The Buzz

September 25, 2013

Kansas group responds to underfunded public pension allegation

The response is printed in full. Critics say the Kansas pension plan lacks enough money to pay promised benefits.

The Buzz

The facts, faces and hum of local politics with Steve Kraske and Dave Helling

Buzz readers may remember this post

about a study involving public pensions across the nation. The Kansas pension shortfall, you may recall, was found to be among the worst in the nation.

Kansas public pension advocates have responded. Here’s what they said:

This article is in response to Dave Helling’s September 17, 2013, piece in The Buzz” entitled “Kansas pension shortfall among worst in the nation.” This piece unfortunately fails to appropriately recognize how recent reforms to the Kansas Public Employees Retirement System (KPERS) will address both the unfunded actuarial liability and long-term solvency of KPERS while saving taxpayers millions. As chair of the Keeping the Kansas Promise Coalition, I want to address the issue.

When we think of the bedrocks of our community, those people that garner respect across the political spectrum, we conjure up images of our public safety workers, our snowplow drivers, our teachers, and our law enforcement officials. Like all Kansans, these workers ought to expect a secure retirement that allows them to live modestly into old age. And for more than 50 years, the Kansas Public Employees Retirement System (KPERS) has played a critical role in ensuring that these Kansans are able to retire with dignity after their years of service. Recent changes to KPERS put Kansas on a solid path for the future so that we can ensure retirement security for hundreds of thousands of Kansans.

Alan Conroy, executive director of KPERS, and the state’s resident expert, recently wrote, “With continued strong investment returns and the positive effects of last year’s benefit change legislation, KPERS is on a clear path to financial soundness. Projections show the actuarial liability will be paid off by 2033.”

The legislature took important action to require greater responsibility from both employees and employers so that we can make a commitment to our retirees and stick to it. In 2012, both parties came to the table and agreed that mutual sacrifice was the best way to put our state’s retirement system on solid footing.

Those changes to KPERS have already proved to be smart fiscal moves, as we have witnessed in the past year. Yet there are those who advocate for more drastic changes to the retirement system—changes that could prove detrimental to both employees and Kansas’ taxpayers.

Instead of giving the 2012 changes the time to take effect and deliver the financial soundness that Kansans deserve, a small troop of ideologues would prefer to slash the state retirement system entirely and convert all employees into a 401(k)-type plan that would decrease retirement benefits while creating new costs to taxpayers. If we took the advice of this group, Kansas taxpayers would be paying more for less; I call that a bad deal.

Those who advocate for a 401(k)-type plan fail to address Kansas’ funding shortfall altogether—which the legislative fix adequately addresses and corrects—and instead want to start digging another hole for the state.

They also ignore a body of research coming from other states across the country who attempted to “fix” their pension systems by converting them to 401(k)-type plans. Case studies from other states demonstrate how such overhaul is damaging and unaffordable for both public employees and taxpayers.

Alaska and Michigan saw their pension debts increase when they switched their public employees over to a 401(k)-style plan, while independent actuaries found that a 401(k0)-style proposal in Pennsylvania would cost nearly $47 billion. In West Virginia, after 15 years of administering 401(k)-style plans for their public employees, a report found that many were eligible for means-tested public assistance because they had received such little in retirement income. This ended up driving up costs for the state, and forcing the state legislature to finally revert back to a traditional pension plan in 2006. Switching to a 401(k)-style plan did little to improve the fiscal situations of these states, and instead undermined the retirement security of teachers, road workers and emergency responders.

Just last year, all parties came to the table and agreed on a plan to strengthen retirement security in Kansas—a plan that asked for concessions from employees as well as employers. And these changes to KPERS have put us back on a path to a secure future. Now is not the time to go back to the drawing board, especially with a plan that has been proven to be riskier and costlier.

Let’s protect retirement security, let’s allow people to retire to dignity, and let’s reject the recent attacks on KPERS. Let’s stay the course on KPERS!

Rebecca Proctor is chair of the Keeping the Kansas Promise Coalition. The Coalition is a group of public employee organizations including, teachers, public safety workers, state, city and county employees, formed to collectively advocate for fair and affordable reforms to the Kansas Public Employees Retirement System to ensure the long-term solvency of the System.

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