Topeka A leader’s plan for tackling the Kansas public pension system’s long-term funding problems is balanced, but it remains part of a longer debate about retirement benefits for teachers and government workers, state senators said Monday.
Senate President Steve Morris said his chamber should debate a bill containing the plan this week. The measure would require most state employees to contribute a higher percentage of their salaries to the state pension system, but it would give many a boost in benefits. It contains the most aggressive proposal yet for increasing the state’s annual contribution to public employees’ benefits.
The bill sets up an 11-member study commission to consider even more sweeping recommendations for changes in the Kansas Public Employees Retirement System, or KPERS. Those changes could include 401(k)-style plans for teachers and government workers, though Morris has been reluctant to move in such a direction.
Morris, a Hugoton Republican, is also chairman of a special Senate committee on pensions, and the panel endorsed the bill unanimously Friday.
KPERS faces a projected $7.7 billion gap between its anticipated long-term revenues and the benefits it has promised public employees over the next few decades. A national report said last year that KPERS assets would cover 59 percent of its long-term liabilities, second-lowest of any U.S. state, behind only Illinois.
Sen. Laura Kelly, of Topeka, the ranking Democrat on the pensions committee, called Morris’ plan, “a great place to start the conversation.”
“Clearly, we have to do some restructuring at KPERS because the current system is not sustainable over the long haul,” Kelly said. “If you look at the bill, it’s very balanced.”
Public employee groups are resisting proposals that require them to make concessions. They strongly oppose efforts to move toward 401(k)-style plans that base retirement benefits on investment earnings and away from their traditional plans that guarantee benefits up front, based on salary and years of experience.
The Kansas Organization of State Employees is reserving judgment on the Senate’s plan for a study commission, but Executive Director Jane Carter said the rest of the bill represents the first proposal for addressing the pension system’s problems that it sees as reasonable.
“This is a very good effort to solve a really bad problem,” she said. “I think there’s been a good — a diligent — effort to make sure that we kind of stop pointing fingers.”
The study commission would make recommendations to the Legislature by December and give legislators until June 2012 to consider them.
’That’s why we formed the commission, to see what we can do further,“ said Sen. Ruth Teichman, a Stafford Republican and pensions committee member.
Morris’ plan would raise the state’s annual contribution to KPERS by $23 million, starting July 1, 2013. A plan before the House would increase the annual commitment by $10 million, also starting in 2013.
About 131,500 teachers and government workers covered by KPERS now pay 4 percent of their salaries to the pension fund. Under Morris’ plan, that would increase to 6 percent by 2016, though those workers would get a small boost in their promised benefits in exchange.
Another 20,000 employees, hired after June 2009, already pay 6 percent of their salaries into the pension fund, and they’ve been promised annual cost-of-living adjustments in their benefits after they retire. With Morris’ plan, they’d could keep the annual adjustments and pay 8 percent of their pay into the pension system, or forgo the future adjustments and pay 6 percent into the fund.
“We’re moving forward — we’re aggressive — on our funding problem with KPERS,” Morris said.
Morris’ proposal is in keeping with many state officials’ long-held views that Kansas law and previous court decisions prevent the state can’t go too far in forcing concessions from public employees.
The House plan goes against the convention wisdom. It would change how pension benefits would be calculated for teachers and government workers after July 1, 2013, giving them 20 percent less credit for each year of service after that date.