RE: Political Communication from State Commissioner

ASEA Members and Retirees,

A message from Commissioner Curtis Thayer was delivered to many public retirees that reads as a political endorsement and violates the prohibition of using state resources for political purposes.

Commissioner Thayer violates his own Sept. 14, 2014 memo to all State of Alaska employees asserting Alaska statute prohibits the use of state resources for partisan political purposes.

My response and Commissioner Thayer's original message follow below.

Jim Duncan
Executive Director

From: Jim Duncan
Sent: Friday, October 31, 2014
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Subject: Campaigning using State of Alaska Resources

Dear Commissioner Thayer,

You have some explaining to do!

The following email which is clearly a campaign statement in support of your Governor Parnell was received by many retired public employees. Yes, you sent it to their home email address but it was sent from “Alaska Department of Administration” with an email address of This email address is being protected from spambots. You need JavaScript enabled to view it.. It also said to reply to the same public email address. I also question whether you should be using data bases that are maintained by the Division of Retirement and Benefits for political mailings.

I know that as Commissioner of Administration you are aware that it is a violation to use State equipment and resources for political purposes. In fact, you recently sent an email to all State of Alaska employees informing them that they are prohibited from using State resources for political purposes.

You may rationalize this by claiming it is not a political statement. However, you know that the status of the retirement system and the unfunded liability has been a major issue in this year’s campaign for Governor. In fact, in the past few days during televised debates Governor Parnell made this an issue by pointing out the very same points you do in your email. Based on that it is clear to me that this is a political statement supporting the Governor.

I am shocked and disappointed that you would send this message in the final days prior to the election.

Jim Duncan

From: Curtis Thayer
Sent: Monday, October 27, 2014

Dear Retired Public Employee:

The Retired Public Employees of Alaska, APEA/AFT (RPEA) sent an unsolicited open letter to retired public employees last week that makes a number of statements regarding your retirement system and benefits. Before I address these statements, let me state categorically: We will keep the retirement promises made to you.

This Department works hard every day to ensure that the promises made to the State of Alaska’s defined benefit retirees are kept. The work is not easy. The State and our pension systems face many challenges: rising healthcare costs, volatile investment markets, and declining general fund revenue. PERS and TRS currently have assets of $21 billion, an unfunded liability of approximately $9 billion, and a projected benefit pay-out obligation of over $130 billion over the next 60 years. Keeping our promises means we must continually work to ensure that these systems are sustainable for the long term.

2014 $3 Billion Appropriation: Last session, Governor Parnell and a unanimous Legislature appropriated $3 billion from the constitutional budget reserve to the PERS and TRS trust funds. As a result of this appropriation we anticipate that the funding levels of PERS and TRS will increase collectively from 56% to 73%.

I am very grateful for Governor Parnell’s leadership in introducing the proposal to appropriate $3 billion to PERS and TRS in his FY2015 budget. And thanks to the many retirees who recognized the significance of this proposal and helped to get this passed.

To address the remaining unfunded liability, the Legislature called for refinancing it over a new 25-year term. The adopted plan was reviewed and approved by Buck Consultants, the PERS/TRS actuary. Buck’s actuarial review may be found here:

These steps were very important, because the State has many financial obligations that must be met over the near term (schools, public safety, roads, etc.). The Governor and Legislature partnered to address this significant cost driver in our annual State budget while facilitating a predictable way to meet our commitments to our retirees, both now and into the future.

Importantly, the Legislature’s refinancing of the unfunded liability will allow the State to preserve general funds to invest in generating revenue for the future, including the construction of a gas pipeline. With over $130 billion in projected retirement obligations over the next 60 years, building a strong and fiscally healthy Alaska for the future is of vital importance to the long-term sustainability of your retirement plans.

RPEA understood these dynamics and wrote to its members earlier this year: “Most of you know that the governor included a $3 billion appropriation to the retiree trusts in the proposed FY15 budget, addressing the unfunded liability of those funds…. Without the early pay-down of the unfunded liability, the state’s annual contribution to the trusts would exceed a billion dollars in a few short years, making it the largest item in the operating budget. With declining revenues and greater competition with other state programs for those budget dollars, it’s unlikely those contributions would be made to that level in the future. The next action is up to the Legislature, and it is up to all of us to make sure our legislators know the importance of this appropriation. This is your call to action.” RPEA Reporter, President’s Message, Jay Dulany, p. 1 (Feb. 2014).

We appreciated RPEA’s understanding of the issues and support during the Legislative session.

New Third Party Administrators: The State transitioned to new TPAs Aetna and Moda on January 1, 2014. All retirees were given written notice of this transition through the Division of Retirement & Benefits HealthMatters newsletters in February 2013, October 2013 and December 2013.

This is a large plan. Including actives and dependents, the membership of this plan is over 84,000 covered lives. The TPA processes over 1.6 million medical claims and over 1 million pharmacy claims each year. And because your plan design is fairly unique, over 40% of the medical claims are manually processed.

In any transition, there are hundreds of details to manage. Over the course of this year, my department has repeatedly acknowledged that the transition has been difficult. Unfortunately, all TPA transitions are difficult. During the very first TPA transition, the Juneau Empire reported that a “[A state employee] said a medical procedure that in the past had been covered by Aetna was denied by NYLCare.” Juneau Empire, “State’s New Health Claims Processor Drawing Complaints,” Jan. 23, 1998.

My staff has worked tirelessly this year to address member concerns, and has provided repeated direction to Aetna and Moda. Some issues still remain to be corrected, but the number of complaints is down to a fraction of what they were earlier in the year. In recent weeks, RPEA leadership has expressed thanks in writing to my staff for their work in addressing the open issues.

2003 Retiree Plan Booklet: An issue that seems to complicate transitions and plan administration is the current plan document (the 2003 Retiree Plan Booklet). It has never been a comprehensive plan document--there are many gaps and ambiguities. This has been well known for years. In 2010, RPEA reported that a top retiree request was “Updating the Retiree Insurance Information Booklet to replace the current booklet, which is dated May 2003.” RPEA News., Dec. 2010, p. 2. RPEA later stated, “One of our major concerns is the need to update the medical handbook for retirees. The book was printed in 2003 and is in need of revision.” RPEA Reporter, May 2011, p. 2.

Earlier this year, the Department offered for comment a more detailed draft plan document that could have eliminated some of the current gaps and ambiguities. Many commenting members objected to various aspects of the draft plan document, and in response we decided to not adopt the draft. But members need to understand that when the AlaskaCare plan document is silent or ambiguous, TPA claims reimbursement policies will control. We remain committed to dialogue on this issue with the retiree community as a whole. My staff conducted 10 town hall meetings with retirees this year. Next year, we will try again to engage with the members to update the 2003 Retiree Plan Booklet. I encourage members to participate in that effort.

Curtis W. Thayer