Draft statements show about $1.2 billion less unfunded debt in Alaska's main pension plans

Alaska's two main public pension plans carried about $1.2 billion less unfunded debt in draft fiscal 2026 financial statements prepared for the Alaska Retirement Management Board's Audit Committee for its Oct. 12 meeting. The pages are marked as drafts, and the auditor opinions inside them are unsigned and undated.

The Public Employees' Retirement System's net pension liability fell to about $4.26 billion from $4.96 billion. The Teachers' Retirement System's liability fell from $1.55 billion, but its draft gives three new figures: about $1.033 billion, $1.073 billion and $1.076 billion. Combined, the drop is between $1.18 billion and $1.22 billion.

The drafts credit investment returns of 14.18% for the employee plan and 14.17% for the teacher plan, against the 7.25% the plans assume each year. Gallagher, the board's actuary, had put the return at about 13.3% based on preliminary assets.

At market value on June 30, the employee plan held assets equal to 75.89% of its liability, up from 71.23% a year earlier. The teacher plan showed 87.07% or 86.57%, up from 80.65%.

One year's figures can still move. The draft employee plan note says its liability comes from a June 30, 2024 valuation rolled forward, and new assumptions adopted in June take effect with the June 30, 2026 valuation.

The state appropriated $79.8 million to the employee plan and $139.0 million to the teacher plan for fiscal 2026. In September the board adopted fiscal 2028 rates that Gallagher prices at $80 million and $141 million, plus $304 million as an employee-plan employer. That scenario sets the retiree health care contribution to zero because those health trusts are funded above 100%.

KPMG told the committee Sept. 14 it expected clean opinions for the employee and teacher plans but expected to again decline to issue an opinion on the National Guard and Naval Militia Retirement System, citing missing data supporting census figures and a continuing material weakness. That $48.3 million plan is 154.25% funded, so the issue is its records, not a shortfall.

Twelve employers in the employee system were behind on payroll reports as of Aug. 26. The Hydaburg City School District owed about $400,000 plus interest and was headed to mediation.

The Audit Committee is scheduled to review the final audit with KPMG on Dec. 1, ahead of the full board's meeting Dec. 2-3.