Advertisement

Archive for Monday, February 28, 2011

Kansas Senate leader promises KPERS funding will be addressed

February 28, 2011

Advertisement

— The leader of the Kansas Senate has vowed that the Legislature will address long-term funding problems with the state’s pension system for teachers and other government workers.

“We will have a definitive bill” this session, Senate President Steve Morris, R-Hugoton, said. But he added that work on the Kansas Public Employees Retirement System would continue for a long time.

KPERS faces a projected $7.7 billion gap between future obligations promised to retirees and current workers and anticipated revenues.

A proposed Senate bill would increase the state’s contribution to the system. It would also require some workers to chip in more.

A plan in the House would create a 401(k)-style plan for new employees.

Morris, who was asked by Gov. Sam Brownback to come up with a proposal, said even if a 401(k)-type plan was started, that wouldn’t address closing the unfunded liability under the current plan.

State officials emphasize that current retirees’ benefits are safe.

Comments

parrothead8 3 years, 11 months ago

The Kansas Sentae. That's what you get when you cut education funding.

somebodynew 3 years, 11 months ago

You can have any bill you want to increase the State's contribution, but you actually have to put the money into the system for it to work. You can't continue to take that money for other "projects" like you have in the past (and there is one current bill in the house to do that this year AGAIN). Just pay your fair share like you should have (as all employees and other employers have) and it will help.

40grit 3 years, 11 months ago

Well finally someone who speaks the truth. Can someone tell me how long has the state not funded their portion?

zenmon 3 years, 11 months ago

re: somebodynew, you are right you have to contribute and I'm not talking about the state, because the state isn't some dead beat, it's all of us. I work for an entity where I'm eligible for KPERS. I contribute very little to KPERS, so I'm guessing that is the problem not so much the general public contribution. Government employee pensions are going to kill every state if they don't start reducing benefits or asking employees to contribute more. I don't like the idea of having to pay more into my retirement but I shouldn't expect everyone else in the state to pay more if I'm not willing to.

jafs 3 years, 11 months ago

Actually, according to what I know, the state hasn't been funding the system at the correct levels for a long time.

And, the investments were hit by the recent meltdown.

Neomarxist123 3 years, 11 months ago

I couldn't agree more.

Everyone knows the best solution is to keep borrowing money from China and pretending the debt doesn't matter.

notanota 3 years, 11 months ago

Why not? It's the solution used for the previous presidential administration. Heck, let's cut even more taxes for the rich and start another couple of wars.

Taffy3 3 years, 11 months ago

Zenmon-- I also pay into KPERS, the required 4%, my employer pays nothing except for administrative costs. If you were hired before 1993, you are guaranteed an 8% return on the money in the form of a defined benefit. Hires after 1993 get 4%. The KPERs Board takes your contribution and invest its and if they don't get the required percentage, the state has to fund that difference. KPERs isn't what is breaking KS, it's the blasted education funding which is the big dog in the budget.

Excellent article in USAToday on how much state employees make compared to the general workforce. http://www.usatoday.com/news/nation/2011-03-01-1Apublicworkers01_ST_N.htm

KS public employees lag behind.

somebodynew 3 years, 11 months ago

I don't know which employer you work for, but my former employer and all like them are required to pay a percentage also, just like what was withheld from my check. The State isn't required to fund any difference in investments - they are a defined employer and are supposed to contribute like cities and municipalities do. What has happened is the Legislature always takes that money for something else.

William Weissbeck 3 years, 11 months ago

Apparently most of the people commenting both locally and nationally have forgotten that it wasn't so long ago that most employers, especially large industrial corporations and governments, provided defined benefit pension plans (the old style). Changes in the economy during the 70's and 80's, some corporations being raided for over funded plans, while others filed bankruptcy to get out from under under funded plans, the aging of the workforce among others made this pension model less workable. Still even with the adoption of the 401(k) model, many publicly traded corporations offered stock purchase plans to their employees to purchase the company stock at a reduced cost. The trick was not to put all your retirement eggs into the Enron basket. Both pension models were premised on the American belief that our economy would continue to grow and that investments would also grow at a rate exceeding inflation. But governments don't produce profits or stock like a corporation. But governments also made the assumption that the economy will grow to provide increased tax revenues and returns on the state's investments/contributions to a pension system. This wasn't some hare brained scheme; it was common practice. But of course, just like the federal government has done with social security, which is also supposed to be a segregated fund with dedicated tax receipts, the states manipulated their pensions. It's no different than your insurance company promising you a 8 percent return to get your money, but spending all your premiums to pay existing claims. (Bernie Madoff would be proud). But an 8 percent return is not pie in the sky. In fact after 1993, until the 2000 net stock bubble, 8 percent was conservative. Even after the '01 recession, most stock analysts would have said that an idiot investing in index funds should expect 8 percent. Now we are under the new normal. And under an insane shrinking of the tax base to protect the affluent. In 1983 Reagan's reforms to social security were designed to impose the FICA tax on 90 percent of all income. Now because of the shift to the more affluent, the FICA tax hits only 84 percent of income. Since Kansas doesn't have a graduated tax system and it's sales tax is regressive, they are likely also missing this shift in income. It's real easy to see a decline in tax revenues when those in the middle class are being laid off or having their hours reduced. Now we can ignore all these facts and punish current state workers, but that would be like the old USSR when it collapsed and just stopped paying old age and war veteran pensions.

