Archive for Friday, March 22, 2013

House panel ends push for 401(k)-style plan

March 22, 2013


A proposal for issuing $1.5 billion in bonds to boost the long-term health of Kansas’ public pension system advanced Thursday in the state Legislature, but Republican lawmakers who want to put new government employees into a 401(k)-style plan abandoned an effort to pass such a bill this year.

The GOP-controlled House Pensions and Benefits Committee approved a bill authorizing the bonds on a 7-6 vote, sending it to the entire House for debate. But on a voice vote, it tabled a separate measure to start the 401(k)-style plan for state and local government workers hired after 2014, as well as a separate, non-traditional plan for new teachers.

The measures followed two years’ worth of legislation overhauling the retirement system for teachers and state and local government employees. The committee faced skepticism from retiree groups and public employee unions that lawmakers needed to consider additional changes this year.

The Kansas Public Employees Retirement System projects that previous changes — which include boosting state contributions and setting aside state casino profits to pensions — would eliminate a projected $9.3 billion gap between revenues and benefits promised to workers by 2033. But many GOP lawmakers believe such a gap will occur again if the state isn’t more aggressive in moving away from traditional plans that guarantee benefits upfront, based on a worker’s salary and years of service.

“They look at it and say, ‘Why would you ever want to put the state in that position?’” said committee Chairman Steve Johnson, an Assaria Republican.

The bill authorizing bonds is designed to give KPERS a quick infusion of cash, so that the percentage of its obligations covered by its assets, now 53 percent, would jump to 61 percent in 2015 and grow more quickly than it would under current law. Also, the state wouldn’t have to boost its annual contributions to KPERS as aggressively.

Both Republicans and Democrats were split over how much financial risk the move involves and whether it does enough to improve the retirement system’s financial footing.

Putting new government workers into a 401(k)-style plan would base their retirement benefits on investment earnings. In their new plan, teachers would contribute part of their salaries to tax-free annuities paying out once they retired, with multiple options for the riskiness and potential benefits from their investments.

Public employee and retiree groups believe all of the potential options will result in less secure pensions because of the potential volatility of financial markets.

Lisa Ochs, president of the Kansas chapter of the American Federation of Teachers, said legislators have studied such changes in depth and concluded previously that they come with costs while sacrificing benefits.

“We have an obligation to each other in a civilized society to make sure that we’re doing what we can to make sure that our public servants have a retirement they can depend on, have a dignified retirement and that we’re not creating generations of indigent elderly,” she said.

Most committee members said they needed more time to consider the bill. Lawmakers expect to wrap up most of their work for the year on April 5, and tabling the pensions measure means they won’t consider it until next year.

“We just don’t have the time to really spend another month, basically, to come up with the best plan,” said Rep. Jim Howell, a Derby Republican and the committee’s vice chairman. “I do agree that this is the right thing to do today, but we’ve got to get back into it.”

Republican legislators and GOP Gov. Sam Brownback’s administration worked quietly for weeks on the measure for a 401(k)-style plan. They unveiled it with a big splash this week in a hearing featuring Nobel Prize winner Robert Merton and Bill Bradley, the former Democratic presidential candidate and U.S. senator from New Jersey who also used to be a New York Knicks standout.

Both Bradley and Merton, a finance professor at the Massachusetts Institute of Technology, advise an Austin, Texas, company that manages private-sector 401(k) plans. The measure called for having private companies manage the new plans.


Michael LoBurgio 5 years, 2 months ago

Is it time to take away the pension perks the kansas legislature gets?

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.

A May story said that Kansas legislators get credit for working 372 days a year.

Although Kansas legislators work part time and are paid only during the 90 legislative session and days their committees meet outside that window, lawmakers who choose to join the Kansas Public Employees Retirement System (KPERS) pay their contributions into the system as if they worked every single calendar day of the year plus one more week

chootspa 5 years, 2 months ago

Yes, on one hand, but on the other I think that particular perk is the only reason they have kept the program even slightly solvent. There are a lot of former teachers that will eat cat food when they foolishly shift it into a 401k without providing for current and future retirees already in the system.

chootspa 5 years, 2 months ago

I'll also add that it's too bad we can't elect people who do the right thing by teachers because it's the right thing.

Michael LoBurgio 5 years, 2 months ago

Thursday morning

The Kansas House Republicans approved a $400 million middle class tax increase. Last week, Senate Republicans approved $500 million middle class tax hike. The Governor's latest tax plan includes a $700 million middle class tax hike. All of these proposals were introduced to pay for tax cuts Governor Brownback pushed through in 2012, which give the top earners in the state an average tax cut of about $20,000 while enabling business owners go income tax free. None of these plans will generate enough revenue to allow for restored funding of Kansas schools. Please share - your neighbors need to know what is happening in Statehouse.

Alceste 5 years, 2 months ago

Alceste publically challenges Rep. Steve Johnson (and his associates) to step forward and disclose his own KPERS package. Did he personally sign up for the full deal he was offered and which is such a disgusting, specious little perk the legislature has given itself it is laughable? Here's the deal:

And, did everyone know that our ever so dedicated Legislators in Topeka participate in KPERS, too? After all, they're state workers also. But, guess what? These legislators set up a very special system for how they get their KPERS benefits. Here it is in a nutshell:

Legislators have given themselves one heck of a sweetheart deal in how their own KPERS benefits are calculated. 372 days in a year! Leave it to a political hack to figure that one out!

For the legislator listing all income - the daily rate, subsistence and allowance - this is how annualization is calculated:

•$88.66 (daily rate) x 31 (days) x 12 (months) = $32,981.52

•$123 (subsistence) x 31 (days) x 12 (months) = $45,756

•$7,083 non-session allowance.

Altogether, that equals $85,820.52, and that's the pay figure that would be used for that legislator retiring now.

The Senate president and House speaker are at the top of the pay scale, and annualized pay for those posts could be as high as $99,859.74, depending on their enrollment choices.

This guy Morris who is the President of the Kansas Senate has even been quoted as saying he deserves that kind of KPERS benefit because he is so underpaid!!! Man, this is some amusing stuff!!! Aren't legislators supposed to be servants of the people? Isn't the common thinking that people run for office, not to get rich, but to serve? We sure do think stupid real good like in this state: The people who do the day to day work which make Kansas run have their KPERS figured one way.....and the galoots who pose for 3 months a year as "legislators" get to figure their KPERS benefit in a totally different the point where they've invented a new calendar: 372 days in a year and they work each and every one of them!! Woo Hoo!!!

Well, the legislature changed the formula last year to make it more honest. They simply pay themselves for working 365 days per year. While these hacks may not get paid a huge salary on the job itself (why should they, anyway?), they make sure they get a big, phat PAYOFF when they retire. Shhhh.....keep it quiet.....

Oh....and don't think people like Paul Davis of Lawrence haven't signed up for the same payoff; Tom Holland....all them guys....same deal: They COULD have chosen to pay themselves ONLY FOR DAYS WORKED....but they are greedy hacks and did not......

weeslicket 5 years, 2 months ago

since state legislators are paid with "public monies" won't they be prevented from speaking on public policy issues if current bills eliminating "public worker rights" are enacted?

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