Kansas Public Employee Retirement System (KPERS)

Topeka ? Officials are considering lowering the expected rate of return for Kansas’ public employee pension investments in a move that could further strain the state’s budget.

The Kansas Public Employee Retirement System has assumed an annual return on investment of 8 percent for three decades, The Topeka Capital-Journal reported. A lower expected return on investments would mean taxpayers and possibly employees would need to chip in more money.

Consultants have been meeting with the pension’s board for months to weigh options. A final decision might be made at the Nov. 18 meeting or put off until January.

“They’re in the thick of considering it,” said Alan Conroy, executive director of KPERS, adding that the investment return appraisal is among the fundamental assumptions reassessed every three years by the board. The system’s return averaged slightly above the target during the last quarter century despite swings in the market.

Resetting the formula to reflect a 7.5 percent or 7.75 percent annual rate of return is a reasonable adjustment, said Rep. Steven Johnson, an Assaria Republican who chairs the House Pensions and Benefits Committee.

He said other states had dropped return expectations below 8 percent and Kansas ought to follow that trend.

“It’s more conservative to lower the assumption,” Johnson said.

He said the transition wouldn’t change pension benefits to KPERS’ members, but would require larger contributions to the system.

Sen. Jeff King, an Independence Republican who chairs the Legislature’s joint committee on pensions, agreed that a change was warranted.

“We need to acknowledge we’re not going to make 8 percent,” said King, who is not seeking re-election Nov. 8. “Eight percent is an unrealistic target going forward.”