State of Alaska
Fiscal Note
Bill Version: CSHB 220(FIN)
2022 Legislative Session
Fiscal Note Number: 3
(H) Publish Date: 5/15/2022
Identifier: HB220-RET-PERS-5-10-2022 Department: State Retirement Payments
Title: RETIREMENT SYSTEMS; DEFINED BENEFIT Appropriation: PERS State Assistance
OPT. Allocation: All Other PERS
Sponsor: HOPKINS OMB Component Number: 2866
Requester: (H) FINANCE
Expenditures/Revenues
Note: Amounts do not include inflation unless otherwise noted below. (Thousands of Dollars)
Included in
FY2023 Governor's
Appropriation FY2023 Out-Year Cost Estimates
Requested Request
OPERATING EXPENDITURES FY 2023 FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 FY 2028
Personal Services
Travel
Services
Commodities
Capital Outlay
Grants & Benefits
Miscellaneous (28,500.0) (16,500.0) (13,300.0) (10,500.0) (6,800.0)
Total Operating 0.0 0.0 (28,500.0) (16,500.0) (13,300.0) (10,500.0) (6,800.0)
Fund Source (Operating Only)
1004 Gen Fund (UGF) (28,500.0) (16,500.0) (13,300.0) (10,500.0) (6,800.0)
Total 0.0 0.0 (28,500.0) (16,500.0) (13,300.0) (10,500.0) (6,800.0)
Positions
Full-time
Part-time
Temporary
Change in Revenues
None
Total 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Estimated SUPPLEMENTAL (FY2022) cost: 0.0 (separate supplemental appropriation required)
Estimated CAPITAL (FY2023) cost: 0.0 (separate capital appropriation required)
Does the bill create or modify a new fund or account? Yes
(Supplemental/Capital/New Fund - discuss reasons and fund source(s) in analysis section)
ASSOCIATED REGULATIONS
Does the bill direct, or will the bill result in, regulation changes adopted by your agency? No
If yes, by what date are the regulations to be adopted, amended or repealed? N/A
Why this fiscal note differs from previous version/comments:
Fiscal note updated for amendments made at House Finance Committee on April 21, 2022.
See attached and updated actuarial impact letter from Buck Global LLC dated May 10, 2022, for out year cost impacts through FY
2039, the anticipated year that plans are fully funded.
Prepared By: Ken Truitt, DOA Legislative Liaison Phone: (907)465-8464
Division: Office of the Commissioner Date: 05/10/2022
Approved By: Leslie Isaacs, Administrative Services Director Date:
OUT OF
05/11/2022
Agency: Department of Administration REPORTED
Printed 5/15/2022 Page 1 of 14 HFC 05/11/2 022
Control Code: szCfR
 CSHB 220(FIN) - Fiscal Note 3
FISCAL NOTE ANALYSIS
STATE OF ALASKA BILL NO. CSHB 220(FIN)
2022 LEGISLATIVE SESSION
Analysis
This bill provides certain employees of the Alaska Public Employees' Retirement System (PERS) and Alaska Teachers'
Retirement System (TRS) an opportunity to choose between the Defined Benefit Plan (DB) and the Defined Contribution
Plan (DCR) of the Alaska PERS and TRS. New employees will have the choice between the respective PERS or TRS DB and
DCR plans. Existing PERS and TRS DCR members will be allowed an opportunity to convert to the new defined benefit tier
or plan.
The PERS and TRS consulting actuary, BUCK Global LLC (Buck), has calculated the financial effects if this bill should pass as
written. The basic result is that there will be a net decrease to the PERS additional state contributions (decreases in
FY2024FY2027, increase in FY2028) and a decrease to the TRS additional state contributions in FY2024FY2028 due to a
change in the sources of contributions to each system and the change in the defined benefit and defined contribution
distribution of funding.
