Topeka Kansas’ public employee pension system investments have taken such a beating in the stock market that the system needs a long-term fix soon, leaders said Friday.
The Kansas Public Employees Retirement System had a record unfunded actuarial liability of $8.3 billion as of Dec. 31, 2008 — the day officials took a snapshot of the system. That represents a $2.7 billion increase from the previous year in the unfunded liability, the difference between the system’s assets and future pension obligations.
Glenn Deck, executive director of KPERS, emphasized that current retirement benefits “are safe,” but that the state needs a long-term strategy to reduce the liability. He said it would not be prudent simply to wait for the market to rebound.
“This is the most important issue facing KPERS,” Deck said during a meeting of the KPERS board of trustees. “The longer we wait to act on this, the more expensive the problem becomes.”
He said KPERS will work with lawmakers, Gov. Mark Parkinson and other interests to develop a plan for the 2010 legislative session, which starts in January.
KPERS provides retirement plans for state and local public employees, including teachers, and has more than 250,000 members.
Doug Wolff, vice chairman of the board of trustees, said the gravity of the issue should help “convince those in the Legislature that something needs to be done.”
KPERS officials said they planned to put a notice on the system’s Web site stating that its stock portfolio was down 19.2 percent in the last fiscal year.
The $8.3 billion unfunded liability is not too far off the system’s $10 billion in assets.
Pat Beckham, a consulting actuary with Milliman Inc., said most public employee pension systems are in similar circumstances. “Everybody is feeling the pain,” she said.