The latest desperate bid to try to balance the out-of-whack Kansas budget is sending a chill through tens of thousands of state, county and school employees.
This measure has set off alarm bells among responsible lawmakers as well as unions that represent public employees.
Reforms several years ago boosted the amount of money public workers must place into the state’s pension system. Now, suddenly, the state could opt out of putting its fair share into the account.
Sen. Laura Kelly, a Topeka Democrat, said Tuesday the latest tactics could financially damage the pension fund and wipe out the positive changes the state took to strengthen it.
A healthy pension plan for dedicated public servants should be a top priority for the Legislature, right up there with adequately financing schools, roads and public safety.
Supporters contend the delay wouldn’t cost KPERS any money because the state would pledge to pay interest on the delayed payments. But that requirement is in only the Senate bill, not the pending House version.
Sen. Jim Denning, an Overland Park Republican, said the tactic is “not a loan.... It smells like one, but it’s not.”
Actually, it reeks of being exactly that — a loan that, incredibly, a few state legislators already are indicating they might not be able to pay back.
Indeed, why would anyone trust the “we’ll gladly pay you back” line from a deadbeat state that already has had to divert $1.4 billion from its road funds and repeatedly sliced its annual budget the last few years?
Brownback and the Republican-controlled Legislature are recklessly looking for any cash they can find while refusing to consider the single best way to improve the situation: reverse the costly income tax cuts that took effect in 2013.
That action helped cause an astounding drop of $1.37 billion in individual income tax revenues in the first two years alone, sparking a series of risky moves in Topeka.
One came last year when Kansas borrowed $1 billion to invest in its pension fund. The national Government Finance Officers Association recommends against governments issuing pension obligation bonds because they “involve considerable investment risk.” A government might not earn a sufficient rate of return on its investments to pay off the bonds, exacerbating its financial woes.
The Moody’s rating firm said the Kansas pension bonds would “do little to solve the challenges surrounding its poorly funded state-administered pension plans.”
The delay of future pension payments could undermine a KPERS system that had a funding ratio of assets to liabilities of 62 percent on Dec. 31, 2014. That’s far below the 80 percent figure that’s merely the bottom of the “recommended” funding level for pensions.
Public servants in Kansas already have good reasons to worry about the future of their pensions. The Legislature should reject yet another move that would further endanger the retirement benefits these workers have helped pay for and have earned.