Topeka — Legislators on Friday moved toward issuing $1.5 billion in bonds in a gamble to shore up the state pension system.
The Senate Ways and Means Committee recommended approval of a bill that would allow the issuance of the bonds at a maximum interest rate of 4 percent.
The House has already adopted House Bill 2403, which would set the maximum interest rate of the pension obligation bonds at 5 percent. The differences in the two bills will likely be negotiated in a House-Senate conference committee.
Supporters of the plan say the state can borrow money at 5 percent or 4 percent or lower, and then invest those funds, hopefully getting a higher rate on investment, which historically has been 8 percent.
The profit would then be plowed back into the Kansas Public Employee Retirement System to help fill a gap between anticipated revenues and long-term promised benefits to teachers and government workers.
"This is a good idea for the state," said State Treasurer Ron Estes. "The net cost to the taxpayer will be less over the next 20 years if we do issue bonds."
Some legislators said they thought the plan needed further analysis.
"We are taking action long before we have the information we need to make an educated decision on this," said Sen. Laura Kelly, D-Topeka.