A Kansas state pension coalition announced today that it would officially oppose the agreement reached yesterday by House and Senate negotiators on a plan to reform the public employee retirement system (KPERS). A legislative conference committee signed off on a proposal to place all new public employees hired after January 1, 2015 into a new “cash balance” style retirement plan.
Terry Forsyth, chair of the Keeping the Kansas Promise Coalition, said today, “Our coalition of dedicated public workers is unable to get behind any plan that will not provide for an adequate retirement benefit for our future members and cost the taxpayers billions of dollars more than necessary. The most fiscally responsible option for KPERS reform continues to be enacting the provisions of 2011 House Bill 2194″
While no cost projections are currently available regarding the plan agreed to by legislative conferees, previous cost projections from KPERS’s actuary (click here), Cavanaugh Macdonald Consulting, LLC, show the cost to taxpayers of the cash balance plan to be $30 billion through the year 2060. The same cost projections peg the cost of 2011 House Bill 2194 at $22 billion over the same time period.
“The cash balance plan being contemplated appears to be unsustainable,” said Forsyth. “Layer on top of that future budget deficits created by the Legislature’s recently passed massive tax cut plan and they become pure fiscal fantasy. HB 2194 is a no-brainer if responsible KPERS reform is to be done this year.”
The Coalition did applaud Senators for rejecting a defined-contribution plan sought by the Governor and House leaders. Forsyth said a defined-contribution plan would have been a costly boondoggle for the state, costing an estimated $10.9 billion more than HB 2194.
In 2011, the Legislature and Governor approved House Bill 2194, which requires the state to meet its employer contribution and modestly increases rates for Tier I and Tier II members and new employees coming into the system in exchange for cost-of-living-adjustments and an increase in the retirement benefit formula multiplier for all future years of service. The bill would address the KPERS unfunded liability by year 2035.
A provision of the bill prohibits the other provisions of HB 2194 from going into effect until the Legislature votes on the plan developed by the KPERS Study Commission. Unless both chambers of the Legislature vote “up or down” on the Study Commission’s plan, HB 2194 will not become law. The Senate KPERS Select Committee voted down the Study Commission plan, but the House has refused to take any action to trigger the provisions of HB 2194.
“At this point it appears reform efforts aren’t based on fiscal reality, but on an ideological desire to follow the failures of the private sector and shift all the risk from the state to retirees,” Forsythe said. “Blindly moving to a system that increases costs to the state taxpayers while placing added burden on state retirees is not a fair pact for the thousands of Kansans who have spent their careers working to improve the lives of their fellow Kansans.”
