Senators have advanced a bill that would cut future benefits for teachers and government workers and require more contributions from the state, while the House is preparing to debate a similar bill that would not boost state contributions as much, according to the Associated Press.
The senators’ plan would increase the state’s annual contribution to KPERS by $23 million starting July 1, 2013. The House’s plan would increase the annual commitment by $10 million, also starting in 2013.
The AP reports that about 131,500 teachers and government workers covered by KPERS pay 4% of their salaries to the pension fund. Under the Senate plan, that would increase to 6% by 2016, though those workers would get a small boost in their pensions in exchange.
Another 20,000 employees, hired after June 2009, already pay 6% of their salaries into the pension fund, and they’ve been promised annual cost-of-living adjustments in their benefits after they retire. They could keep the annual adjustments and pay 8% of their pay into the pension system, or forgo the future adjustments and pay 6% into the fund.
The House plan would change how pension benefits are calculated for teachers and government workers after July 1, 2013, giving them 20% less credit for each year of service after that date.
The AP said the retirement fund faces a projected $7.7 billion gap between its anticipated long-term revenues and the benefits it has promised public employees over the next few decades. A national report determined last year that KPERS’ assets would cover 59% of its long-term liabilities, the second-lowest percentage of any U.S. state, behind Illinois.A Kansas state House committee recently turned aside a bill that would establish a 401(k)-style plan for new public employees (see KS House Panel Tables 401(k) Conversion Bill).