Since this bill would take effect on July 1, 2022, there is no financial impact to Fiscal Year 2023 additional state
contributions because these amounts for Fiscal Year 2023 have already been adopted by the Alaska Retirement
Management Board. If future experience matches the actuarial assumptions used to value the plans' liabilities, the dollar
impact on the PERS and TRS additional state contribution is reflected below (dollars in thousands):
Year FY2024 FY2025 FY2026 FY2027 FY2028
PERS $(12,900) $( 4,700) $( 2,300) $( 200) $ 2,800
TRS $(15,600) $(11,800) $(11,000) $(10,300) $ (9,600)
TOTAL $(28,500) $(16,500) $(13,300) $(10,500) $ (6,800)
While current projections show a reduction to the additional state contributions between FY2024 2028, projected future
total additional state contributions beyond FY2028 are also expected to change (increases are projected after FY2028 for
PERS, decreases are projected after FY2028 for TRS). As noted on page 3 of attached letter from Buck dated May 10,
2022, there are increases to the additional state contributions from FY 2030 2039 in the amount of $188.8 million.
See attached letter from Buck dated May 10, 2022. As noted in the last paragraph on page 1 of the letter, "By shifting
active members (and all future hires) from DCR to DB, the State will be taking on greater risk of higher [additional state]
contributions in future years." Additionally, this same risk also applies to the State of Alaskaasanemployer as a result of
the passage of SB 55 in FY 2021.
It is important to note that there will be a net increase in FY 2023 State of Alaskaasanemployer payroll contributions
because projected FY 2023 payroll and beyond is projected to increase if this bill is implemented. The fiscal impact to the
State of Alaskaasanemployer is shown in a separate fiscal note, but is included on page 3 of 3 of this fiscal note to show
the total impact of implementing HB 220. The net added increase to the State of Alaskaasanemployer is expected to
increase by $385.4 million.
(Revised 11/23/21 OMB/LFD) Page 2 of 3
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 CSHB 220(FIN) - Fiscal Note 3
FISCAL NOTE ANALYSIS
STATE OF ALASKA BILL NO. CSHB 220(FIN)
2022 LEGISLATIVE SESSION
Analysis
(Revised 11/23/21 OMB/LFD) Page 3 of 3
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 CSHB 220(FIN) - Fiscal Note 3
May 10, 2022
Mr. Jim Puckett
Deputy Director/Chief Pension Officer
Division of Retirement and Benefits
State of Alaska
P.O. Box 110203
Juneau, AK 99811-0203
RE: Fiscal Note Analysis for HB 220 CS-B
Dear Jim:
As requested, we are providing a fiscal note analysis for HB 220 CS-B. This letter is an update to our
letter dated May 6, 2022 with projected State contributions through FY39 added to Section A (see
page 3).
In this letter, we use HB 220 PERS members and HB 220 TRS members to refer to PERS and TRS
members, respectively, who are affected by HB 220 CS-B. Collectively, they are referred to as HB 220
members.
HB 220 CS-B includes the following modifications to HB 220:
1. All HB 220 members (current active members of the DCR plans and all future hires) will be
given a one-time election to enter the DB or DCR plan.
2. The authority to increase member contribution rates and/or reduce PRPA benefits for HB 220
members was changed from the Alaska Retirement Management Board (ARMB) to the DOA
Commissioner.
3. The maximum member contribution rate was increased to 12% for all HB 220 members.
4. The member contribution rate for PERS Others HB 220 members was increased from 6% to
8%.
5. Normal retirement eligibility was changed for all HB 220 members.
6. Average compensation for TRS HB 220 members was changed from 3 years to 5 years.
7. To be eligible for healthcare benefits, HB 220 members must retire directly from active service.
(Under HB 220, the current statutes would have changed such that an HB 220 member did not
have to retire directly from active service to be eligible for healthcare benefits.)
Note: The changes in #1 through #3 do not affect our cost analysis.
Adverse plan experience (due to poor asset returns and/or unexpected growth in liabilities) or changes
to more conservative assumptions will increase the PERS DB and TRS DB unfunded liabilities,
resulting in higher contribution rates. The impact of HB 220 CS-B on projected contribution rates
depends on how large the PERS DB and TRS DB unfunded liabilities become. By shifting active
members (and all future hires) from DCR to DB, the State will be taking on greater risk of higher
contributions in future years.
