Senate Bill 49
Senate Bill 49 is Senate President Steve Morris’ legislation aimed at shoring up the long term unfunded liabilities of the KPERS fund. The bill would perform one of three amendments to the current KPERS system:
- increase the state’s annual contribution increase cap from .6 percent (%) to 1.0 percent (%);
- increase the multiplier on the final average salary of KPERS retirees; and
- increase the employee contribution rates by two (2) percent (%) over the next two (2) years, making the contributions of Tier I members six (6) percent (%) and of Tier II members eight (8) percent (%).
As presently drafted, the KKP Coalition opposes Senate Bill 49, because it further reduces public employee compensation through an unfair and inequitable assessment that places the most burden upon Kansas public employees who have made their actuarially required contributions to the KPERS fund.
Written Testimony Submitted to the:
Kansas Senate Select KPERS Committee
February 23, 2011
Coalition for Keeping the Kansas Promise
Testimony In Opposition to Senate Bill 49
President Morris and Members of the Select Committee:
Thank you for the opportunity to appear before the Select Committee and to dialogue on an important issue for nearly 300,000 Kansans.
The Coalition for Keeping the Kansas Promise, composed of state employees, teachers, firefighters, public safety workers, health care professionals, and higher education professionals, was established at the end of 2010 for the purpose of serving as a comprehensive resource for both KPERS members and retirees, and Kansas policymakers.
The Coalition for Keeping the Kansas Promise supports certain provisions of Senate Bill 49, though, as a whole, the Coalition opposes the legislation.
Each year, Kansas public employees face uncertainty – uncertainty that their efforts to do more with less will be appropriately acknowledged and rewarded according to the rules of the free market. Kansas public employee compensation, year-after-year, is the first target of those who seek to reduce government spending despite the fact that public employees are paid less and contribute more than their private market counterparts.
The provisions of Senate Bill 49 that seek to increase employee contributions, even in a phase-in over a number of years, generates further uncertainty for Kansas’ public employees. After years of legislative efforts to reduce public employee compensation and reduce the total number of public employees in the state, it is clear that continued and sustained efforts to further erode public employee compensation and staff support will not cease. Thus, while the increased employee contributions under Senate Bill 49 may seem nominal, when taken in conjunction with other reductions in total compensation, such as that witnessed in House Appropriations just this session, the increase is another erosion of total compensation for Kansas public employees.
Kansas values are appropriately summed up by “work hard and play by the rules.” Kansas public employees have done just that. With 2,000 less state employees than five years ago and 1,000 less public school teachers than three years ago, Kansas’ public employees have risen to the challenge of working hard and doing more with less, only to earn less than their private market counterparts. Worse yet, Kansas’ public employees have “played by the rules.” They have made their required contributions year-after-year for the support of KPERS and a nominal retirement. It is the contributions by state and local governments that have failed to make the actuarially required payments – for the last 17 years. To now place the burden of that inaction on Kansas’ public employees is an affront to our shared Kansas values of “work hard and play by the rules.”
The Coalition for Keeping the Kansas Promise does support Section 1 of Senate Bill 49, which would seek to adjust the past inaction to make the actuarially required contributions by Kansas public employers to the KPERS fund. Increasing the employer contribution cap from .6% to 1.0% will, over a number of years, help to decrease the total unfunded actuarial liability and will shore up the KPERS fund. It is, however, a process that will take years, but an action that we urge the Select Committee and legislature to take immediately.
The Coalition further supports Section 2 of Senate Bill 49, which will increase the multiplier of members’ final average salary. The average monthly retirement benefit of KPERS is $1,200, which often requires that Kansas public employees not rely solely on KPERS as their sole retirement benefit with many choosing to invest in other private market retirement accounts or, alternatively, continue to work into their golden years to supplement their nominal KPERS retirement benefit.
Thank you, again, for the opportunity to share dialogue on this important subject matter that impacts Kansas public employees and retirees in all 105 Kansas counties and every legislative district throughout the state.