Topeka The Legislature was putting the final touches on a bill Saturday that would allow the state to borrow $750 million to shore up the state pension system, a proposal that one opponent called "a crapshoot."
The bill also contains a few goodies for a handful of legislators under the Kansas Public Employees Retirement System.
The measure was sent to the House on a 31-7 vote, with several senators saying they supported it because of other parts of the comprehensive bill, including a provision that would give a group of elderly retirees an extra monthly check, worth on the average about $475.
The major part of the bill, however, would allow the issuance of $750 million of taxable revenue bonds to reduce the gap between assets and benefit obligations in KPERS.
Supporters of the measure say the bonds are needed to keep KPERS sound. KPERS could borrow the money at a low interest rate and invest it to yield a higher rate on dividends.
But Sen. Ed Pugh, R-Wamego, asked what would happens if the investments went sour, as they have for the past couple of years with the downturn in the stock market. "This is sort of like a crapshoot," he said.
The 10-year average investment performance for KPERS is 8.1 percent, but the average of the past three years has been a negative 4.5 percent. Last year, the system's portfolio was down 6.9 percent, reducing its assets from $9.1 billion to $8.2 billion.
Pugh said the Legislature was simply playing money manager with money that was supposed to be set aside for retirees.
There are 140,000 public employees paying into the system, and about 52,000 retirees receiving benefits. KPERS distributes $551 million in retirement benefits each year
The bill also contained several provisions to increase the benefits of lawmakers.
One provision would affect state Rep. Barbara Ballard, D-Lawrence. Ballard has been a lawmaker for 10 years, and is an associate vice provost at KU. During the legislative session, she said, she takes an unpaid leave of absence. And for years that meant the university didn't contribute to her retirement plan during the session.
But the law was changed in 2001, and said that legislators who were also employees of regents universities may elect to have the Kansas Board of Regents make contributions to the regents retirement plan while they are serving in the Legislature.
This bill under consideration would go further by allowing the employee to elect to have the institution make retroactive contributions to the regents retirement plan for legislative service prior to Jan. 8, 2001.
Ballard has said the proposal would allow her, and future legislators in her position, to be treated the same as her colleagues.
The bill also would permit retired members of KPERS who serve in the Legislature to elect an 8 percent deferred compensation plan since they are ineligible for further KPERS benefits.
In addition, the bill would allow legislators who decide not to participate in KPERS to be allowed to receive the benefits of the state's death and disability fund.
State government has contributed to the death and disability fund for state employees for decades. If a state employee dies, his beneficiary receives 150 percent of his annual compensation. The plan also provides long-term disability pay minus what an employee receives under Social Security or workers' compensation.
Senate President Dave Kerr, R-Hutchinson, said the provisions for state legislators were simply fairness issues. He said some lawmakers chose not to participate in KPERS, but that they shouldn't be penalized by not being allowed to receive the death and disability benefit.