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Archive for Monday, September 28, 2009

KPERS report sparks war of words

September 28, 2009

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The Kansas Public Employees Retirement System funding problem is starting to generate a lot of heat.

KPERS suffered $2.3 billion in investment losses this year. No current retirement benefits are in jeopardy, but a report by the Kansas University School of Business Center for Applied Economics called the issue a “funding crisis,” adding that “KPERS is bankrupt under current operating assumptions.”

But State Treasurer Dennis McKinney, who also is a member of the KPERS board of trustees, trashed that report.

The use of the word “bankrupt” was reckless, he said. He said the solution for KPERS is pretty simple, although it will require a lot of political will. The state will have to pay more into the pension system, as will employees, he said.

“Scaring 80-year-old retired teachers is not good policy,” he said.

He said the state has failed for the past 16 years to pay into KPERS what was needed to narrow the actuarial liability. That has produced a shortfall, he said.

But Art Hall, who is executive director of the Center for Applied Economics, defended the report.

“We chose the word ‘bankrupt’ to make crystal clear to Kansas taxpayers the seriousness of the situation. As used in the report, the word clearly means insolvency in a long-run operating context,” he said.

The KU report was done by Barry Poulson, an economics professor at the University of Colorado. Poulson has been described as the architect of TABOR, the so-called Taxpayer’s Bill of Rights in Colorado, and has worked on behalf of Americans for Prosperity in trying to push for passage of TABOR in Kansas.

Transportation program

The drive for another comprehensive transportation program starts today with a news conference and release of a report on the “current condition, use and funding of Kansas’ highway transportation system.”

The news conference will be held by Economic Lifelines, which lobbies for highway funding, and a group called TRIP, which promotes transportation projects.

In announcing the news conference, Economic Lifelines said, “Kansas faces a significant transportation funding gap over the next 10 years, which will not only impede efforts to improve roads and other infrastructures, but will also limit the potential for economic recovery.”

The current 10 year, $13 billion highway program ends this year.

Comments

KS 5 years, 2 months ago

The State always seems to have enough money to support its social programs. Hummm! Squeaky wheel?

jafs 5 years, 2 months ago

That's simply not true - social programs are almost always the first items cut when the state runs into budget problems.

Shane Garrett 5 years, 2 months ago

But State Treasurer Dennis McKinney said the state has failed for the past 16 years to pay into KPERS what was needed to narrow the actuarial liability. That has produced a shortfall, he said.

And no one is asking why?

justthefacts 5 years, 2 months ago

It does not take a rocket scientist to figure out that when the population of workers versus retirees is not the same, KPERS, as well as programs like social security, are going to suffer. Couple the shift in population numbers (baby boomers used to pay in more and now they are getting old and need to take out more), with the plunge in stock values, and it's a recipe for bankruptcy. Call it what you want. The facts don't change. You can't spend what you don't have. Unless you live on credit. Like the whole government is doing.

Danielle Brunin 5 years, 2 months ago

Actually, SRS is laying a lot of people off. Very scary.

svenway_park 5 years, 2 months ago

Art Hall is just a tired apologist for the Koch Oil and Americans for Prosperity types. He wants to scare everyone. The LJW gives him far too much ink.

The portfolios supporting defined benefit programs have taken a hit in the last year, but the benefits are legal obligations. They are as sound as the IRS is in its continued existence. In other words, they are golden. I'd trade my IRA's for a defined benefit anyday.

svenway_park 5 years, 2 months ago

"KPERS, as well as programs like social security"


justthefacts, that comparison is idiotic.

Silent_Dave 5 years, 2 months ago

“Scaring 80-year-old retired teachers is not good policy” - State Treasurer Dennis McKinney

Only a true imbecile would think 80-year-olds should be scared by this. They're SET. The 80-year-old has ALREADY received much more than they initially paid in!

Of those who possess two functional brain cells to rub together to cause a spark to know enough to be concerned, it's the YOUNG workers who will receive nothing later from what they're currently paying in.

Sigmund 5 years, 2 months ago

“Scaring 80-year-old retired teachers is not good policy” -

Especially if it is true.

Silent_Dave (Anonymous) says… "Only a true imbecile would think 80-year-olds should be scared by this. They're SET. The 80-year-old has already received much more than they initially paid in!"

Only a true moron wouldn't understand the time value of money, compound interest, and that a 80 year old doesn't have the opportunity to make up the time value of their retirement investments and that their working years are behind them. 80 year old's have a very good reason to be very afraid.

junco_partner 5 years, 2 months ago

I have worked for the state of kansas for 20 years, I am eligble to retire in another 11 years. I didn't plan on retiring right when I was eligible but waiting for another 5 to 7 years. I started working at age 15 and worked for another company for 10 years before I started at the state.

