By Kirsten Adams
Nearly a year after the close of the 2009 fiscal year, financial reports on the public employees’ pension systems for that year are finally complete, and ready for review by pension management.
The Alaska Retirement Management Board, tasked with keeping an eye on Alaska’s multi-billion dollar retirement systems, uses the annual valuations to set State contribution rates for future years.
The rates specify how much the State must contribute into the system on behalf of public employees every year, and are based on certified valuations of the Public Employees Retirement System.
“The 2009 valuation, those numbers are based on the end of the fiscal year, June 30 of 2009, and it takes about a month or so to close the books on all the transactions,” said Pat Shier, Director of Retirement and Benefits. “By August, the actuary receives the data file from the ARM Board.”
Shier said a draft valuation is usually ready by January of the following year, and is then checked by a second actuary for accuracy. The final draft valuation, complete with suggested rates for State contributions, is usually ready for Board approval by April.
A bill passed by the legislature in 2008 limits employer contributions to the system to 22 percent, and the State is obligated to fund the remainder of the obligation through appropriations from the General Fund.
According to the 2008 valuations, the retirement system had almost $16 billion in liabilities and only $11 billion in assets, which led to a FY 2011 contribution rate of 28 percent of gross employee salaries.
When the market tumbled in late 2008, however, assets plummeted and liabilities skyrocketed, leaving an unfunded liability estimated at $6.3 billion in 2009. Despite the change in liabilities, contribution rates for 2011 are fixed based on pre-crash numbers, and could contribute to much higher rates in 2012 in order to close the gap.
“The rate setting we’re doing is for fiscal year 2012,” Shier said. “There has been lively discussion on the ARM Board about the language in the valuation and the rates.”
The Board meets today and Friday at 9 a.m at the Dena’ina Convention Center.
Kirsten Adams is an investigative reporter with the Alaska Watchdog. She can be reached at firstname.lastname@example.org.