02 February 2007

PERS/TRS Lawsuit

The Palin administration wants 12-million dollars to sue the pants off Mercer Consulting for putting the state retirement systems 10-billion dollars in the hole.

Fine. But - as I've already indicated - it doesn't solve the problem.

Senate Finance co-chair Bert Stedman - who I previously thought was wildly off the mark on PERS and TRS - appears to get the picture. At the weekly press conference earlier this week, he said about the idea of a lawsuit:

It's kind of a distraction in some ways. In other words, it's an important viable issue to look at but we don't want to lose sight of the policy calls dealing with the retirement system and the unfunded liability moving forward. I don't think it will materially change policy calls we need to make to get to a solution.
If you listen to the Department of Administration's presentation to Senate Finance today, you'll learn that Mercer was consulting for the state for 29 years. That leads me to one of two conclusions. First, Mercer has been making projection mistakes for nearly 30 years and no one noticed them. If that's the case, is it Mercer's fault for the wrong projections or the state's fault for not catching them. Second, Mercer has been doing just fine and this is a desperate attempt to pin the blame on whomever is around and looks liable.

But I have a hard time believing that after 29 years of apparently good service (else why else would have they been around that long?), Mercer all of a sudden made some major mistake that has contributed to this hole in PERS and TRS.


Naoko said...

unrelated to alaska politics: you should really join facebook, everyone is on it. i joined last weekend and am totally addicted.

Anonymous said...

It's not just Alaska. Public emoployee retirement systems all over the country are in the same kind of hole, and it's just coming to light now. It's a consequence of the promises made for decades, under the duress of a strike threat, to employees to keep labor peace. Everybody realized that sometime those promises would have to be kept, but it was sometime in the future when it would be somebody else's problem. ell, folks, the future is now.

And it's not just public employees; the same kind of promises are a major cause of the troubles faced by the domestic Big Three auto makers.