BE INVOLVED - Whether you are currently working or already retired, these legislative decisions will affect you the rest of your life. We need more involvement from both current employees and retirees.
Law enforcement officers in 77% of Kansas Law Enforcement Agencies are not in KP&F. This includes about 1/3 of all law enforcement officers in the state. All non-sworn support personnel in agencies using the state retirement system are in the KPERS plans, not the KP&F plan. See KPERS to KP&F Comparison at this Link.
Kansas Coalition of Public Retirees (March 29, 2020) A response to several Social Media Posts on FB and Twitter regarding the KCPR KPERS COLA Proposal was issued. See the response at this link. Related information: SB74 and HB2100 are the two bills propose a cost of living adjustment (COLA) beginning July 1, 2019 [Note: The year would be updated to the year the bill passes], for certain retirees who have been retired at least five years. The COLA would be applicable to all Kansas Public Employee Retirement System (KPERS) groups. The structure of the COLA would be the following: retirees who retired on or before July 1, 2014, would receive a 1.0 percent increase; retirees who retired on or before July 1, 2009, would receive a 2.0 percent increase; and, retirees who retired on or before July 1, 2004, would receive a 3.0 percent increase. However, any increase in the monthly benefit from the COLA could not exceed $150. Cost information for HB2100
Millennial State & Local Government Employee Views on Their Jobs, Compensation & Retirement Link to articleLink to study The key findings are as follows:
Despite knowing they could earn a higher salary in the private sector, Millennials working in state and local government are satisfied with their jobs and total compensation.
State & local government Millennial employees are planning to stick with their current job, but changing their benefits might push some out the door.
Millennials working in state and local government are highly supportive of pensions, and they see the advantages of their benefits beyond retirement.
State and local government Millennial employees feel confident about their retirement, but worry about cuts or changes to benefits.
State and local government Millennial workers say eliminating pensions has negative consequences.
KPERS Reamortization Part of Governor's FY21 Budget Request
The Governor has proposed in the FY21 budget to reamortize paying down the KPERS unfunded actuarial liability (UAL). I have fielded some questions from law enforcement about how this affects our retirement plans. The most important thing to law enforcement is that it will not impact local KPERS or KP&F. The proposal makes no adjustment to the schedule already in place to reduce the UAL of KP&F/ Local KPERS plans.
Just as general information since I know many of you are politically active and will be in related conversations, here are some key points of the Reamortization proposal:
The budget proposal includes payment of $268.4m to KPERS to cover deferred payments from 2017 and 2019. This will pay these deferred payments in full instead of paying each year through 2037.
The proposal increases the 30-year cost of state contributions to state and school KPERS by $4.4 Billion (Yes, with a B), which is a 27% increase.
Under the current path to reduce the state and school KPERS UAL, the funds would be 80% funded in 2036 and the contributions would decrease from $1.091 billion a year to just over $200 million per year. In the proposal the higher payments would peak in 2041, albeit lower at about $1.042 billion, with the significant reduction happening in 2046 when they would drop to near zero, the same time they would drop to near zero in the current plan.
The high annual payments will come again in the reamortization plan, reaching the current levels in about 2030, conveniently when the next governor or maybe two governors from now and few of the current legislators will be in office. And the peak will only be about $49 million less under the proposed reamortization plan. Which begs the question of would it just be reamortized again at some point between 2030 and 2041.
Also see the attached charts from KPERS where you will see the UAL for state and school KPERS is still increasing at the current contribution levels. In both plans the UAL will peak in 2022, but would peak about $500 million higher in the proposal. In the current plan the UAL is back down to 2018 levels in 2025, while in the reamortization proposal it does not return to 2018 levels until 2033.
These bills are identical and would provide a 1% benefit increase to those retired for 5-10 years; 2% for those retired 10-15 years; and 3% for those retired 15 or more years. I places a cap of $150 per month on the resulting increase.
This bill increases the lump-sum death benefit for those already retired under KPERS from $4000 to $10,000.
2017 KPERS Bills Signed by Governor
Leave Time The Governor has signed SB205 which includes a provision to assure officers who are on paid leave will no longer be placed in an inactive status with the retirement system. The bill is effective on July 1, 2017, but is retroactive to cover officers who were placed in an inactive status due to paid leave on or after July 1, 2014. Retaining the credit for service time is dependent upon the officer returning to duty unless they don't return due to death or disability, regardless of whether the death or disability is duty related or not. If the employee chooses not to return to work, for example due to the trauma of an incident they were placed on paid leave for, they are limited to 365 days of service credit. If there is any service time lost due to not returning to duty at the end of the leave, any contributions paid will be returned to the employee or employer who paid them.
