From the Capital Journal on Feb. 7th
A plan championed by House and Senate Republicans to fix the Kansas Public Employees Retirement System will cost the state $10.9 billion more than the repair passed last session, individuals against the proposal said Tuesday.
The figure comes from the state’s actuary and is included in reports from the KPERS Study Commission. The 13-member special commission was formed in 2011 to fix the pension for state, school and local government workers, which serves 290,000 Kansans. KPERS currently carries an actuarial deficit of $8.3 billion through 2033.
The plan working its way through the House and Senate attempts to fill that gap, which is known as an “unfunded actuarial liability” — or how much more the system has to pay out than what it will likely take in during the next 30 years.
The plan was proposed by Sen. Jeff King, R-Independence, who served as chairman of the KPERS Study Commission. Eight members of the commission recommended King’s plan, and five voted against it.
King’s plan leaves the current network in place for employees with at least five years of service by January 2014. It also allocates hundreds of millions of tax dollars to stabilize the system and eliminates the unique benefits available to legislators.
A central strategy of the proposal is to create a 401(k)-style pension plan for new employees and workers not vested by January 2014. Employees who haven’t worked five years before then would be enrolled in a defined-contribution plan, which would require employees to contribute 6 percent of their salary each year. The state would match that contribution as much as 5 percent — 1 percent in the first year and half a percent in each year following that. Employees then wouldn’t get the maximum employer contribution until they have worked with the state for eight years.
State contributions, however, go into a separate coffer that isn’t guaranteed an interest rate — meaning employees aren’t guaranteed to earn money on it.
Opposers Tuesday said King’s plan does nothing to address the $8.3 billion gap, won’t save the state money and doesn’t provide livable retirement plans.
“Nobody wins with this plan,” labor lawyer Rebecca Proctor said during a conference call Tuesday. “There is no valid reason to vote for it.”
Proctor wrote the KPERS Study Commission’s minority report, which was signed by five commission members, including Sen. Laura Kelly, D-Topeka.
Kelly, who joined Proctor on the conference call, said she and others who oppose the plan will be educating legislators about its shortfalls in the hopes of finding a real solution the problem.
“There is no way that anyone can look at the facts of the plan and conclude that it is in anybody’s interest to switch” from the current plan to King’s plan, she said.
The bill still is gaining traction, Kelly said, because of a flawed ideology.
“There are some folks who firmly believe that public employees should have the same type of retirement plan that corporate America has, and they are just bound and determined to make the switch,” she said.
That line of thinking is flawed, she said, because the corporate world differs from the public sector on multiple levels, including the scope of work, the culture and the level of income.
The average public employee works 22 years on a salary less than $40,000 before retirement, she said. That doesn’t leave them much to save while they are raising a family, she said. That is why public employees need more in retirement to make sure they can survive.
King wasn’t available for comment Tuesday afternoon.
The plan’s deficiencies will have dramatic effects on state employees — including police officers, said Peter Fogarty, president of the Fraternal Order of Police for the state of Kansas.
“These officers simply will not be able to survive after they retire,” said Fogarty, who also was on Tuesday’s conference call.
That means officers will stay on the force longer, a conclusion that isn’t safe for the officers or the public, Fogarty said.
“Do you really want a 65-year-old officer out there patrolling your neighborhood? It just doesn’t make any sense,” he said.
Fogarty also said he worries about officers leaving the profession and the state’s ability to recruit quality officers as a result of the proposal, which he described as ”just ridiculous.”
Aly Van Dyke can be reached at (785) 295-1270 or email@example.com. Follow her on Twitter @alyvandyke.