Topeka The next Kansas governor is going to face a problem that to fix will require a lot of what state government doesn’t have: money.
The Kansas Public Employee Retirement System has an unfunded actuarial liability — the difference between the system’s assets and future pension obligations — of nearly $7.7 billion.
The unfunded actuarial liability doesn’t affect current benefits, but officials say a plan needs to be implemented to address the issue over the long term. The system has 250,000 members.
The problem, according to experts, is the state doesn’t contribute enough to the system.
A recent report by Pew Center for the States rated KPERS as one of the most underfunded pension systems in the country.
“We are certainly one of the lower-funded systems and one of the reasons: We are not contributing at the actuarial rate,” said Glenn Deck, executive director of KPERS.
Senate President Steve Morris, R-Hugoton, said addressing the issue will be one of his top priorities in the next legislative session, which starts in January.
He supports legislation that would increase the state’s contribution at an annual cost of approximately $58 million.
But after six rounds of budget cuts and amid a struggling economy, finding that kind of cash will be extremely difficult.
Some have suggested the state move away from a deferred benefit plan based on employees’ salaries and years of service, and move toward 401(k)-style plans. But others have argued against that, pointing to the beating that 401(k) plans took during the recent recession.
The Lawrence Journal-World asked the two major political party candidates for governor — Republican Sam Brownback and Democrat Tom Holland — what they would do to address the KPERS issue and whether they support a 401(k) style plan for new teachers and government employees.
Here are their responses:
“The state has failed to fully fund KPERs. As the economy improves and new resources become available, we must address this unfunded liability. Meanwhile, we cannot expect employees to increase their contributions if the state has failed to meet its obligations.
“In terms of the retirement benefits, I support the defined benefit plan. I do not support cutting those benefits. And we should not be putting our retirees’ future at risk by gambling their contributions in the stock market, especially after my opponent and his friends in Washington devastated the stock market by deregulating the banks and bailing out Wall Street.
“The state has made a promise to our teachers and civil servants that, after many years of paying into a system, that system would be there for them at the end of their career. We cannot break that promise. As governor, I will not break that promise.”
“KPERS faces huge problems. It has a projected deficit of $7.6 billion, and that’s if the fund averages an 8 percent return on its investments in the coming years. According to a recent report in Barron’s Magazine, KPERS is one of the most underfunded state retirement systems in the country.
“A Brownback administration will work with the Kansas legislators, retired and current state employees, KPERS board and others to develop a plan for its long-term solvency. State employees who dedicate their careers to meeting the needs of Kansans deserve a stable retirement system.”