NEA/unions join Begich attacks on Sullivan’s Wall Street settlement. Are the attacks fair?

The National Education Association Advocacy Fund released an ad on Wednesday, attacking GOP Senate candidate Dan Sullivan, for his role in a settlement that Alaska received for the state’s retirement trust funds while he was attorney general. Sullivan has touted his role in negotiating the settlement, which some have criticized as being too low. His campaign ran an ad recently, featuring a school teacher who said that the settlement helped Alaska teachers. Hence the NEA’s involvement on Sen. Mark Begich’s behalf and its pushback.

Also on Wednesday, the National Association of Teachers- Alaska (NEA-Alaska), the Alaska Professional Fire Fighters Association (AKPFFA), and Alaska Public Employees Association (APEA), held a press conference, criticizing the settlement.

A Begich campaign press release about that event included quotes from union members criticizing the deal. It also included a picture of a fake check for $91 million made out to a New York Law Firm with Dan Sullivan’s signature on it. The memo line of the fake check reads, “Money that should have gone to hard-working Alaskans.”

However, Alaskans from both sides of the aisle question whether the criticism is fair.

The backstory: Mercer Inc., a financial actuarial firm, knowingly gave bad actuarial advice to the managers of the Public Employees’ Retirement and Teachers’ Retirement Systems. The state’s suit was filed against the Wall Street firm in 2007. The Department of Law asked the Legislature in 2008 for $12 million to sue. It refused. Some members of the Legislature, including Rep. Mike Hawker and Sen. Bert Stedman weren’t sure that the state had a case. It’s like “suing the weatherman for a bad forecast,” Hawker said at the time. Both urged the Department of Law to hire a lawfirm on contingency.

Mike Barnhill, who was the assistant attorney general at the time and managed the case, hired the New York law firm who took it on contingency. This was before Sullivan’s tenure as AG.

Barnhill settled on the contingency terms. Initially, the lawyers were to get 25 percent. Eventually that was whittled that down to 18.5 percent, which was considered a good deal for Alaska at the time.

Sullivan, according to Barnhill and others, was also in charge of negotiating the final settlement of the suit in 2010. The state originally had been asking for $2.5 billion to $2.8 billion. After lawyers’ fees, the state got about $400 million, which went into the retirement trust funds. According to The American Lawyer, a nationally renowned legal publication, it was the largest actuarial malpractice settlement in U.S. history.

The Alaska Retirement Management Board, (ARM Board) which oversees the funds, was kept abreast of the settlement, and ultimately approved it. The ARM Board included members of unions, including Sam Trivette, who is on the national executive board of the American Federation of Teachers retirees and represented public employees. The chair of the board, Gail Schubert, is the head of the Bering Straits Native Corporation.

Mike Barnhill, the assistant AG who managed the case, declined to say what was talked about during executive session, when the details were revealed to the board in June, 2010. However, he said that the Department of Law treated the ARM Board like any other client, and that he “can absolutely assure the public that consensus was reached,” as it is with all clients.

Pat Galvin, a Democrat who was the Department of Revenue Commissioner at the time, also was a member of the board. He said in an interview on Wednesday that the case was complicated, not the least because it was a new area of law.

He said that he didn’t think the criticism  leveled by Begich and the unions about the settlement is fair. “The ARM Board was the most affected by it and was the state entity that was in the position to object if they wanted to object. They could have come back and opposed it. They didn’t. We got more out of it than we ever expected to,” he said.

Galvin also noted that those who are criticizing the settlement now didn’t say anything about it then.

Years later, Sen. Johnny Ellis, D-Anchorage, called it “scandalously low.” However, shortly after it was settled, Sen. Hollis French, also a Democrat from Anchorage, called it “gratifying.”

Here’s the NEA ad:

Correction: The story originally said that the state got $500,000 after lawyers. The number was about $400,000.

Contact Amanda Coyne at


15 thoughts on “NEA/unions join Begich attacks on Sullivan’s Wall Street settlement. Are the attacks fair?

  1. Anonymous

    I’m sorry. I just can’t see Sullivan putting his back into this. He and his ilk don’t care about teachers. Hawker was the one who could’ve, with one vote, killed the bill to convert the retirement system from defined benefits to defined contributions and established Tier 4.

    So after Hawker won’t put out the money to get their retirement money back “Super Dan comes to the rescue”? You’ve got to be kidding me. This state has such tremendous political capital in the private and public sectors. My thinking is if Sullivan really cared about a successful outcome for retirees he would’ve used that to get us a much more fair shake. If he can’t strongarm like that he doesn’t need to be in office.

