Advertisement

Archive for Monday, August 11, 2014

US settles with Kansas over alleged pension fraud

August 11, 2014, 12:56 p.m. Updated August 11, 2014, 3:00 p.m.

Advertisement

— Federal authorities announced Monday that Kansas has agreed to settle a securities fraud charge accusing the the state of misleading investors about the financial health of its public employee pension system in 2009 and 2010 — at the time the second-worst underfunded system of its kind in the nation.

The Securities and Exchange Commission said Monday that the state has consented to its cease-and-desist order to settle the case, without admitting or denying its findings. No financial sanctions were imposed. The SEC noted Kansas has since made changes and blamed insufficient procedures and poor communication between state agencies for the problem, which happened under the administration of then-Gov. Mark Parkinson, a Democrat.

"Kansas failed to adequately disclose its multi-billion-dollar pension liability in bond offering documents, leaving investors with an incomplete picture of the state's finances and its ability to repay the bonds amid competing strains on the state budget, said LeeAnn Ghazil Gaunt, chief of the agency's enforcement unit dealing with public pensions.

She also noted in a news release that in determining the settlement, the agency considered the state's "significant remedial actions" to mitigate the issues and the cooperation of state officials during the investigation.

Between August 2009 and July 2010, the Kansas Development Finance Authority raised $273 million through eight series of bonds without disclosing in its offering the existence of the significant underfunded pension liability in its Kansas Public Employees Retirement System, according to the SEC order. The failure to disclose the information resulted from insufficient procedures and poor communication between the state's Development Finance Authority and the Kansas Department of Administration, SEC said.

Gov. Sam Brownback said in a written statement that his administration has improved transparency in the reporting system and taken decisive actions to meet its obligations.

"Since taking office, I have made restoring the health of our KPERS system a priority," Brownback said.

The Legislature in 2012 approved changes that included boosting employer and employee contributions and creating a new cash balance plan for people hired after 2015 that made "significant strides" in reducing the state's projected pension debt by almost $500 million, the governor said.

Kansas Secretary of Administration Jim Clark also said in a statement that the agency is pleased SEC did not seek any financial penalties or make any claims of intentional misconduct based on the actions of prior administrations.

Comments

Cait McKnelly 4 months, 1 week ago

WOW!!!! How much you want to bet Brownback blames THIS on Obama?? Umm as for Brownback "restoring" the health of the pension system, how much did he have to do with it becoming "ill" in the first place?

Dorothy Hoyt-Reed 4 months, 1 week ago

Actually it might go back to Graves when we had a large surplus, but instead of funding the pensions or giving more money to schools, he gave a bunch of tax cuts. He knew he wasn't going to have to deal with it.

Scott Burkhart 4 months, 1 week ago

It was Sebelius and Parkinson. 2009 and 2010. Sebelius served 8 years and Brownback didn't take office until 2011. This one sits on the shoulders of Sebelius who is as big a liar as Obama. Sebelius and Parkinson were "cookin' the books!" I don't expect you to agree.

James Howlette 4 months, 1 week ago

The pension had been underfunded for years and years, but Parkinson was the governor during the time of the complaint.

Zachariah Davis 4 months, 1 week ago

You mean to tell me the Brownback administration lied to the people of Kansas?!?

Wow, who in their right mind would of ever thought that the State of Kansas Government would try and deceive those its supposed to serve... I am sure somehow this is Obama's fault... You know, the classic Kansan thing to do blame Obama.

Dolph whats your take on this obvious Obama failure? Just an idea for your next Saturday Column.

Steve Jacob 4 months, 1 week ago

Brownback was not governor at the time people. KPERS is his only win as governor, in my opinion.

Philipp Wannemaker 4 months, 1 week ago

brownie has had no wins as governor. He's an incompetent koch-head at best. At worse he wants to turn Kansas into a theocracy with the Koch's as gods, his gods. After he only believes in the gospel as provided by the memo's he receives daily.

James Howlette 4 months, 1 week ago

It was barely a win, but I'll give him a nod for not tanking the system and turning it all into a 401k.

Scott Burkhart 4 months, 1 week ago

All of you libs need to pull your collective heads out! This was Sebelius and Parkinson cooking the books. Thanks to Brownback the Kansas public employees have a solvent retirement plan. Can't spin this, libs.

Commenting has been disabled for this item.