With the financial mess that social security and kpers is in and the amounts I have lost in my own investments due to 9/11 and the wallstreet fiasco of the last couple of years I'll probably be working until the day I die. And people can't understand why people in this country are angry. I have always paid my bills on time and followed the rules. Why can't our elected officials do the same. It seems that when they didn't have money to pay us and had to borrow from themselves at the beginning of the year they sang the praise of how valuable the state workers are. Well put your money where your mouth is... The State of Kansas needs to start funding thier part of KPERS.... Period

Sigmund 5 years, 2 months ago

justthefacts (Anonymous) says… "It does not take a rocket scientist to figure out that when the population of workers versus retirees is not the same, KPERS, as well as programs like social security, are going to suffer."

svenway_park (Anonymous) says… “justthefacts, that comparison is idiotic."

No you're the idiot, Sven. As the population ages and more people retire, with fewer workers and more retiree benefits to be paid, programs the rely on payroll taxes (Social Security, KPERS) will begin to collapse. Anyone with a computer and a spreadsheet can run the numbers for you.

Jingal 5 years, 2 months ago

Eighty-year old KPERS retirees have nothing to fear. Nor do 20-year old potential KPERS retirees. At least as regards the benefit - it's DEFINED in statute, and not dependent on investment returns, or their timing.

Unless the State itself goes bankrupt, as in taxpayers have something to be concerned about, as the only source of additional employer contributions comes from taxes.

Art Hall IS a tired apologist, or whatever the term was, with a political axe to grind (i.e., never let a serious crisis go to waste).

The LJW is the only imbecile in our midst, without two functional brain cells (or journalists) to rub together. If they devoted one-half their ink to actually providing readers with factual information, what a wonderful world it would be...

Jingal 5 years, 2 months ago

Oh, and Sigmund, let's not hand over the idiot title just yet.

Social Secuirty benefits are paid from payroll taxes. There is no reserve, or money set aside. KPERS benefits are paid from a trust fund from past deposits and their investment earnings.

SO if the State Payroll (or KPERS) shut down this afternoon, there would be sufficient money to continue to pay benefits for several decades. This is regardless of future payroll, new hires, ratio of young to old, etc. etc.

ONLY if there were never a rebound in the value of the current pool of investments would the money run out; i.e., if they fund never earned in excess of 8% per year from now till eternity.

And that was true last year, two years ago, three, etc. etc. as the System has been underfunded (i.e., had a net liability) for pretty much the last 25 years. The 2008 investment returns just put a finer point on that fact.

tbaker 5 years, 2 months ago

So KPERS is broke because government (State of Kansas) failed to financially perform as they had originally promised? (they didn't pay-in their share to retirement fund when they were supposed to)

Is government failing to perform as originally promised the same reason why all of our KS state income tax refund checks were several months late this year?

Is government failing to perform a trend, or is this just an isolated hiccup?

63BC 5 years, 2 months ago

"He said the state has failed for the past 16 years to pay into KPERS what was needed to narrow the actuarial liability. That has produced a shortfall, he said."

Absolutely right.

Remember that next time somebody asks you how good a Governor Sebelius was.

somebodynew 5 years, 2 months ago

63BC - while Gov Kitty may have had some problems you can't lay this at her feet. This underfunding has been going on for Years before her. And the gov really doesn't have a lot of say in it, it is the LEGISLATURE who took the money for other things.

svenway_park 5 years, 2 months ago

Boston_Corbett (Anonymous) says…

Sigmund (Anonymous) says… “No you're the idiot, Sven.”

No Sigmud, the idiot is you. To compare Social Security, which is universal, and has no investments, and is just a social tax transfer program, with KPERS, which is not a universal program, and which actually has investments to back much of its benefit obligations, is just plain wrongheaded.

Sure defined benefit programs have taken a hit and there is a degree of underfunding of the portfolio. But this is much different than a zero-balance non-existent portfolio.

And stop calling me Sven :)

justthefacts 5 years, 2 months ago

i don't pretend to not be an idiot. But I do recognize some facts. (1) There are fewer people working now than in a long time; (2) The government is run on tax dollars collected from working people (and in some states people who own property).; (3) we are an aging nation - there are fewer young people than old people. And the young people have traditionally been relied upon to take care of the old people. And (4) unless we start printing money on toilet paper, we are all living on credit - money borrowed from the future. It's a Ponzi scheme at best.

Even though KPERS is required to be fully funded, by law, statutes change. And it hasn't been fully funded, so now they're running lower than they'd like on funds. So who makes up for the $$ not in there for future retiree's? The tax payers, that's who. The very same people who are now outnumbered by us old geezers. So just tax away. take 100% of everyone's earnings. Then maybe we can pay off all we owe?

There will probably come a time when the John Galt's of the nation throw up their hands and disappear - or simply move somewhere that doesn't need/want/take away most of the $ they have/make. It's more a question of when, not if.

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