Government & Politics

Kelly signs $115 million state employee pension bill, but says more needs to be done.

Democratic Gov. Laura Kelly signs SB 9, authorizing a payment of $115 million to the state’s retired employee pension system.
Democratic Gov. Laura Kelly signs SB 9, authorizing a payment of $115 million to the state’s retired employee pension system. The Kansas City Star

Gov. Laura Kelly signed her first bill Friday morning but the measure—authorizing a payment of $115 million to the Kansas Public Employee Retirement System, or KPERS—was not the one she had in mind.

Kelly, a Democrat, had proposed a refinancing of the pension system, whittling down annual payments to something more manageable. She said the plan would save the state about $145 million annually over the next few years, money that could be reallocated to other needs.

But the refinancing also extended the schedule of payments by 30 years, at a cost of an additional $7.4 billion. The state’s unfunded liability—the amount it would need to fully cover retirement costs—wouldn’t drop from $7 billion to $5 billion until 2040, 15 years later than under the current plan.

And it would take an additional 12 years for KPERS to be 80 percent funded, a level considered the marker of a healthy pension system.

Lawmakers rejected the idea, criticizing the governor for choosing short-term savings over long-term ones.

Kelly said the bill she signed, which makes up for a previously missed payment to the fund, is a “step in the right direction,” but more needs to be done.

She reaffirmed her support for what she’s calling reamortization, and said if the legislature does not act soon, KPERS payments will balloon to almost $1 billion a year in the next decade.

Rep. Brenda Dietrich, R-Topeka, said she’s “very pleased” that Kelly signed the bill paying out $115 million, but said she wants to leave the decision of reamoritzation up to the KPERS board.

“I really don’t think it’s the legislature’s role to make that determination,” said Dietrich, whose district includes a large number of public employees.

Dietrich says the idea of an annual payment ballooning to almost $1 billion does worry her, but said she’s more concerned about the “unintended consequences” of Kelly’s refinancing plan.

“That’s kind of hard to get your arms around when you’re a middle-income Kansan making $45,000 a year and you’re going to see the state taking on $7 billion of interest debt,” Dietrich said. “That doesn’t make sense to most folks.”

KPERS handles the retirement funds of about 311,000 current and former state employees. In fiscal year 2018, it paid out $1.7 billion in retirement benefits.

Kelly lauded the service of Kansas’ public employees, and called on lawmakers to come to a bipartisan solution for the KPERS debt.

“We must put politics aside and make wise choices about how we can protect retirees and their benefits while also putting our pension system on a sustainable path,” Kelly said.