The Issue: Embedded in the state’s budget negotiations this year was the state’s Kansas Public Employees Retirement System’s projected $8 billion shortfall.

Thousands of state employees are covered by the retirement system and lawmakers struggled to compromise on changes to salvage the system. On Wednesday, Governor Sam Brownback signed into law House Bill 2194, which takes the first steps in addressing the fund’s shortfall.


The Issue: Embedded in the state’s budget negotiations this year was the state’s Kansas Public Employees Retirement System’s projected $8 billion shortfall.
Thousands of state employees are covered by the retirement system and lawmakers struggled to compromise on changes to salvage the system. On Wednesday, Governor Sam Brownback signed into law House Bill 2194, which takes the first steps in addressing the fund’s shortfall.

Background: KPERS has more than 260,000 active, inactive and retired members and about $11 billion in assets. Public employees contribute a portion of their paycheck to the fund each pay period in addition to state contributions. When an employee retires, he or she is eligible for retirement benefits through KPERS. The system is used in lieu of a 401K-style retirement plan used by many private companies. The fund’s shortfall is a result of the state repeatedly failing to pay its share of the contributions.

What’s Next: The new legislation will establish a 13-member KPERS Study Commission that will consider alternative retirement plans including defined contribution plans, hybrid plans that could include a defined contribution component, and other possible plans. The commission will report its recommendations to the 2012 legislature which will consider two identical bills in each chamber. Each chamber must vote on the identical bills in 2012 before other provisions in HB 2194 will be implemented. Those provisions require: Increased employer contributions; increased employee contributions; increased benefit multiplier for future service; and transfer of 80 percent of the proceeds from the sale of surplus state real estate to KPERS to reduce the unfunded liability.
The law also requires a decision from the Internal Revenue Service as to whether current state employees can choose to change their retirement benefits.

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Email: katie.sawyer@mcphersonsentinel.com
Phone: (620)241-2422
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