Despite delaying hundreds of millions in payments to the state’s pension fund and revising future interest earnings downward, state officials said this week that current and former state employees need not worry about their pensions.
Seems like a good a time to worry.
In the past two years, Kansas lawmakers have skipped $161.4 million in payments to the Kansas Public Employees Retirement System. Plans are to delay another $194 million in payments next year. Also, state officials have revised downward their future projections of interest earned on KPERS funds, leaving the system with an unfunded liability of more than $9 billion.
But in his annual report to a legislative oversight committee Monday, KPERS Executive Director Alan Conroy said the retirement system is sound. “Our members should not worry about getting their retirement benefits,” Conroy said.
Rep. Steven Johnson, R-Assaria, who chairs the Joint Committee on Pensions, Investments and Benefits, added, “there is a significant amount in the trust fund. The risk to benefits is not there.”
And Sen. Laura Kelly, D-Topeka, said the system is nearly 67 percent funded, up from about 55 percent funded in 2010. “That’s a safe zone, between 60 and 80 (percent),” she said. “It’s an improvement over the past, so we’re going in the right direction.”
But given the increasing volume of pensioners drawing benefits and the decreasing number of active participants contributing to KPERS, it’s difficult not to be concerned about the pension fund’s long-term viability.
There are nearly 305,000 members eligible for KPERS benefits, up 10 percent since 2009. In that time frame, the number of active workers contributing to KPERS has fallen by 8,700 workers or 5.4 percent while the number of retirees drawing KPERS benefits has increased by more than 23,600 or 10 percent.
Under current law, the state is scheduled to increase its employer contributions into the fund so that by 2021 the unfunded liability will stop growing and will be gradually paid off over the following 15 years. But the state has revised such plans in the past. Just last year, the state delayed a $97.4 million KPERS payment to 2017, and then postponed another $64 million payment. Plans are to delay another $194 million in payments next year.
The Legislature’s track record of using KPERS payments to balance the state’s budget — while allowing the unfunded liability to continue to increase — is absolutely worrisome. Hopefully, KPERS participants have a backup plan.