TOPEKA, Kan. (AP) — Gov. Sam Brownback is satisfied that Kansas’ public pension system is on a solid financial footing, though he said Friday that he’s still open to big changes such as creating a 401(k)-style plan for new teachers and government workers.
The Republican governor had a Statehouse news conference to highlight improvements in the Kansas Public Employees Retirement System in recent years. He also touted the state’s sale last month of $1 billion in bonds aimed at bolstering the pension system’s finances.
“We’ll continue to review other policy options, but I’m pleased with the direction we’re heading,” Brownback said.
The pension system projects that benefits due retirees over the next 18 years were 62 percent funded at the end of last year, with anticipated revenues and investment earnings falling nearly $9.5 billion short. A 2012 law committed the state to greater contributions and revised benefits for new employees so the gap would be eliminated in 2033. The National Association of State Retirement Administrators recommends funding of 80 percent as a healthy level for public pension funds.
Brownback argues that issuing bonds makes closing the gap easier, immediately boosting the funding ratio. State officials expect KPERS to earn more from investing the funds raised than it will pay in interest to bond holders over the debt’s 30-year life.
The move has been questioned by some analysts nationally. In a report last month, a national rating agency, Moody’s Investors Service, said “it represents a riskier strategy than the simpler alternative of making larger pension contributions.”
Brownback said dealing with the pension system is “not a glamorous thing.”
“You get more appreciation if you put more money in other places, if you’re announcing things like new roads,” Brownback said.
Two top Brownback advisers last year proposed studying privatizing KPERS, and the governor has supported a 401(k)-style plan for new workers. Traditional KPERS plans base benefits on years of service and salary, not investment earnings.
Mark Desetti, a lobbyist for the state’s largest teachers’ union, said Brownback and other Kansas officials should resist more big changes after the ones enacted in recent years.
“Now you let those reforms take effect,” he said.
Kansas public pension system: http://www.kpers.org/ .