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Parnell Proposes $3B Toward Pension Shortfall

Published On: Dec 06 2013 06:04:36 AM AKST
JUNEAU, Alaska -

Gov. Sean Parnell is proposing putting $3 billion from savings toward addressing Alaska's $12-billion unfunded pension liability.

The state's currently on a payment schedule that calls for increasing payments expected to exceed $1 billion before dropping.

Parnell previously supported staying on that schedule but says he's become convinced, partly from feedback from ratings agencies, that that option isn't sustainable.

His budget office says his plan would allow for flat, $500-million payments after the infusion.

The state started the fiscal year with about $16 billion between two savings accounts, but savings also will be needed to help balance state budgets amid declining revenues.

A stock market dive, rising health care costs and actuarial mistakes contributed to the pension liability.

Alaska switched from a pension program to a 401(k)-style benefit in 2005.