Wednesday, January 18, 2006

Community will lose with new retirement plan for public employees --

From the Fairbanks Daily News-Miner December 25, 2005, By Tim Parker

Another post about
Alaskan issues. I happened to come across this while researching the previous post. It's not NCLB but it is related, as I see it, to the organized attempt to drastically alter public education that resulted in NCLB. This, to take away hard fought retirement systems and replace it with something much less. In this state, with harsh climate, vast distances and few roads, at least %25 of teachers are imported from outside the state. We need to be able to draw these teachers. As this opinion piece shows the new changes in law will make that even more difficult. (Emphasis is mine)


(Alaska)... has long attracted top-notch teachers because of the quality of the community, as well as the reasonable salary and retirement.

However, this could soon change.

Changes to the state's retirement system--known as Senate Bill 141--have put in place incentives that will encourage new employees to leave.

Instead of the defined-benefit system that the state used for decades, starting next July newly hired employees will get a 401(k), also referred to as a defined-contribution plan. If they stay five years, the state will match the amount the employee puts in, and the employee can leave, taking their money and the state's money with them.

At an AARP meeting at the Noel Wien Public Library on Dec. 17, Rep. Mike Kelly and Sen. Gary Wilken were asked if they had calculated how much money would leave the state under this new plan. Neither had an answer.

The real difficulty with the new plan is that teachers in Alaska do not collect Social Security. Now, under the new plan, a teacher could work for dozens of years, puts thousands into a 401(k), and if the market did not perform well, or something else went wrong, they could be left with nothing, as in zip, or zilch.

Asked what would happen to these public employees who outlived their defined-contribution plan, Kelly and Wilken had no answer.

Another potentially serious issue for taxpayers is that the new plan is likely to cost more than the old one. Right now, the income put into the defined-benefit plan pays the benefits of current retired workers. In the new plan, the money to pay future retirees will come out of Alaska's general fund.

That would mean less for roads and other public services, said Wilken. At the AARP meeting, Sam Trivette, a member of the Alaska Retirement Management Board said other states--West Virginia, Nebraska and Michigan--scrapped their 401(k)-style plans after discovering they cost more money.

Perhaps the most outrageous part of the AARP meeting came when a woman stood up next to her two daughters and explained that the cuts to retirement and pay in Alaska have forced her to encourage her daughters--who are in college and thinking about becoming teachers--to look to the Lower 48 for employment.

Kelly said that if the daughters were only after money, then they should leave. He made a broad wave of his arm and said, "Adios."

Is this really the attitude of legislators toward future Alaska teachers? Do we really want to encourage our best and brightest to leave Alaska instead of staying and becoming teachers?

Keeping teachers in Alaska was becoming harder even before SB 141. Teacher salaries in Alaska have been on a steady decline for the past 10 years compared with other states. In fact, Alaska went from the top three in the country in the early 1990s to 11th in 2003-2004. When cost of living is factored in, Alaska now ranks 36th.


A diminished retirement will create a revolving door that will not only hurt the community but ultimately children.

Tim Parker is a teacher at Lathrop High School and vice president of the Fairbanks Education Association, a union representing the approximately 1,000 teachers in the Fairbanks North Star Borough School District.

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