Jan Rolls 3 years, 11 months ago

The state hasn't been paying what they were supposed to for years. Not only is it hurting current employees it's also hurting retirees who haven't had a cost of living increase in quite sometime and we know the cost of everything has gone up. Bought any gas lately? To add insult to injury, the IRS just this month secretly changed tax brackets so retirees check this month was less.

spartyinjayhawkland 3 years, 11 months ago

Something to remember about a defined benefit penison plan like KPERS is that the benefit to be received the rest of your life is based upon a formula (in this case final average salary multiplied by the number of years of service multiplied by the appropriate percentage factor, 1.75%). Cost of living increases are not part of what the employee or the appropriate unit of government/school are funding with their contributions. The unfunded liability associated with the cost of living increases provided in past years has been an additional boat anchor adding to the problem. In addition, local units of government (not sure about school districts) were also protected with a cap on increases to their contribution rates after joining the system. This was a decision that also added to the unfunded liability. Add the investment return difficulties brought on by the financial crisis and a baby boom generation starting to check out from employment...you end up with quite a situation on your hands! President Morris and the administration have a tough task ahead, but both should be applauded for having the courage to seek a reasonable solution.

yankeevet 3 years, 11 months ago

Compensation gap by state for public, private workersState and local government workers earn more than private-sector workers in 41 states. Average compensation (including salaries and benefits) in 2009 and difference with private-sector workers:

Rank State Compensation Difference

1 District of Columbia $82,607 +$457

2 Connecticut $77,697 +$7,687

3 New Jersey $72,007 +$6,681

4 California $71,385 +$7,977

5 New York $71,282 +$1,699

6 Rhode Island $69,284 +$17,603

7 Nevada $68,785 +$17,815

8 Maryland $65,947 +$6,931

9 Massachusetts $62,562 —$4,688

10 Alaska $60,882 +$2,764

11 Illinois $60,274 +$485

12 Delaware $60,077 +$2,911

13 Hawaii $59,595 +$12,243

14 Washington $59,288 +$532

15 Michigan $58,801 +$6,436

16 Florida $58,749 +$9,099

17 Arizona $56,321 +$4,310

18 Minnesota $55,826 +$1,259

19 Virginia $55,705 —$2,328

20 Oregon $55,682 +$5,607

21 Pennsylvania $55,137 +$1,567

22 Colorado $54,184 —$3,391

23 Wyoming $53,460 +$3,116

24 South Carolina $52,591 +$7,590

25 Ohio $52,473 +$2,392

26 Louisiana $52,412 +$2,473

27 New Hampshire $52,181 —$1,876

28 Vermont $51,503 +$5,811

29 New Mexico $51,428 +$5,715

30 Texas $51,310 —$3,580

31 Alabama $50,999 +$5,001

32 North Carolina $50,902 +$1,857

33 Wisconsin $50,774 +$1,802

34 Iowa $50,394 +$6,178

35 Utah $50,149 +$2,611

36 Maine $49,850 +$4,912

37 Georgia $49,600 —$3,875

38 Indiana $49,157 +$1,183

39 Missouri $49,092 —$1,075

40 Nebraska $48,953 +$3,130

41 Kentucky $48,046 +$2,313

42 Arkansas $48,033 +$4,196

43 West Virginia $47,899 +$3,655

44 Tennessee $47,891 —$756

45 Montana $47,596 +$7,396

46 Oklahoma $47,258 +$1,667

47 Mississippi $46,375 +$4,713

48 Idaho $45,280 +$2,855

49 Kansas $44,803 —$3,229

50 North Dakota $43,619 +$389

51 South Dakota $41,684 +$1,909

Total United States $57,775 +$2,511

barlowtl 3 years, 11 months ago

There were many instances in Kansas where positions would be vacant for years because they could not find anyone to fill them, particularly those requiring bachelors or masters degrees.

William Weissbeck 3 years, 11 months ago

Boy, given what they pay in Kansas, I'm surprised anybody has stayed. To rank behind West Virginia says something. Don't forget, in private industry you have all those janitorial workers who don't speak a great deal of English and security guards who tend to be the only guys/gals applying for the part time jobs who don't have a criminal records.

Jan Rolls 3 years, 11 months ago

I guess the people doing out sourced jobs in India, etc. are great English speakers.

Commenting has been disabled for this item.