Across the country, state legislatures are approaching the midpoint of their sessions, and public pensions are once again at the center of budget debates and workforce policy fights. In several states, including Colorado, Washington, and Oklahoma, lawmakers have proposed redirecting pension reserves or reducing scheduled contributions. In Alaska and New York, public workers and their allies are rallying to advance legislation that will strengthen retirement systems and improve recruitment and retention.
These actions have defied traditional party lines. Democrats in Denver and Olympia have moved to tap into funds dedicated to pensions for other purposes, joining Republicans in Oklahoma City who want to divert teachers’ pension funds to tax breaks for largely well-off private school parents. Meanwhile, Republicans in Alaska are divided over the future of the state retirement systems. As legislative leaders advance a bill to restore a defined-benefit pension, lame-duck Governor Mike Dunleavy—himself the recipient of a teacher’s pension—has signaled his opposition. Together, these developments show how central pension systems have become to the broader policy debates unfolding in state capitols.
Alaska
In Alaska, lawmakers continue to debate House Bill 78, legislation that would establish a defined benefit pension for public employees. The state closed its pension systems to new hires in 2006, instead offering defined contribution plans. Since then, agencies across the state have struggled with recruitment and retention challenges, particularly in public safety and education.
Meanwhile, Governor Mike Dunleavy, who has announced he will not be seeking reelection this year, on March 1st failed to reappoint TRS and PERS representatives to seats on the Alaska Retirement Management Board of Trustees.
At this point, the bill is in Senate Finance, where a veteran co-chairman is currently floating a competing DC-bill that would strengthen the Alaska Supplemental Annuity Plan (SBS-AP), a defined contribution plan.
NPPC, in alliance with the Alaska Public Pension Coalition, launched the Alaska Needs Pensions campaign earlier this year. Click here to learn more.
Arizona
The Arizona State Legislature introduced an all-time record number of bills this year, including several attacks on collective bargaining rights and measures seeking to weaponize public pensions as a means to prevent teachers and other public employees from striking or organizing on public property.
Arizona utilizes “strike-everything” amendments, meaning that any piece of legislation with a “strike-everything” or “striker” could be rewritten in its entirety, possibly changing the bill’s initial goal. House Bill 2313, a bill that would impose legal penalties on educators who participate in any labor demonstrations, including strikes, is especially sensitive to a strike-everything amendment. Language demanding the immediate forfeiture of ASRS benefits, along with termination and legal action, has been added to and removed from the bill–and could set a dangerous precedent if signed into law.
California
Pension debates increasingly focus on investment governance at the nation’s largest retirement systems, including CalPERS and CalSTRS. Recent discussions have centered on private equity exposure, transparency around alternative investments, and governance reforms such as CalPERS’ adoption of a ‘total portfolio approach’ to managing investment risk and returns.
Colorado
In Colorado, pension debates have focused on state contributions to the Colorado Public Employees’ Retirement Association (PERA). In November, Governor Jared Polis proposed reducing scheduled state contributions as part of an effort to close a projected budget gap. Advocates warned that skipping required contributions undermines the funding discipline that helped stabilize PERA following the 2018 reforms. In mid-February, the Colorado Joint Budget Committee denied Polis’ request to reduce contributions to PERA.
Connecticut
Efforts to expand public safety participation in the Connecticut Municipal Employees’ Retirement System (CMERS) have circulated through the Connecticut General Assembly for several sessions, unable to reach the finish line. This year, lawmakers passed SB 298, compelling the Comptroller’s office to conduct a study of the fiscal impacts on municipalities that do not currently provide a defined pension plan to full-time police and firefighters.
One other bill to watch in the Nutmeg State is SB 249, which would establish a framework for revoking or reducing the pensions of public officials and municipal or state employees convicted of crimes related to their official duties. While controversial, this bill directly infringes on collective bargaining rights and could result in unnecessary litigation and the use of government dollars. This bill had a public hearing before the Joint Government Oversight Committee in late February and was met with opposition from labor leaders and state workers.
Kentucky
Much of the pension legislation in Kentucky’s budget session this year addressed reemployment after retirement to address public employee shortages, and a few clean-up bills shoring up the state’s hazardous position benefits. The legislature faced an early threat to pension funding when initial budget recommendations included adjustments to TRS, the health insurance fund, which would have left the fund $80m short of its expected contributions. However, lawmakers removed the contribution cap from the budget and included a 2% pay raise for state employees, as well as a much-needed “13th check” for state retirees.
New York
In New York, unions and public-worker advocates continue to push reforms to the state’s Tier 6 retirement system. Enacted in 2012, Tier 6 increased employee contributions, drastically reduced benefits, and forced public employees to work longer to qualify for a full retirement. Advocates argue these changes have created workforce challenges for public employers and reduced the attractiveness of public service careers.
Oklahoma
Lawmakers in the Sooner State have expanded private school tax credit programs that education advocates warn could divert resources from public education and increase fiscal pressure on the state’s retirement systems. Data from the Oklahoma Tax Commission shows many of the tax credits are going to families with incomes above the state average, meaning most of the funds flow to well-off families already sending their children to private schools.
Additionally, a faction of retired firefighters known as “Tweeners” is hoping for a much-needed COLA through House Bill 1889. The bill would provide a benefit adjustment, effective July 1, 2026, designed to restore the purchasing power of their initial retirement benefits lost to inflation. Tweeners are retirees who did not qualify for automatic COLAS granted to those eligible for retirement before May 26, 1983, and who also weren’t offered the deferred option plans introduced on November 1, 1989.
Washington
In Washington, lawmakers passed HB 2034, redirecting billions in surplus dollars from the Law Enforcement Officers’ and Firefighters’ Retirement System Plan 1 (LEOFF 1) to address other state budgetary needs. LEOFF 1 covers police officers and firefighters hired before 1977 and is now closed to new members. With a 160% funded ratio, the plan has accumulated significant reserves–a portion of which, some lawmakers argue, could be used to address broader state budget pressures. The bill is now on the governor’s desk, awaiting final action.
Firefighters and law enforcement organizations strongly opposed the proposal, arguing the funds represent deferred compensation earned by public safety workers over decades of service, not surplus state money available for other purposes.
If you’d like to stay up to date on the latest in pension legislation, be sure to check out our NPPC Legislation Tracker!