Kansas Senate president’s pension plan wins first-round approval

? Kansas teachers and government workers would be required to pay more toward their pensions but see the state’s contribution increase by $23 million annually under a plan that won first-round approval Tuesday in the Senate.

The measure, drafted largely by Senate President Steve Morris, is an attempt to attack long-term funding problems facing the Kansas Public Employees Retirement System. It would create an 11-member commission to consider more sweeping changes, including new 401(k)-style plans for public employees, though Morris and many legislators are wary of the idea.

Senators advanced the bill on a voice vote, and there was no opposition during debate. A final vote is expected Wednesday, and if the bill passes as expected, it will go to the House.

The House is considering a separate plan, up for debate Wednesday, that would cut future benefits for teachers and government workers. It also would boost the state’s annual contribution KPERS, but not nearly as much as the Senate’s bill.

The retirement fund 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 determined last year that KPERS’ assets would cover 59 percent of its long-term liabilities, the second-lowest percentage of any U.S. state, behind only Illinois.

“This kind of issue takes everyone working together,” said Morris, a Hugoton Republican. “This is a good start. I believe with this legislation, we can proceed forward on the right path.”

The senator’s plan would increase the state’s annual contribution to KPERS by $23 million starting July 1, 2013, the most aggressive proposal for boosting the state’s commitment. The House’s plan would increase the annual commitment by $10 million, also starting in 2013.

About 131,500 teachers and government workers covered by KPERS pay 4 percent of their salaries to the pension fund. Under the Senate plan, that would increase to 6 percent by 2016, though those workers would get a small boost in their pensions 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.

The House plan would change how pension benefits are calculated for teachers and government workers after July 1, 2013, giving them 20 percent less credit for each year of service after that date.

The Senate plan reflects state officials’ long-held assessment that Kansas law and past court decisions limit the concessions that can be imposed on teachers and government workers when the state changes in their pension plans. Public employee groups want lawmakers to focus on committing additional dollars to KPERS, arguing that the state has been chronically short on its obligations.

But Sen. Chris Steineger, a Kansas City Republican, suggested during Tuesday’s debate that losses from risky real estate and direct business investments in the 1980s also significantly contributed to the long-term funding shortfall KPERS faces.

Steineger supported Morris’ plan but told his colleagues they should expect to deal with pension issues again.

“It’s going to take much, much more than what this bill has to offer,” Steineger said.

Sen. Laura Kelly, a Topeka Democrat, said the commission that would be set up by Morris’ bill was an important part of any attempt to eliminate the long-term KPERS funding gap. The panel, with members appointed by legislative leaders and the governor, would draft recommendations by December, and lawmakers would have until June 2012 to consider them.

“Everyone recognizes that we have not totally fixed the KPERS issue,” she said.

Derrick Sontag, state director for Americans for Prosperity, mocked the study commission, suggesting it duplicates a special Senate committee led by Morris that endorsed the Senate president’s plan. Sontag’s anti-tax, small government group favors moving the state toward 401(k)-style plans for public employees, arguing that traditional plans of guaranteeing benefits up front based on worker’s salary and years of experience can’t be sustained.

“That bill doesn’t seem to acknowledge that there’s much of a problem,” Sontag said of the Senate plan.