Maximum duty related death benefit The Governor has signed SB205 which includes a provision to assure the surviving spouse and/or children of an officer suffering a duty related death will receive the greater of 1) the duty related death benefit, or 2) the retirement benefit they would have received had they retired on the day of the death under the 100% spouse option. In the past they would only receive the duty related death benefit even if their service time would calculate to a higher retirement.
2016 KPERS Conference Committee
On March 24, KPERS staff briefed the conference committee on the following bills:
HB2725 House Appropriations Hearing (March 11, 2016) Rep. Lunn was the only proponent testifying. The KPERS Executive Director was the only neutral testimony. As usual, they gave an excellent and balanced explanation of the bill and of the final average salary issue. There were many opponents (9 I believe). No action is expected on the bill, but we will be keeping a watch on it. Revisor's Explanation of the bill. (Does not appear to be accurate in several areas.) KACP-KSA-KPOA Testimony Rep. Lunn's Proponent Testimony All Opponent Testimony KPERS Briefing Document
HB2426 was introduced in 2015 (Requested by Rep. Lunn) and the session ended with the bill sitting in the House Commerce Committee. At the beginning of the 2016 session the bill was moved the House Appropriations Committee. There has been no further action on the bill this year.
On March 9, 2016, two new bills on this topic were introduced (Again requested by Rep. Lunn). HB2724 only addresses the use of payments from 409A and 457(f) plans. It does not include anything on annual leave accruals. It is assigned to the House Pensions Committee and a hearing is scheduled for March 14. HB2725 addresses both the 409A and 457(f) plans and leave accruals. It is assigned to the House Appropriations Committee and a hearing was held on March 11.
Several briefings were given on the Final Average Salary during the first half of the 2016 session, including in House Appropriations, House Pensions, and Senate Ways and Means. All were focused on KPERS briefings and reports from the efficiency study.
2014 Defined Contribution Efforts (Updated 4/16/14) The efforts to move to a defined contribution plan have quited, it would be very difficult for it to move forward at this point since it is a topic that did not pass either chamber. The new KPERS 2015 plan amendments have passed which further dampens the opportunities for the proponents this year initiated. The battle cry is still to place the entire risk on the backs of employees. HB2519 had a hearing in the House Pensions and Benefits Committee but the committee voted it down. There are currently no bills in the Senate proposing a change to a defined contribution plan. We will still need to watch for this movement to start again in the 2015 session.
2014 Forfeiture of KPERS Benefits (Updated 4/16/14) HB2666 conveys the idea to create a law that any KPERS member who is convicted of a felony should lose their KPERS benefits. This is regardless to the level of the felony, regardless of the connection of the felony to the workplace, and regardless of whether the member is already retired. We learned in the committee hearing this bill was supposedly modeled after the Pennsylvania law enacted as the result the Sandusky incident at Penn State. Only problem is the bill goes way beyond what the Pennsylvania law did. The Pennsylvania law lists specific crimes that apply and also requires the crime to be connected to their employment. Another example of an evil attack by some Kansas legislators on Kansas public employees. The House Committee did not move the bill forward.
2014 Lump Sum Payment Amendments (Updated 4/16/14) HB2743 was introduced 2/28/14 after the House Pensions and Benefits had a short presentation by KPERS on the Lump Sum payment options and their actuarial costs. Currently Lump Sum payouts can be taken in 10% increments up to 50%. The bill proposes allowing 75% and 100% payouts as well. A hearing was held in the House Committee but they did not move the bill forward.
2013 KP&F Maximum Retirement Percentage: HB2213 (Posted 6/6/13)
The provision to increase the maximum retirement benefit in KP&F from 80% to 90% is now signed by the governor and became law on July 1, 2013. The KP&F employee contribution rate will increase from 7.0% to 7.15% at the same time to pay for the higher actuarial cost of this change. This increase effects all KP&F members and not just those working after 32 years in the system. The multiplier remains 2.5% per year of service so an employee will work 36 years to achieve the 90%. .
2013 Amendments to the KPERS 2015 Plan (Posted 6/6/13)
The governor has signed HB2213 into law. That bill includes technical amendments to the KPERS 2015 plan set to go into effect January 1 2015. This plan does not affect KP&F members but it does affect about 1/3 of all law enforcement officers in Kansas since they are under regular KPERS and not KP&F. For details of the plan go to the KPERS Webpage. On the right hand side of the page are links to explanations of how the new plan will effect existing employees and another for how it will effect current employees. Note that for existing KPERS employees (not KP&F) there will be a 1% increase (from 4% to 5%) in the employee contribution rate on January 1, 2014.
