Retired public employees seek cost-of-living adjustment to KPERS benefits

02/18/2014 3:28 PM

08/08/2014 10:22 AM

More than 200 retired public employees packed the Capitol rotunda on Tuesday to demand that lawmakers approve a cost-of-living adjustment and back away from a plan that would change the KPERS system to a defined contribution model.

Ernie Claudel, vice chairman of the Kansas Coalition of Public Retirees, said public retirees have not had a cost-of-living adjustment for 17 years. House Bill 2539 would provide KPERS members with a moderate increase in payments annually.

KPERS members who retired before 2004 would see a 1 percent increase or more if the bill is passed. The retirees wore green stickers with the acronym COLA at their rally.

House Minority Leader Paul Davis, D-Lawrence, addressed the rally and voiced his support of the bill.

Davis, the probable Democratic nominee for governor, said inflation and increased health care costs have hit public retirees hard.

“I hear it all over the state from retirees who are really struggling to get by, because their retirement is not what it used to be,” he said after concluding his speech. “It is a real issue for thousands upon thousands of Kansans.”

Sally Hayes, an elementary school librarian from Wichita who retired in 2002, said the cost of groceries has shot up considerably since she retired. She thinks it is only fair the state keep that in mind.

“We didn’t get that much as schoolteachers,” Hayes said. “We paid into it. It was part of our paycheck.”

“A lot of us, that’s all we have, what we get from Social Security and KPERS,” Hayes said.

Jonell Davies, another retired librarian who joined Hayes, noted that retirees shop at local stores. If they cannot afford to buy goods, it will affect businesses in their communities, she said.

Rep. Jim Howell, R-Derby, vice chairman of the Pensions and Benefits Committee, said he was undecided on the cost-of-living adjustment. However, he noted that Kansas has a comparatively lower cost of living than other states.

“I know inflation has happened,” Howell said. “One of the problems with the (defined benefit) plan is that it has no provisions for inflation.”

House Bill 2519 would put public employees hired after Jan. 1, 2015, onto a direct contribution plan instead of a defined benefit plan. The bill is scheduled for a hearing on Wednesday.

Defined benefit means retirees who have paid into KPERS receive a set amount of money each year. Direct contribution would be more similar to private-sector plans like 401(k) plans.

Many of the retirees at the rally expressed concern about the possible change to direct contributions. Democrats have also voiced disapproval.

Howell cautioned against over-reactions. Legislators are only hearing testimony on the bill at this point, and as it stands it would not change any benefits for current public employees or retirees.

“But I’ll just tell you this, and this is the important point that I think people need to know: If we do nothing it puts them (retirees) at a higher risk,” Howell said.

“What we’re trying to do is find a way to solve the future problem so we can stabilize, if you will, our promise to people who we already owe benefits to,” Howell said. “To not have a discussion out of fear is not smart.”

Senate Minority Leader Anthony Hensley, D-Topeka, a public schoolteacher for 39 years, opposes a defined contribution plan.

“It puts people into a 401(k) system at the expense of people that are already in the system, the retirees. The base of the system is whittled away over time because you don’t have people contributing into KPERS,” Hensley said.

Claudel said that legislators should stop tinkering with the KPERS system and keep the current cash balance plan.

KPERS faces a $10 billion deficit, though lawmakers say reforms set to take effect in 2015 will help make up the deficit.

On Tuesday, the Senate announced a special committee to review the KPERS system. Senate Vice President Jeff King, R-Independence, said current and retired public employees have nothing to worry about.

“All of these changes are solely focused on people who start working after Jan. 1, 2015,” King said.

King said legislators are just trying to streamline the state’s cash balance plan to ensure that future retirees receive benefits.

“We’re worried whether under the current bill we can ever pay a dividend. And it’s in the interest of retirees that we’re able to pay dividends,” King said.

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