Opinion Columns & Blogs

Is KPERS bonding plan a sign of distress?

“Kansas is considering a corner of the municipal-bond market most states have come to avoid because of its risk,” the Wall Street Journal reported. Gov. Sam Brownback wants to sell $1.5 billion in bonds to help fund the Kansas Public Employees Retirement System and reduce the state’s annual contributions to KPERS – thus freeing up some money to help cover the state’s budget deficit. Some bond investors and analysts see such debt offerings as a sign of distress and a warning of eroding credit. For example, debt tied to pensions played a role in the bankruptcies of Detroit and Stockton, Calif., the Journal reported. The bonds “can be used beneficially in some situations, but they are often inappropriately used by the desperate and irresponsible,” said Alicia Munnell of Boston College. – Phillip Brownlee

  Comments