Senate President Steve Morris stepped out front Tuesday with a pension reform bill that would actually reform the state employee pension system. KPERS is out of balance by about $7.7 billion. It will fall that far short of paying the pensions owed in the years ahead unless more money is pumped into reserves or pension payments are reduced.
Nobody wants to cut pensions to teachers, firemen, park employees, or, for that matter, former lawmakers. With that in mind, Sen. Morris introduced a bill calling for raising the annual payment into the KPERS investment fund by $23 million, beginning July 1, 2013. More important, the Hugoton Republican also proposes to increase the amount teachers and others under the plan contribute from their salaries into the fund from 4 percent to 6 percent — a 50 percent increase.
State workers hired after June 2009, already pay 6 percent of their salaries into the retirement fund but have been promised an annual cost-of-living increase. Under the Morris plan, they would be given a choice between paying 8 percent into the fund or giving up the COL increase and staying at 6 percent.
Sen. Morris took the bull by the horns. These are significant increases. The AP story didn’t say whether they would be sufficient to put KPERS into the black, long term. Perhaps the math has yet to be done. But a 50 percent increase in employee contributions, plus an additional $23 million a year from the state, should move the markers a long way down the road.
In addition to raising KPERS income, the Morris bill also creates a commission to study the pension system and perhaps advocate still more changes. It would be required to make its recommendations by December so they could be acted on by the 2012 Legislature.
KPERS IS UNDER WATER because past Legislatures ducked their responsibility and past governors let them get away with it. Contributions to the fund by the Legislature — when they were made as calculated — were inadequate because they were based on rates of investment return that were unrealistic in the first place and were not adjusted downward when the economy slowed and interest rates tanked.
These facts were common knowledge in Capitol halls. Remedies weren’t taken because the consequences of underfunding the pension fund were far in the future and could be ignored without creating a protesting mob.
There still is plenty of money in the KPERS fund to pay today’s retirees, but the long term deficit is so huge that action should be taken now while the program can be returned to soundness with increases in employee and state contributions at acceptable levels.
Sen. Morris deserves applause for his initiative. It is both courageous and intelligent.
— Emerson Lynn, jr.
