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Archive for Monday, December 5, 2011

Legislators reaching crunch time for making decisions on future of KPERS

Kansas House Pensions Committee Chairman Mitch Holmes, far right, listens during a pensions legislation debate at the Statehouse Tuesday, May 10, 2011. Behind him is Rep. Leslie Osterman, a Wichita Republican.

Kansas House Pensions Committee Chairman Mitch Holmes, far right, listens during a pensions legislation debate at the Statehouse Tuesday, May 10, 2011. Behind him is Rep. Leslie Osterman, a Wichita Republican.

December 5, 2011

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— A special commission that has been studying the state’s public employee retirement system is nearing some crucial decisions that could affect the lives of thousands of Kansans.

The commission is scheduled to spend today and Thursday debating whether to recommend a new retirement plan design and modifications to the current one.

“We have a big task ahead of us,” said Rep. Mitch Holmes, R-St. John, who is co-chairman of the Kansas Public Employees Retirement System Study Commission.

KPERS provides retirement benefits to state, local government and school employees and has nearly 280,000 members.

Pensions are financed through contributions from employees and employers and investments made by the system.

Employees who have retired receive a “defined benefit” based on how long they worked and how much they made on average in the final years of employment. For example, a typical worker earning $40,000 a year who worked for 20 years will receive an annual pension of $14,000.

A combination of inadequate funding and record-making investment losses in 2008 have hurt the long-term funding status of the system. Many states have faced the same problem as Kansas.

Some have argued that Kansas should convert to a 401(k)-style “defined contribution” system, but others have said that would do nothing to solve the existing funding gap.

Holmes said another proposal that has caught some attention is what is called a “stacked hybrid system” in which salaries below a certain level would continue under the current pension plan, while earnings above that level would go into a 401(k)-style plan. If Kansas were to adopt this plan, it would be the first state in the nation to do so.

But others argue that what the Legislature has already done is enough to solve the long-term funding problem.

During the last legislative session, legislators and Gov. Sam Brownback approved House Bill 2194, which would increase employer contribution rates and provide an option for some employees to contribute more in exchange for increased retirement benefits. However, those changes won’t take effect unless the Legislature acts on bills recommended by the KPERS Study Commission during the 2012 session that starts in January.

KPERS officials have said those additional employer and employee contributions and plan design changes in HB 2194 “are a meaningful step towards improving the system’s long-term funding outlook and reaching actuarially required contribution levels.” But the system is still vulnerable to future economic downturns that cause investment returns to decline, KPERS officials said.

One commission member, Sen. Laura Kelly, D-Topeka, said HB 2194 “is still alive and part of the process.” Rep. Geraldine Flaharty, D-Wichita, who serves on another pension committee, said HB 2194 “is a reasonable plan” that solves the funding problem.

Comments

pace 2 years, 4 months ago

if only there was some way to take the money from pensions and give it to the "job producers" Yes many, many will have to sacrifice but the "job producers" are in a desperate state. But that is what is great about America, the sacrifices of the American working family. The job producers need to build a war fund to fight all the little minded people who don't understand that the "job producers have an opportunity to build bigger empires, to establish labor savings unseen since the depression. Money is the engine for the "job producers" Once they control more of the money and get it out the dead end, welfare type of retirement funds and get it in the hands of the "job producers" once that is done, then we can sit back and watch the "job producers" really control jobs, pay, housing, food, energy, even the poor box in the church. It is only to help us people who don't know what to do with their pension money. It should be used, controlled by the job producers. We can trust that all the benefits will trickle down, jobs, money, health care access, housing, even constitution rights, if we cede them to "Job producers" they will just give them back to the little people. The people will have to wait, patiently, with faith , the money lenders can be believed in. Good coal, clean oil, Tea party Congress are just hand in hand with working families. The ads help us understand. the "job producers" are our kind and smarter daddies. Look how good they are doing.

