Topeka A committee that has already recommended borrowing $500 million to shore up the Kansas public employee pension system will meet Wednesday to revisit the issue in a rare legislative do-over.
"Nothing is as simple as it looks," said state Rep. John Edmonds, a Republican from Great Bend, who is chairman of the House-Senate Committee on Pensions, Investments and Benefits. "There are more issues and more factors that have to be thought about."
On Dec. 1, the committee recommended that Gov. Kathleen Sebelius give the green light to issuing $500 million in pension obligation bonds.
Under the proposal, the Kansas Public Employee Retirement System would invest the funds in hopes of earning more in investments than what would have to be spent to pay off the bonds.
The interest and principal payments for the bonds would have come from state tax revenues, under the original recommendation.
But Sebelius opposes using tax funds to pay for the bonds and instead wants the payments to come from the state's contribution to KPERS.
That would significantly reduce the benefit of the deal to KPERS, officials said.
"From the standpoint of KPERS, it is not nearly as advantageous," Edmonds said.
Edmonds has called a meeting of the pension committee for Wednesday morning to consider recommending that the KPERS bonds be paid back through the state's contribution to the retirement system.
Sebelius' budget director, Duane Goossen, said the state simply couldn't afford to use tax revenue to pay off the bonds because it was already committed to increasing employer contributions in the next several years.
"Right now, the state cannot afford another new funding commitment," he said.
Because of the downturn in the stock market and inadequate contributions by the state, the difference between assets and projected liabilities in KPERS has grown to nearly $3 billion.