Final Average Salary: Changes Did Not Move Forward in 2013 Session (Updated 6/6/13)
UPDATE - The portion of HB2308 regarding changes to final average salary calculations was not passed out of committee in the 2013 legislature. I doubt it will get much attention next year either since the new legislators, some of who started this bill, are becoming more educated about the legalities of changing the plan for existing employees. If you were hired into a KPERS position (including KP&F) on or after July 1, 1993, the KPERS laws already exclude the use of accrual pay for the final average salary calculation. If you were hired into a KPERS position prior to July 1, 1993, your accrual paid at the time of retirement will continue to be calculated into your final average salary.
NOTE: The author is not an attorney and this is not a legal opinion. It is simply a summary of information that has been discussed and presented to the legislators in various forms. Always consult with KPERS and, if necessary, with your personal or labor organization attorneys before making your KPERS retirement decisions.
KPERS Defined Contribution Plan Still Being Sought (Updated 4/16/13)
UPDATE - The House Committee tabled the proposal to change the KPERS 2015 plan passed last year by outsourcing (privatizing) the investments and changing the management of the funds. I look for it to be a topic of discussion in the 2014 session. The bill was "tabled to a date certain" which means it will be off the table and open to committee discussion at the beginning of the 2014 session.
The Governor and Legislative Leaders are still pursuing a Defined Contribution KPERS plan to replace the Cash Balance Plan they passed last year. In the alternative, they appear to be working toward privatization of the members investments instead of letting the KPERS Board direct the investments. Privatization will shift the administrative costs to the employees and the investment gains through the KPERS board seems to far exceed the gains typical in private investment companies. This is probably a further move to put more money into the hands of big business at the expense of public employees.
A Cash Balance Plan shifts the risk from being all on the state taxpayers in the current plan to being shared between the state and the employees in the new plan. A Defined Contribution plan will shift the risk entirely to the employees. The Cash Balance plan is set to provide a lower salary replacement at retirement than the current defined benefit plan. The replacement salary under a defined contribution plan is dependant on your investment strategies and the market. Both the defined contribution and cash balance plan will only result in a viable retirement if the employer contributes at a rate to build a fund adequate to grow into a retirement annuity. So far, the state has shown little interest in contributing adequate amounts to achieve that and more interested in simply reducing what the state pays into the retirement system to support public employees.
2013 Session Activity (Updated 3/11/13)
Are they still working on changing to a defined contribution (401k style) plan? The House Pensions and Benefits Committee is planning to continue discussions about plan designs and the potential to change the plan passed last year to a defined contribution plan. It is highly unlikely any such change, if recommended by the committee, would proceed this year. But we can't rule that out. They continue to work toward implementation of the Cash Balance Plan passed last year. This includes a clean-up bill passed by the House and currently being worked in the Senate. This bill makes only technical changes to the plan passed last year which is slated to go into effect in 2015.
Are there any other substantive changes being proposed to the plan passed last year? There are also two bills (SB205 and HB2301) to modify the interest rate that will be paid in the new Cash Balance Plan from 5.25% to 5.0%. Of course making that change will save the state money, but do so at the expense of the retirement benefits of the employee. I am happy to report that as of this writing (3/11/13) neither bill has had any action taken, although action could still be taken this year since both bills are exempt from deadlines.
The proposed changes to KP&F maximum retirement from 80% to 90% (HB2352) The bill was passed by the House and is currently in the Senate Ways and Means Committee. No hearing has been set yet. This bill increases all KP&F active member contributions from 7% to 7.15% and raises the cap to 90% from 80%. To be clear, while all officers covered under the plan will pay a slightly higher contribution rate throughout their career for all pay received after the bill passes. They will only reap any additional benefits if they choose to work past 32 years of service. KPERS reported there are about 40 current members with more than 32 years of service and slightly more than 8,000 working KP&F members.
Our Proposal for Public Safety KPERS Retirement Provisions (Posted March 3, 2012)
During the committee hearings on KPERS, we have been advocating for a provision for all public safety employees similar to the provisions for state corrections officers. On Thursday, March 1, I was asked by the chair of the House Pensions and Benefits Committee to submit information on how we could define "public safety officer" in such a provision and address other issues within parameters he provided to me. The document linked below is what I submitted. Note that this still needs some vetting with other public safety organizations which I am working on.