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lawslady 2 years, 4 months ago

First point, all the proposed plans can legally impact new employees or current employees going forward. The Legislators have been informed (repeatedly) that the courts would rule against them if they try to TAKE AWAY money (retirement benefits) that has already been earned (vested) as a violation of contract rights. So anything new that they enact will only impact new employees or going forward rights of "old"/current employees in the KPERS systems.

2ndly I totally agree that the Legislator's are screwing over the regular retiree's (having for years NOT properly funded the pension fund; i.e. they borrowed from it to pay for other things - like their renovations on the Capital Building). They said "yes" to things like roads and schools (which no one objected to) and took the money to pay for it from the funds that should have been paid to fund the retirement plan. They knew it was resulting in an "Unfunded liability" but did not care b/c they were hoping that by the time it came to a head, THEY would be out of office. It's not just about bad investments. It's also a case of not enough investments! It's a classic case of juggling the books, legally. At this point, we simply do not have enough being paid in to support the benefits promised to the employees.

Finally, it is NOT true that the majority of the Kansas law makers are doctors or lawyers. Back in "the day" this may have been true. But it's not been the case for decades. Now most of them are "business men/women." There is a little booklet published (on paper) each year that lists their professions - and for years I have tallied up the # of Kansas law makers in specific vocations. Perhaps if there were more lawyers working to enact new laws and amend old ones, they'd come up with statutes that are more legal?

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Enoughsaid 2 years, 4 months ago

When I read this article it really bothers me. Anyone who has ever worked a state or county job knows the pay is low but there is an above average retirement if you meet the formula. Rule of 85, age 62 with 10 years or 65 with 1 year of service. These were the old formuals and now have changed for new hires, age 60 with 30 years or 65 with 10 years.

Kansas teachers are also under this retirement and some have retired under KPERS and went to Parkville MO to spend 5 years under the Missouri Teachers Retirement System and get a second pension. If the Legislators destroy the current KPERS, I don't think many new teachers would want to work under the Kansas Retirement System when they can go to Missouri which is considered to have the best retirement system for teachers. With that being said both KC MO and Saint Louis have their own retirement system's and both districts are plagued with problems.

Speaking of Kansas Legislators, it really bothers me after reading the article in the paper (Google, Perks for Kansas Legislators) about Kansas Legislators having their own special KPERS retirement system. Legislators work three months out of the year and make around $10,000 for their limited service. For retirement purposes they have a formula that shows them working the whole year and making around $85,820 per year. If a legislator is in office for 10 years his annual retirement would be $15,018 for life. If he/she is in office for 20 years, the annual retirement would be $30,037 for life. A hard working school teacher could spend 35 years teaching with an annual salary around $55,00 and retire making around $33,000 annually. Kansas legislators are screwing the taxpayers all the way to the bank. This explains why so many Legislators are lawyers and doctors to get a decent retirement.

What is funny about all this if you go to the KPERS website you can find lots of information about normal KPERS retirement (judges, police and fire, corrections, government-city/county/state/school districts). There is nothing about the Kansas Legislators own special retirement system.

The big question is whether the Legislators will water-down their own special retirement system. I suggest everyone call their legislator and complain about their special retirement and asked them to modify their retirement. I also feel it should be listed on the KPERS website. Kansas Legislatures, I hope all KPERS recipient's rally and next year vote out all veteran legislatures. Its time for new faces and no special retirement systems for legislators.

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bobberboy 2 years, 4 months ago

whatever happened to - raising taxes on the rich ?

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Paul R Getto 2 years, 4 months ago

http://www.politico.com/news/stories/1210/46777.html Long term, I think this is their strategy. ALEC supports this. Can you spell ENRON, boys and girls?

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jmadison 2 years, 4 months ago

What is the current inflow of contributions from the participants? What is the current outflow of payments to recipients? What does the state provide to pay for the difference?

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imastinker 2 years, 4 months ago

If they wanted to fix it they could stop the abuses of the system that occur because payouts are calculated based on the highest three years of income.

