The Kansas Public Employees Retirement System is not bankrupt ("KU report: KPERS could see shortfall of $8 billion," Sept. 24 Local & State). Currently, there are more than $11 billion in assets being held by KPERS.
However, it is clear that a problem lies ahead in the extended future. This situation exists primarily because the state has not contributed at actuarially required levels for the past 15 years. The sooner that we act on this problem, the easier it will be to navigate a solution.
Retirees and those close to retiring are the safest in the system as it stands right now. But as I discuss the issue with current employees, it is clear that workers are willing to do their part to make the system work better for everyone. However, the first burden is on the state to meet its obligations.
Using the term "bankrupt" to describe KPERS, as a report from the University of Kansas' Center for Applied Economics did, is reckless and needlessly scares our teachers, corrections officers and other public servants who have dedicated their lives to helping other Kansans. These people work hard each day and do not deserve to live in fear of not having the ability to retire.
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Elderly retirees have also been scared by the word "bankrupt," a serious term in these economic times. The current system definitely needs to see change, but calling it "bankrupt" is careless.
Switching to a defined-contribution plan, similar to a 401(k), could cost the state even more money. As employees switch to a new plan, the state would find itself funding both the existing plan for current members and a new plan for new employees. Funding two separate plans could require an even greater state commitment.
Action to reduce future costs already has been initiated by the Legislature. Kansas public employees hired after July 1, 2009, must be at least 60 years of age and have at least 30 years of service or be at least 65 with a minimum of five years of service to be fully eligible for benefits. The level of retirement benefits remains based upon years of service. This is a more restrictive formula than the previous one.
During the good market years of the 1990s, 401(k) plans were showing stellar performance. Many critics at that point opposed a defined-contribution plan for public employees, as it seemed too costly for the state and too lucrative for the employees. Now, in a far different market, KPERS' defined-benefit plan is being assailed as too expensive for the state and too rewarding for employees.
What a difference a market shift can make in perception.
It is imperative for the state of Kansas, like any private-sector employer, to have a reliable retirement system to attract and to maintain quality employees.
It's important for people to know that this long-term problem is manageable. Now is the time to get our heads together to come up with solutions. The sooner we act, the easier it is going to be to get us on the right track.