    He was probably too busy preying on Alaska Native elders to put the proper energy into developing elementary legal strategy.

  2. Anonymous

    Both sides are inflating and both sides know it. Ms. ASD 7th grade teacher is a pawn of the highest order. Here is hoping she was well paid; if not, she definately should not be teaching. Same goes for Mr. Middle School music teacher.

  3. anonymous

    This claim should be rated Pants on Fire. Just like the Jerry Active ad that the Begich campaign created, it wasn’t based in fact. Sorry Begich, you and your team just got caught in another lie.

  4. CPG49

    If the NEA thinks Alaskans are stupid enough to believe this trumped up claim, I would submit that we need to get rid of the teachers in our public schools. Alaskans aren’t fools, nor idiots and not going to believe this claim. Where was the out cry four years ago when the settlement was made? The teachers and other labor folks were part of the decision making process and the settlement advance with their blessing. The settlement was heralded nationally by legal scholars and journals. Begich’s campaign must be in serious trouble given all the slanderous negative attacks. You’d think Sen. Begich would have something to promote that he accomplished. But, he doesn’t. He hasn’t done anything except play poliitics and do whatever Harry Reid tells him to do. No wonder Sen. Reid is plowing so much money into Begich’s Superpac.
    As a former state worker, I salute Dan Sullivan’s victory for the state and its employees.

  5. Maggie

    On mmy way to the store this evening, I was thinking about Senator Begich’s campaign and the string of falsehoods they have been trying to perpetuate and was glad that his son was living out-of-state and wouldn’t be exposed to the out right lies that his father seems to so easily spew. I would suggest to the Senator that there are more important things than winning at any cost. I would suggest he think about his lack of truthfullness and the shadows it casts on his character. Is that the way he wants history to record him? I would hope that he’d want more. At least for the sake of his son.
    Mark Begich is morally vaccuous and not fit for public service.

  6. Anonymous

    Mae the moron at it again. Sigh. You just can’t learn anything, can you? Perhaps this was too complicated of a story for Mae to understand. The details in this reporting made it clear.

  7. Brandon Wall

    Had the State taken it to trial and won, it is unlikely that the award would have been $2.8 billion (the State’s attorneys were shooting for the moon).

    What is likely is that had the State won, this case would still be in the appeals process. Remember the Exxon-Valdez? The award in that case was north of $5 billion. 15 years worth of appeals later, the plaintiffs received about $500 million.

    I’m no Sullivan apologist, but if Begich and the Dems want to be taken seriously they really need to quit blowing smoke. Neither group has any credibility when talking about Sullivan at this point.

  8. Jim R.

    The NEA and the labor organizations that are complaining about the settlement never cried a negative word until now. More and more, organized labor is looking and acting like Begich’s stooges. Labor had reps on the ARM board which could have objected at the time the deal was going down and didn’t. This is just anothe cheap political ploy from Begich and his supporters. Another clear example of Begich’s willingness to say anithing. He is the biggest liar I can think of. Begich and his supporters have taken the art of negative campaigns to a new and sad level in Alaska’s history. Begich sold out the city to the unions when he was mayor and we’re still paying for it as taxpayers. If Begich is re-elected, we’ll just continue to pay for Begich’s gifts to labor. My wife is a card carrying union member and finds Begich’s antic to be despicable.

  9. Jon K

    Mae – The only reason why the attorneys got paid so much is bc the legislature refused to fund the litigation and so the state had to hire them on contingency.

    Anyway – what would you do: take the $500 million, risk getting nothing at trial or risk winning $2 billion at trial but know that it is an unenforceable judgment bc the mercer declares bankruptcy?

    People cannot assume that just bc the state was asking for $2 billion we would have gotten it.

  10. Mae

    L48 Dan takes credit for a 20 cents on the dollar legal wrangling deal, then yeah, it is fair to attack.

    And the financial times considered it a great deal for the attorneys involved.

    So 80% of that money did NOT go to Alaskans.

  11. Jon k

    Thanks Amanda for getting the facts out. I’m shocked, shocked that Pat Fogery ran a misleading article….one fact to correct – after attorneys fees the I’m pretty sure the state got about $400 million, not $500. We settled for 500 and then deducted the fees.

    I would add that Dan had to make a hard decision between accepted a half of billion or rolling the dice and going to trial on some iffy claims. The Financial Times ranked the victory as the #1 litigation result in 2010.

Comments are closed.