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 CSHB 220(FIN) - Fiscal Note 3
Mr. Jim Puckett May 10, 2022
State of Alaska
A. Impact of HB 220 CS-B on Projected State Contributions for FY23-FY28
State contributions for FY23-FY28 are projected to increase/(decrease) due to HB 220 CS-B as shown
in the table below (assuming no actuarial gains or losses after June 30, 2021):
($ millions) FY231 FY24 FY25 FY26 FY27 FY28 6-Year Total
Additional State Contributions
PERS $0.02 $(12.9) $(4.7) $(2.3) $(0.2) $2.8 $(17.3)
TRS $0.0 $(15.6) $(11.8) $(11.0) $(10.3) $(9.6) $(58.3)
Total $0.0 $(28.5) $(16.5) $(13.3) $(10.5) $(6.8) $(75.6)
State-as-an-Employer Contributions
PERS $1.6 $44.7 $56.8 $63.2 $69.2 $76.0 $311.5
PERS DCR $0.6 $(54.2) $(56.7) $(59.4) $(62.1) $(64.9) $(296.7)
Total $2.2 $(9.5) $0.1 $3.8 $7.1 $11.1 $14.8
Total State Contributions $2.2 $(38.0) $(16.4) $(9.5) $(3.4) $4.3 $(60.8)
State contributions are also projected to increase/(decrease) beyond FY28. On the following page, we
summarize projected State contributions for FY23-FY39 (in $000s).
To fully understand the overall impact of HB 220 CS-B on the States projected contributions, we have
to consider all sources of contributions, which includes a shifting of employer contributions between the
DB plans and the DCR plans.
On pages 4-6, we have illustrated the impact of HB 220 CS-B on FY24 contributions (similar results
would apply for FY25-FY28). Contribution rates are expressed as a percentage of DB/DCR pay.
Contribution amounts on page 4 are in $000s based on projected pay; contribution amounts on pages
5 and 6 are in $millions based on projected pay.
Page 4 Development of projected employer and State contributions for FY24
Page 5 Sources of projected FY24 contributions (members, employers, State) for PERS DB/DCR
Page 6 Sources of projected FY24 contributions (members, employers, State) for TRS DB/DCR
1 The FY23 Additional State Contribution amounts were adopted by the ARMB in October 2021, so there is no
impact on FY23 Additional State Contributions. The FY23 contribution rates were adopted by the ARMB in
October 2021. PERS DB/DCR payroll is projected to increase after reflecting HB 220 CS-B since employee
retention is expected to be higher for those transferring to the DB plan. As a result, projected FY23 State-as-an-
Employer contributions increase.
2
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 CSHB 220(FIN) - Fiscal Note 3
Mr. Jim Puckett May 10, 2022
State of Alaska
The amounts below are in $000s.
Additional State Contributions - PERS Additional State Contributions - TRS Additional State Contributions - Total
Fiscal Year Current HB 220 CS-B Incr/(Decr) Current HB 220 CS-B Incr/(Decr) Current HB 220 CS-B Incr/(Decr)
2023 33,933 33,933 0 91,029 91,029 0 124,962 124,962 0
2024 44,673 31,732 (12,941) 90,155 74,540 (15,615) 134,828 106,272 (28,556)
2025 31,743 27,027 (4,716) 76,956 65,109 (11,847) 108,699 92,136 (16,563)
2026 17,103 14,805 (2,298) 61,747 50,757 (10,990) 78,850 65,562 (13,288)
2027 17,307 17,117 (190) 63,023 52,738 (10,285) 80,330 69,855 (10,475)
2028 17,294 20,059 2,765 64,481 54,843 (9,638) 81,775 74,902 (6,873)
2029 17,564 23,117 5,553 65,898 56,984 (8,914) 83,462 80,101 (3,361)
2030 18,384 26,843 8,459 67,425 59,154 (8,271) 85,809 85,997 188
2031 19,379 30,854 11,475 69,065 61,601 (7,464) 88,444 92,455 4,011
2032 20,283 35,019 14,736 70,825 64,001 (6,824) 91,108 99,020 7,912
2033 21,279 39,700 18,421 72,724 66,429 (6,295) 94,003 106,129 12,126
2034 22,607 44,425 21,818 74,532 69,062 (5,470) 97,139 113,487 16,348
2035 23,847 49,494 25,647