All that means is that people get as much overtime or that promotion three years before they retire and their whole retirement is based on them earning the higher salary the whole time.

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bootlegger 2 years, 4 months ago

Sooooooooo....whars da money????

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mloburgio 2 years, 4 months ago

Anti-Obama tweet by KS SRS ombudsman meant as joke http://cjonline.com/news/2011-12-05/anti-obama-tweet-srs-ombudsman-meant... @MelissaWardks #shealsoblowsalot

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mloburgio 2 years, 4 months ago

Kansas Legislator Pensions Inflated More Than Ten Fold The average Kansas legislator with 20 years in the Capitol as of 2011 is eligible for a $29,162 annual pension if he retires at the end of this year. That’s more than ten times what he would receive if the pension was calculated just on salary. Legislators are the only classification of Kansas public employee that can draw down benefits based on a annualized salary.

Kansas Legislator example

Salary: $7,979

Inflation #1: Based on 372 day year = $32,982

Inglation #2: Include $123 per diem (also for 372 days) = $45,756

Inflation #3: Include payments for expenses while not in session = $7,083

Total salary for pension calculation: $83,216

Government employees enrolled in KPERS and hired before July 1, 2009, make a 4 percent employee contribution. State employees hired after that date contribute 6 percent.

Legislators’ make the same percentage contribution but it is based on their annualized total pay and expenses of $83,216. The contribution is 42 or 65 percent of their actual $7,979 annual base pay only.

KPERS is currently reported to have an $8.3 billion gap between what’s been promised to the 260,000 active, inactive and retired state workers through 2033 and the projected resources it will have to pay those benefits. A special commission has been created to find ways to close the gap. http://kansas.watchdog.org/7604/kansas-legislator-pensions-inflated-more-than-ten-fold/

wonder how many of these Legislators are double dipping on pensions?

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Steve Miller 2 years, 4 months ago

Rest assured, with politicians involved and special interest, the working KAPERS contributer is going to get it in the $ss, hide and watch.. The rich rob from the poor, history shows that is a matter of fact, and there aint nothin anyone can do.

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JayhawkFan1985 2 years, 4 months ago

Enrichment of the Koch Brothers and the remainder of the 1% comes at a price. I guess we can continue to balance the state's books on the backs of the people who have built the best highways in the US, who educate our children and thus provide for our future economic strength as a nation, who protect the envinronment, who respond to natural disasters, etc.

The Great Leap Backward shouldn't be over the backs of people who have dedicated their careers to public service. We owe them our respect. Undermining KPERS is not respect. It is embarrassing.

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Ron Holzwarth 2 years, 4 months ago

Many years ago, I was employed by a company that fleeced Kansas Public Employee's Retirement System out of a fortune, and I mean the better part of a million, if not more. Maybe it was $2 million, I forget exactly. And it was all legal. I sure did learn a lot from working for them, but nothing of what I learned there was related to ethical business behavior.

I can't even begin to completely explain how it was legally done in here, the story is far, far too long. But an important part of it was to issue a large quantity of stock at par value, then after it was all sold, dilute its value to nothing by issuing a massive quantity of additional stock that was backed by nothing at all.

The important thing for anyone reading this is that if you are going to make any kind of investment decision always remember these two rules:

1) Never invest more than 5% of your portfolio in any one investment vehicle.

2) Never invest in any investment vehicle that you do not thoroughly understand.

The managers of the K.P.E.R.S. portfolio followed the first rule, but not the second.

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1983Hawk 2 years, 4 months ago

Except the provisions of HB 2194 mandating that state employees choose between reduced benefits or increased contributions are a prima facie abrogation of their contract rights under the US Constitution.

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Cant_have_it_both_ways 2 years, 4 months ago

Take from the politicians retirements, they were the ones that squandered the money in the fund. Don't take from the taxpayer as their plans are getting whacked also.

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toe 2 years, 4 months ago

Higher contributions, lower benefits. Only solution possible.

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