Treasurer: KPERS not ‘bankrupt’
But changes needed for public pension system
Kansas State Treasurer Dennis McKinney Thursday refuted a University of Kansas report that claims Kansas Public Employees Retirement System is bankrupt, but he said problems will exist in the future without reform.
The report from the Center for Applied Economics in the KU School of Business says, “KPERS is bankrupt under current operating assumptions.”
There are 637 public employees in Marion County actively contributing to KPERS, not including state employees. That is nearly 5 percent of the population of the county.
“Using the term ‘bankrupt’ to describe KPERS is reckless and needlessly scares our teachers, corrections officers, and other state employees that have dedicated their lives to helping other Kansans,” McKinney said in a statement. “These people work hard each day and do not deserve to live in fear of not having the ability to retire.
“This problem is manageable. Now is the time to get our heads together to come up with solutions.”
Retirees and current employees are at no risk of losing benefits they have earned, according to a statement on the KPERS Web site Thursday. KPERS acts as a pension system. By meeting certain criteria contributors are assured a specific pension after retirement, rather than a plan like a 401K, in which retirement funds depend on investments earning money.
Even with those assurances, some employees have an uneasy feeling about future security.
“I feel like there is none,” County Register of Deeds Jo Ottensmeier said Friday. “You work, you put your money in, and you expect it to be there.”
She said she is even more concerned whether programs like KPERS and Social Security will remain for the next generation.
The report from the Center for Applied Economics at the KU School of Business says all possible solutions need to be on the table for reform, including changes in plan structure and benefits, increased employee contribution rates, and increased employer contribution rates.
“The reality is that Kansas citizens cannot do much about the funding crises that already exists in KPERS; but, they can stop the bleeding by enacting fundamental reforms in the state pension system,” the report says.
Hillsboro High School business teacher Nathan Hiebert is among workers in the county contributing to KPERS. The state isn’t invincible, so like most others, it suffered significant losses in the economic downturn, he said.
“When you’re investing, there’s an amount of risk that’s involved,” he said. “For a while, everyone thought it was just automatic money.”
One way or another, KPERS needs reform, he said.
“If it continues this way, it’s not going to work,” Hiebert said.
As a relatively young contributor, Hiebert is hopeful KPERS will still be in operation when he is ready to retire, but he won’t count on KPERS or Social Security to support him.
He compared the state’s situation to personal finances. Kansas pays people to make the investment decisions for KPERS in much the same way people hire stock brokers for advice.
“If your stock broker loses you $1 million, you’re probably going to find a different stock broker,” he said.