Rebecca Proctor: Step away from Kansas’ pension funds

February 7, 2017

Kansas is falling into deeper debt. State agencies are underfunded. Important early childhood education programs are under siege. And now, Gov. Sam Brownback is borrowing from the pension fund to pay bills. Why? Because the governor refuses to change course on his disastrous 2012 tax policy. Brownback slashed taxes for the wealthy and business, claiming it would be a “shot of adrenaline” to the heart of the Kansas economy. That shot never came.

What did come were enormous budget deficits, deep cuts to services the residents of Kansas rely on and negative job growth.

Since 2012, Kansas has seen its bond rating downgraded twice. By the end of the 2014 fiscal year, Kansas ran up a deficit of about $300 million and revenue collections fell short of expectations, triggering additional spending cuts. Brownback took millions from transportation, public health and youth education programs; and continued funneling highway and pension funds to temporarily fill budget holes.

Now, the Kansas Public Employee Retirement System (KPERS) is on the chopping block. In Brownback’s proposed budget, he wants to defer full payments into the fund and completely skip the payment that was due in 2016. As the director of KPERS stated in a Senate hearing, the move would increase long-term pension costs by $6.5 billion.

Kansas’ pension systems have struggled since the Great Recession, and the state’s lack of financial discipline will make the situation worse, not better. Changes to KPERS in 2012 increased both state and employee contributions into the system and the system had begun to make progress. Funding levels increased to 64 percent at the end of 2014, up from 56 percent at the time changes were enacted. Now, as employees continue to pay 6 percent out of each and every paycheck, the governor wants to shirk the state’s obligation. This will cost teachers, social workers, nurses and other public employees who are depending on a pension for their retirement, and taxpayers, who will have to pay back skipped payments plus 8 percent interest.

If there’s anything we know about stability in pension systems, it’s that states that pay their bills have financially healthy or well-funded pension systems. States that skip their payments – the equivalent of an individual consumer skipping credit card or mortgage payments – are states that have debt (think: Illinois).

Kansas needs to abandon Brownback’s failed policies and start investing back into its people, not robbing them of their hard-earned benefits. If employees don’t have the option to skip out on their bill, the state shouldn’t either.

Rebecca Proctor is the chairperson of the Keeping the Kansas Promise Coalition.

 

Source: http://cjonline.com/opinion/columns/2017-02-03/rebecca-proctor-step-away-kansas-pension-funds

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