Kelly to try again to refinance Kansas public pensions after GOP killed earlier plan
Gov. Laura Kelly will try again to refinance Kansas’s public pension system after Republicans rejected the idea last year.
The Democratic governor, about to enter her second year in office, outlined a plan Monday to limit the financial burden the Kansas Public Employees Retirement System, or KPERS, places on the state. The roughly $19 billion system oversees the pensions of more than 311,000 workers and retirees.
The plan, similar to a proposal the Legislature voted down in 2019, would refinance the system’s debt by pushing out payments over a longer period. That would reduce the state’s contributions in the first few years but cost more in the long run.
KPERS director Alan Conroy projects Kelly’s refinancing proposal would cost the state an additional $4.4 billion over 25 years, but save about $223 million a year during the first 15 years.
The governor’s office said the state has skipped out on past pension payments, causing its annual required contributions to the system to soar to levels that will be unsustainable in the future. Previous projections showed the state’s annual contributions rising from roughly $550 million currently to more than $900 million by 2035 unless changes are made.
“We must act decisively to meaningfully reduce state debt, rebuild the state savings account, and protect Kansas’ ability to pay its bills in the long term,” Kelly said in a statement.
The announcement included few details, such as the overall financial impact the plan would have on KPERS and the state’s required contributions. In addition to refinancing, Kelly said, the plan also “includes paying off over $500 million in debt early and avoiding future principal and interest costs.”
Late Monday, Kelly spokeswoman Lauren Fitzgerald said additional details will be available when the governor releases her budget, expected next week.
Conroy said the state is currently on a 20-year plan to pay off missed contributions. He projects Kelly’s plan would make a payment of $268 million now to avoid future payments that would eventually total $477 million.
Kelly’s new refinancing plan appears to be somewhat more modest than last year’s proposal. It would eventually add $4.4 billion to the pension system’s debt instead of $7.4 billion.
But pension officials and lawmakers are likely to remain skeptical.
The Kansas House in February voted down the 2019 proposal in a 36-87 vote largely along party lines. That came after the KPERS board expressed reservations.
Kelly Arnold, chairman of the KPERS board, said Monday it would evaluate the revised plan, but didn’t anticipate a change in their view.
“I think we are going to stick with our previous position,” Arnold said. He is also a previous chairman of the Kansas Republican Party.
This story was originally published January 6, 2020 at 4:30 PM.