By Topeka Capital-Journal, July 13
Depending on who you talk to these days, either the state government’s finances are in good shape overall despite having hit some rough spots or they’re in an uncontrolled free fall without a parachute.
The truth, as is often the case, probably lies somewhere in the middle, and if problems are on the horizon, they likely can be fixed if our elected officials are willing.
A point in case is the Kansas Public Employees Retirement System, which a few short years ago was among Kansas’ biggest financial hot spots. Now, a report, “The High Cost of Big Labor: Understanding Public Pension Debt,” indicates changes in KPERS are moving the system to sounder, if not rock solid, footing.
That should be welcome news to every KPERS participant and every Kansas taxpayer. A lot of Kansans depend on the system to meet their financial needs when they quit working and nothing is more important than ensuring money is in hand to meet the call for benefits as state employees reach retirement age.
Different reports and studies that rank the states’ pension systems according to their unfunded liabilities have Kansas in the middle of the pack or as high as 14th among the worst funded plans. That might not sound good, but the experts seem to agree Kansas has taken responsible steps to get KPERS back on track.
Aloysius Hogan, a senior fellow at the Competitive Enterprise Institute, which published the report mentioned above, says the Kansas retirement system was rated in the middle of the pack for years but slipped between 2009 and 2012. The state deserves some kudos, Hogan says, for taking action when it did.
That’s not to suggest everything is rosy. KPERS’ unfunded liability once was estimated at $10 billion, and that represents a lot or retirement checks.
Alan Conroy, CEO of KPERS, said at the end of 2012 the system’s funding level had fallen to 56.4 percent of projected needs. When more current data is released this week, Conroy expects it to show the funding level has risen to 60 percent, due to higher contributions by the state and its employees and investment returns. Hogan says 60 percent is somewhat of a floor for solvency and that a pension system is considered well-funded at 80 percent or above.
Clearly the state is doing better due to reforms, including the increased level of employer and employee contributions, enacted by the 2012 Legislature but there still is much work to do.
Any movement in the right direction is worth hailing, but state and KPERS officers must ensure KPERS keeps making gains on its unfunded liability and doesn’t move again in the wrong direction.
Hitting the 60 percent mark would be an accomplishment. Eventually hitting at least 80 percent apparently is essential. It’s not out of reach if those in charge are determined to make it happen.