Pension expenses may shift | The Wichita Eagle

TOPEKA — Wichita schools would lose $3.2 million next year if lawmakers approve a proposal to shift part of the state's responsibility for pension benefits to local school districts, officials said Wednesday.

The Kansas Public Employees Retirement System, KPERS, faces a $7.7 billion unfunded liability.

House Bill 2328 would require school districts to shoulder a contribution to the fund equal to 1 percent of their total payroll. That amount could increase as much as 1 percent each year.

In Wichita, that expense would be added to more than $30 million already expected in state budget cuts.

"Since there is no way for schools to raise additional money for something like this, it would be, in all reality, a cut to our budget," said Diane Gjerstad, lobbyist for the Wichita public schools.

The proposal is generating little support for passage this year from legislators on the House Committee on Pensions and Benefits. But they said it is one idea to throw into the mix as the state seeks solutions for funding KPERS.

The intent of the bill is to more closely link hiring with KPERS contributions, said the committee chairman, Rep. Mitch Holmes, R-St. John.

Schools do not have to take the impact on KPERS into account when they make personnel decisions.

"When schools do their hiring, they make no consideration for KPERS, and the state takes the hit," Holmes said.

But he added that the only way for the bill to be practical is if schools could receive more in annual state aid to pay for the proposed KPERS contribution. Otherwise it has the same effect as a budget cut, and "that's not our intent," he said.

Holmes said legislators have discussed many options for how to resolve the KPERS liability, and this bill is just one attempt "to get something before the committee."

Although shifting the burden onto schools this year would not be a good idea, he said, "three years down the road, it might be."

Rep. Steve Johnson, R-Assaria, asked opponents of the bill for their recommendations on how to fund KPERS and still adequately provide for schools.

He said he thinks everyone in attendance at the hearing has the same goal — to make the funding of KPERS equitable and effective.

"The solution really is bigger than this one bill," Johnson said. "The reality is that we probably don't have the time to do the work necessary to address the problem this session. The problem is just more complex than that."

Gary George, assistant superintendent of Olathe public schools, told the committee he was particularly troubled that the rate of contribution could continue to ratchet up annually if HB 2328 becomes law.

"There is no cap on what the district contribution would be, which would get to be huge," he said.

Tom Krebs, lobbyist for the Kansas Association of School Boards, said the cost to schools would equate to $53 in base aid per pupil in the next school year.

Gjerstad said such an added expense would be devastating to school programs in Wichita.

"With shrinking budgets, the expectations on schools haven't gone down," Gjerstad said. "We have more kids with greater needs than ever before, and the expectations of No Child Left Behind don't go on pause during a recession."

Holmes said his overall goal is "to get KPERS on solid footing in the least painful way."

He said the unfunded liability problem will unfold over decades, but the responsible thing would be to deal with it soon.

"There is a lot of concern out there about keeping KPERS solvent, when the reality is that it wouldn't run out of money for another 30 years even if we did nothing," Holmes said. "But doing nothing is not a good idea."