State of KPERS draws interest
By JUDY SHERARD
School district and other employees who qualify for Kansas Public Employees Retirement System had a chance Tuesday afternoon to learn about changes to the system.
Sue Boldra, a candidate for representative of the 111th House District, hosted a question and answer forum with Ron Estes, state treasurer and member of the KPERS board.
Boldra said she met Estes while campaigning for a U.S. House seat during the 2010 election cycle.
"Wherever we went, if someone asked about KPERS, he defended it," Boldra said of Estes.
Estes said the retirement system has $13.5 billion in assets that include domestic and international stocks, fixed income bonds, real estate -- a few properties directly owned and others owned in real estate pools -- as well as some timberland as a hedge against inflation.
However, to meet obligations, it's estimated the fund should have $22 billion.
A number of factors have contributed to that gap including bringing in additional qualified beneficiaries, bad investments and changes in the system.
Besides state employees, county, many cities, school districts and some government entities' employees might qualify for KPERS.
"By the late 1990s, it became apparent we weren't going to have enough money to pay all the retirees based on the way we were going," Estes said.
Since then the Legislature has voted to implement changes.
It still hasn't been enough to catch up.
In 2011, the Legislature asked for a commission study to bring a recommendation to both chambers.
Under that plan, all current employees will have the same contribution rate after 2014, which means it will increase for some, and some benefit calculations also might change.
All new employees would be in a new plan called cash balance plan they contribute to rather than a defined benefit.
That allows the state to keep the defined benefit and still offer a retirement option to new employees.
"We have some really nice benefits in KPERS," Estes said.
However, it will be another three years before the system has "reached the total bottom in terms of unfunded liability."
Once that is reached "the liability is going to start dropping," Estes said.
When the floor opened for questions, Tim Schumacher, financial adviser with Strategic Financial Partners, peppered Estes with questions.
He told the group gathered he was asking questions because they don't know what to ask.
"The system is in terrible shape," Schumacher said.
When asked if there could be more changes to KPERS, Estes said, "I don't think we need to do anything. Let's see how this plays out."