Gov. Sean Parnell (R-Alaska) signed House Bill 385 into law Monday.

The legislation addresses the state’s largest cost driver, its $12 billion dollar pension liability.

"It takes $3 billion out of our budget reserves and moves it to the pension trust funds, $2 billion to the teacher retirement system and $1 billion going to the public employees retirement system," Parnell said at a press conference.

The governor said by paying a large sum of money up front, it will drop the yearly payments into the system, saving taxpayers more money in the long run.

"Today, we're helping approximately 120,000 retirees. Those are Alaskans, they are beneficiaries, and dependents, teachers, firefighters, state employees and municipal employees,” said Representative Cathy Munoz (R-Juneau).

The legislation passed the house and the senate unanimously, although some lawmakers expressed concerns about the financial risk of drawing a large sum of money from the state’s savings accounts.