Pentagon “mega-project” in Alaska intended to boost the Air Force’s training capability to defend North America.

The 150,000-square-foot Joint Integrated Test and Training Center at Joint Base Elmendorf-Richardson in Anchorage will contain 426 computer servers kept running by a 15 million megavolt-ampere electric substation. The project is slated to be completed in 2029 at a cost of up to $500 million.

John Budnik, spokesman for the U.S. Army Corps of Engineers, said the center will allow trainers to sync personnel on the ground with pilots in the air.

“It’s the only place in the Indo-Pacific Command that can host multi-domain simulators for joint and coalition fighters, including F-35s, F-22s, F-15s, F-18s, next-generation fighters, bombers, command and control platforms, intelligence surveillance, reconnaissance aircraft, and long-range weapons fire,” he said.

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Thareth Casey, the program manager for the Army Corps of Engineers, said the training center is being designed so simulations can be adapted to include weapons and aircraft from other U.S. military branches, as well as NATO allies Canada, Finland, Sweden and others.

Air Force Col. Lisa Mabbutt, commander of the 673d Air Base Wing at Joint Base Elmendorf-Richardson, said the training center’s location underlines the importance of Alaska and the Arctic to the U.S.

“It demonstrates a commitment to Alaska as both a key power-projection platform and one of our nation’s leading edges of homeland defense,” Mabbutt said.

While the long, warmer days of summer have allowed military and commercial ships to take advantage of new sea lanes, the training center has to be built to withstand the seasonal flipside: winter, with its minus-20 temperatures and days where sunset comes a little over five hours after sunrise.

Casey, the project manager, said construction has its challenges.

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To keep the elements outside from impacting the work inside, the center will be built with a reinforced concrete foundation, steel-frame-insulated wall panels covered in masonry, and a steel-reinforced metal roof.

Construction will accelerate during the long, warmer summer days when the sun can be out for 20 hours. It will slow down during the cold, dark winters.

“It’s a one-of-a-kind project,” Casey said. “We’re constrained by the seasons but with planning, we expect to complete work by the fall of 2029.”

Despite a steady stream of reports about Russian and Chinese joint sea and air operations in the region, the U.S. commands that will be the primary users of the training center declined to specify which nations the training will focus on as possible aggressors.

A query to the 11th Air Force in Alaska was passed to Air Force headquarters at the Pentagon, which passed it to U.S. Indo-Pacific Command in Hawaii — which then passed it back to the 11th Air Force.

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But political and military officials have made it clear in earlier statements that the focus will be on training to react to potential threats from Russia and China.

Former Defense Secretary Lloyd Austin and top officers such as Air Force Gen. Anthony J. Cotton, head of Strategic Command, helped popularize the term “near-peer adversary,” a nation with a large military force approaching — it not reaching — equivalence with the United States. The term was most frequently shorthand for Russia. Cotton said in 2023 that Russia, which has about 5,900 nuclear warheads, was a “near peer adversary.”

The other term often used is “pacing challenge” — a country that is building up its military at a rapid rate. A 2023 Pentagon statement said the planned training center at Elmendorf-Richardson would allow “our warfighters to train against our pacing challenge in realistic threat scenarios.”

“China is the only country that can pose a systemic challenge to the United States in the sense of challenging us, economically, technologically, politically and militarily,” Colin Kahl, the Assistant Secretary of Defense for Policy, said in 2023.

Kahl said being a pacing challenge didn’t mean the U.S. had to go to war with China.

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“It does mean that we will have a more competitive and, at times, … adversarial relationship with Beijing,” he said.

Russia’s northern border is adjacent to the Arctic Ocean. From czars to Stalin to Putin, it has operated in the region for centuries.

China is a relative newcomer. Though 900 miles from the Arctic Circle, China in 2018 officially declared itself an “near-Arctic state” intent on becoming a “great polar power” by 2030.

In October 2024, a U.S. Coast Guard HC-130J long-range surveillance plane spotted Russian and Chinese ships operating together near the Bering Strait, the sea passage between Alaska and Russia that is just 55 miles wide at its closest point. Last year, American and Canadian fighters were scrambled to intercept Russian and Chinese long-range reconnaissance aircraft flying near the Alaska Air Defense Identification Zone (ADIZ), a U.S.-designated 150-mile buffer zone from U.S. territory.

Katherine Dahlstrand, a fellow at the Center for Strategic and Budgetary Assessments, a Washington, D.C., think tank, said Russia and China see the same military and commercial opportunities as the United States and its allies.

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“The Arctic is a new transit space for military assets,” Dahlstrand said. “The potential for shorter trade routes around the world using northern passages would be revolutionary for many countries,” she said. “It draws a lot of interest. The area also has energy resources, fishing, and mining.”

Dahlstrand said putting the training center in Alaska and practicing scenarios for defending the region is an investment that will pay off in the future.

“The Arctic spans the globe and is a connector of regions — European, Indo-Pacific, and North America,” Dahlstrand said. “For the United States, it’s also homeland security.”





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