Kansas City’s pension plans are on firmer footing, but they must get better

Pension reform will help ensure steady retirement pay for hundreds of Kansas City police officers in the coming years.
Pension reform will help ensure steady retirement pay for hundreds of Kansas City police officers in the coming years. The Kansas City Star

Four years ago, almost everyone at City Hall said it was going to be next to impossible to reform Kansas City’s four pension plans. The unions were too intractable and the politicians were too timid to make any real progress.

Enter Mayor Mark Funkhouser (remember him?).

He doesn’t get credit for much these days, but Funkhouser did recognize that rising pension expenses threatened the city’s ability to provide basic public services. After voters rejected his re-election bid in early 2011, and just weeks before leaving office, Funkhouser appointed a commission of citizens and city officials to recommend reforms to municipal pensions.

The group’s report included excellent recommendations that police officers, the fire union and other city workers accepted over the next two years. Mayor Sly James and the City Council eventually approved the changes.

Most employees are contributing an extra 1 percent of their pay to the pension systems. Newly hired workers will receive slightly less generous benefits. The city must make required contributions to the four plans each year and not reduce those payments as it had done too often in the past.

The Star last week reviewed the latest financial reports for the four retirement plans. The most important findings show that they are on firmer footing than a few years ago but still below where they need to be.

▪ The city had $2.307 billion in assets vs. $2.895 billion in liabilities to retirees.

That’s a still-significant shortfall of $588 million. But it’s also slightly less than the 2013 figure and better still than the $611 million deficit of 2012.

▪ The city was funding 79.7 percent of its pension liabilities, up from 78.6 percent in 2013.

So the city is closing in on the 80 percent mark, which pension experts recommend as the minimum goal for public retirement plans. But Kansas City still remains far shy of the worthy goal of getting close to the funding level of 100 percent.

▪ The largest city retirement system, covering thousands of mostly blue-collar workers, had the healthiest funding ratio at almost 84 percent, an increase from 81 percent last year.

Others lagged below the 80 percent standard. The firefighters’ plan was at 77.6 percent, while plans that cover police officers and civilian police employees were both at 77 percent. Only the system covering police officers declined from 2013 to 2014, by only 1 percentage point.

City Manager Troy Schulte says the changes are making the pension plans more stable. Ultimately, that should prevent taxpayers from having to pour ever-increasing amounts of money into the systems. On the flip side, pensions for city employees will be in better financial condition when they leave public service.

Lawyer Herb Kohn helped lead the Funkhouser-appointed panel. Kohn said last week he was optimistic that the changes would dramatically improve the city’s retirement systems.

“We knew it would be a long-range project,” he said, pointing out that the commission looked up to 30 years in the future while designing repairs to the city’s plans.

Contrast that with the shocking news in Kansas.

Gov. Sam Brownback has announced that he wants to partly cover a large budget shortfall in 2015 by slashing contributions to the state’s already-weak retirement plans. They cover state workers, many teachers and county employees in our area and across the state.

There’s no shortcut when it comes to protecting taxpayers and public workers regarding pensions. In Kansas City, some good decisions have been made that accomplish both of those essential tasks.

Monday in The Star: How much do Kansas City’s elected officials and municipal judges make in their retirement years?