Many state legislatures have come to a close, and it is apparent that the conversation around pensions is on the upswing. After years of attacks on, reforms to, and closures of state pension systems have ultimately led to worker retention deficits and subsequent gaps in public services in communities across the country. The consequential teacher shortages, emergency response delays, unplowed streets, and deterioration of infrastructure have swayed public opinion back in favor of defined-benefit retirement plans. Much of NPPC’s work this year focused on rolling back anti-pension legislation through strategic campaigns and initiatives. Though there is still a long battle to fight, the tide continues to rise for public pensions in many states.
Alaska
When economist and retirement security authority Teresa Ghilarducci addressed the Alaska House Labor and Commerce Committee in April, she told them about the four main advantages of offering a defined-benefit plan versus a 401(k) plan to public employees. These four aspects–decreased turnover, higher financial efficiency, reduced outmigration, and increased productivity–are all qualities that Alaska’s House members failed to consider as the House State Affairs Committee dragged its feet on hearing Senate Bill 88 for months. The legislation, introduced in 2023 by Senator Cathy Giessel, will return pensions to public employees nearly two decades after they were stripped from them by previous administrations.
When the Alaska legislative session came to a close, the bill ultimately failed to pass, despite efforts by Giessel to insert the bill as a 52-page amendment to an education-related bill. Initially, the Senate narrowly approved the addition. However, concern that including the pension language could jeopardize the overall school funding bill spurred several vote changes. “It didn’t seem that it was going to make for a productive end to the session,” Giessel said.
As Alaska’s public employee population continues its steep decline, public services in the massive state have taken a brutal hit. The situation extends beyond hindrances like unfilled potholes and long lines at the Division of Motor Vehicles. The dire public staffing crisis in Alaska has been linked to the freezing death of an elderly man in his home, the inability to respond to human trafficking concerns, and in January of this year, the Matanuska-Susitna Borough Assembly passed a resolution that urged citizens to arm themselves in light of the severe shortage of law enforcement officers.
Michigan
Michigan also needs more educators, nurses, corrections officers, and state employees. To combat the staffing crisis there, the Coalition for a Secure Retirement–Michigan has had boots on the ground in Lansing this year, looking to restore a defined-benefit pension for state employees. After the installation of a Democratic majority in 2023, the opportunity to re-open the state employees’ pension plan, which was closed in 1991, seems more attainable than ever.
Michigan has a unique set of circumstances requiring nuanced strategy to reinstate secure pensions for state employees. For instance, though the State Employee Retirement System (SERS) no longer offers pensions, some municipalities do. This has become particularly challenging for state law enforcement, who name diminishing pensions as one reason for staffing shortages.
The Michigan legislature meets year-round, requiring a unique strategy for inciting change. Lawmakers have officially repealed Right-to-Work laws, generating a labor-friendly environment in the state house.
New York
Lawmakers in the Empire State made significant improvements to Tier 6 of the New York State and Local Retirement System (NYSLRS) this session to help curb the employee retention crisis there. Rolling back previous reforms that took place in 2012, the benefits calculation equation has changed to reflect the three years when an employee’s earnings were highest, rather than the prior policy of five years. This puts Tier 6 employees, who make up over 50% of the current public workforce in New York, more on par with Tier 5 and Tier 4 workers.
Improvements on the Horizon
Last summer, the state of Kansas conducted a legislative post-audit of the Kansas Public Employees Retirement System (KPERS) Tier 3. The results determined that KPERS 3 delivers inadequate retirement benefits compared to neighboring states like Texas, Nebraska, and Missouri. As a result of the study, a bill was introduced to move all teachers from KPERS 3 to KPERS 2. Aimed at increasing Kansas educators’ dismal recruitment and retention rates, SB 479/HB 2646 was eventually double-referred to the Senate Ways & Means Committee and the Senate Financial Institutions and Insurance Committee, effectively killing the bill.
The silver lining lies in the final notes on HB 2646, which recommended “possible future employee group transfers to KPERS 2” as a solution to ongoing recruitment and retention issues. The pension bill that did pass was a fiscally responsible investment bill, increasing the alternate investment cap from 15% to 20%. An official nod from the Kansas House recognized the need to eliminate KPERS 3 and move all employees to the more favorable KPERS 2, and an investment initiative designed to bolster state pension funds the way for future movement in Sunflower State.
In Kentucky, despite general fund receipts exceeding $1B for 19 consecutive months and a record amount in the state’s rainy day fund, state retirees were again not provided with a one-time supplemental pension check. As Kentucky’s public employee retention levels continue to drop, state workers were granted a 3% raise on July 1, 2024, and July 1, 2025, but school workers received no increase in compensation whatsoever.
Lawmakers did not prioritize several necessary housekeeping bills, which is problematic regarding fund management and legislative responsibility. Indicative of lawmakers not considering the pension system seriously, this opens the door for pension opponents to walk in and attempt to sway opinions against Kentucky’s secure retirement system.
Our outlook on pension legislation remains positive. With state legislatures and public opinion moving in the right direction, the path to our goal of retirement security for all is long but attainable.
