TOPEKA, Kan. (AP) — Legislation authorizing $1.5 billion in bonds to bolster the Kansas pension system for teachers and government workers has stalled in the state Senate, and one advocate said Wednesday that the bill is “dead in the water.”
Senate Ways and Means Committee Chairman Ty Masterson said he doesn’t want to issue the bonds without creating a 401(k)-style pension plan for new public employees. The Andover Republican said the state shouldn’t be “taking on one debt to cover another” unless it reforms its retirement system.
The Kansas Public Employees Retirement System operates traditional pension plans guaranteeing benefits upfront, based on an employee’s salary and years of service. KPERS projects a $9.3 billion gap between anticipated revenues and promised benefits through 2033.
Under a 401(k)-style plan, workers’ benefits would depend on investment earnings and would fluctuate when financial markets are volatile. Public employee and retiree groups strongly oppose moving to such plans.
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Bonds would give KPERS a quick infusion of cash, so that the percentage of its obligations covered by its assets, now 53 percent, would jump to 61 percent in 2015 and grow more quickly than it would under current law. Also, the state wouldn’t have to boost its annual contributions to KPERS as aggressively as it does now.
The House approved the bill last month, but Masterson’s committee hasn’t taken a vote. Senators and House members drafting the final version of other pension legislation and reconciling differences between the two chambers could slip in authorization for the bonds, but Masterson is the Senate’s lead negotiator.
“We need to see a transition” to a 401(k)-style plan for new public employees, Masterson said.