The Kansas Senate’s budget committee voted Wednesday to earmark $115 million to make up for a missed payment three years ago to the Kansas Public Employees Retirement System.
The 2016 Legislature was struggling to find enough cash to balance the state budget when the decision was made to skip a $97 million quarterly payment to KPERS. The bill signed by then-Gov. Sam Brownback obligated the state to pay the principal amount and 8 percent interest. Republican lawmakers have pressed to settle the pension debt, which generates interest of $630,000 each month.
Senate Majority Leader Jim Denning, R-Overland Park, said a projected $900 million surplus in this fiscal year’s state government budget provided opportunity to address the delayed contribution. A significant portion of a $300 million surge in state revenue resulted from ending an income tax “loophole” for owners of limited liability companies, he said.
“The money is there. We should apply it to KPERS,” Denning said. “I would recommend we do our work, pass this bill out, get it over to the House and to the governor’s desk so we can get KPERS back on track.”
Denning said Senate Bill 9 would likely be considered Monday by the full Senate. The measure has 18 Senate cosponsors.
He said the $115 million transfer ought to be credited to the public school employee unit, which has the largest unfunded liability in KPERS.
Sen. Tom Hawk, D-Manhattan, said the Senate Ways and Means Committee should have tabled the bill until fiscal analysts produced a new state tax revenue report in April. It makes sense to wait before writing a large check to the pension system serving about 300,000 retired and current government employees, he said.
“I personally would be much more comfortable waiting until we’ve got the consensus revenue estimate and have a better long-term picture of what our budget would be,” Hawk said.
Sen. Richard Billinger, a Goodland Republican, said the skipped payment to KPERS was scheduled to be settled in 2018. It would be irresponsible to bolster ending balances in 2019 by avoiding the debt again, he said.
“In 2016, we made a promise: ‘We’re not going to make this payment. We promise we’re going to pay it back with interest.’ It’s a promise we made. We got to last year and things were a little bit tight and rightfully so we were trying to make sure we had sufficient funds,” Billinger said.
This article was originally published on The Topeka Capital-Journal website, here.
Paid for by Senate Democratic Committee, Will Lawrence, Treasurer