www.mozilla.com Weather Central
Voices
Headlines

2016 presidential campaign already boring -12/22/2014, 9:08 AM

A rainbow coalition of protests -12/22/2014, 9:07 AM

Budget needs dynamic leadership, not scoring -12/21/2014, 1:06 PM

Sure, you can say that -- but please don't -12/21/2014, 1:06 PM

Holiday travel -12/19/2014, 10:16 AM

ALEC's starring role in the 'Wrecking Crew' -12/19/2014, 10:17 AM

Should profiling be banned? -12/19/2014, 10:06 AM

No right to misbehave -12/18/2014, 10:09 AM

Pompeo deserves thanks -12/18/2014, 10:00 AM

Executive orders -12/18/2014, 10:00 AM

Attack on Pearl Harbor -12/18/2014, 10:00 AM

Christ's role -12/18/2014, 9:59 AM

Governing vs. giving -12/18/2014, 9:58 AM

Adapting to change -12/17/2014, 10:30 AM

Brownback's 'vision' -12/17/2014, 10:30 AM

Young at heart -12/17/2014, 10:29 AM

Newman provides western Kansas education -12/17/2014, 10:29 AM

Big banks win again -12/16/2014, 9:37 AM

Securing the future of aerospace in Kansas -12/16/2014, 9:36 AM

The future with Brownback -12/16/2014, 9:36 AM

White Christmas, red Christmas -12/15/2014, 9:20 AM

A reason to celebrate -12/15/2014, 9:20 AM

Building a competitive opposition party -12/14/2014, 4:33 PM

Without religious freedom, there won't be peace -12/14/2014, 4:33 PM

Flying Hays later -12/14/2014, 4:33 PM

Allowing torture -12/12/2014, 10:11 AM

Racing to Lake Wobegone -12/12/2014, 10:10 AM

What's rule of law? -12/12/2014, 10:10 AM

Media bias -12/11/2014, 10:13 AM

It's not about race -12/11/2014, 10:12 AM

A new civil war -12/11/2014, 10:12 AM

Climate catastrophe -12/11/2014, 10:12 AM

The case of Scott Panetti -12/10/2014, 10:14 AM

Word origins -12/10/2014, 10:14 AM

Kansas will bleed -12/10/2014, 10:13 AM

Minions' mess -12/10/2014, 10:13 AM

Prescription farmers -12/10/2014, 10:12 AM

Vaccines make sense -12/9/2014, 11:02 AM

Net neutrality -12/9/2014, 8:45 AM

Tell me it isn't so? -12/9/2014, 2:53 PM

Willing to do without -12/9/2014, 8:45 AM

KDOT funding -12/9/2014, 8:45 AM

The man elected -12/8/2014, 10:00 AM

Understanding white privilege -12/8/2014, 10:00 AM

Making sure crime doesn't pay -12/8/2014, 10:00 AM

Do Kansans really care? -12/7/2014, 3:17 PM

Core freedoms under fire -12/7/2014, 3:17 PM

Nation needs new approach -12/6/2014, 3:17 PM

Tons of fun on tap -12/5/2014, 9:48 AM

A Christmas plea -12/5/2014, 9:48 AM

School privatization via convenient debt -12/5/2014, 9:48 AM

Race in America -12/4/2014, 10:20 AM

The gift of petroleum -12/4/2014, 10:20 AM

A Charlie Brown Christmas miracle -12/4/2014, 10:19 AM

Care and feeding of farm animals -12/3/2014, 10:19 AM

Let's talk about 'black on black' crime -12/3/2014, 10:19 AM

Sports complex -12/3/2014, 4:14 PM

-12/3/2014, 10:00 AM

Kudos to school for bilingual efforts -12/2/2014, 11:42 AM

Wages prompting county workers to seek better jobs -12/2/2014, 11:42 AM

County employees urge public's support -12/2/2014, 11:42 AM

'Horrible Bosses 2' disappoints;  new 'Star Wars' trailer thrills -12/2/2014, 10:19 AM

Power rests with House speaker -12/2/2014, 10:01 AM

Climate change -12/2/2014, 10:38 AM

Ferguson's pain -12/1/2014, 10:21 AM

Out of sight, or out of luck? -12/1/2014, 10:20 AM

Blacks, whites need to wake up to injustice -12/1/2014, 10:20 AM

Kansas turns South -11/30/2014, 5:33 PM

When should holy days become holidays? -11/30/2014, 5:33 PM

Future of health care -11/30/2014, 5:33 PM

Giving thanks -11/27/2014, 3:08 PM

Give a child hope and a home -11/26/2014, 9:12 AM

Holiday shopping -11/26/2014, 9:12 AM

Today's faults -11/26/2014, 7:45 AM

Meatless Mondays -- forget about it -11/26/2014, 7:45 AM

Cosby, serial rapist? That's a lot to forgive -11/26/2014, 7:45 AM

Letting it fly -11/26/2014, 7:45 AM

KanCare oversight -11/26/2014, 7:45 AM

Giving thanks for blessings as Kansans -11/25/2014, 10:11 AM

Local fixes to local problems? -11/25/2014, 10:11 AM

Energy security -11/25/2014, 10:11 AM

Elite contempt for ordinary Americans -11/24/2014, 9:12 AM

Pipeline politics -11/24/2014, 10:04 AM

They killed Peter Kassig -11/24/2014, 10:04 AM

Going from bad to good on election night -11/23/2014, 6:38 PM

Free Speech can be shield or a sword -11/23/2014, 6:38 PM

Dodge City merger -11/22/2014, 6:38 PM

House mis-speaker -11/21/2014, 9:50 AM

Obama vs. Us -11/21/2014, 9:50 AM

Really smart conservatives love public debt -11/21/2014, 9:50 AM

Official welcome -11/20/2014, 9:52 AM

Control freaks in the U.S. -11/20/2014, 1:24 PM

How did we get here? -11/20/2014, 9:52 AM

An open letter to the GOP -11/19/2014, 10:03 AM

Successful farming -11/19/2014, 10:03 AM

Getting personal -11/18/2014, 9:15 AM

Teachers, not facilities -11/18/2014, 9:15 AM

Schoolteachers and the Legislature -11/18/2014, 9:06 AM

Water vision -11/18/2014, 9:06 AM

I see wonderful things -11/17/2014, 9:26 AM

myTown Calendar

SPOTLIGHT
[var top_story_head]

KPERS: A bad problem only getting worse

Published on -9/27/2012, 8:23 AM

Printer-friendly version
E-Mail This Story

As Randy Quaid's character in the 1996 movie "Independence Day" flew his plane into the alien spacecraft to destroy it, he shouted, "I'm baaaaaack!"

That quote aptly describes the unfunded liability of the Kansas Public Employees Retirement System, because it's not only back, it still has the potential to destroy local and state government budgets.

The valuation report released by KPERS in July shows the "official" unfunded liability went from $8.2 billion to $9.2 billion for 2011. Sadly, that's not the worst part. KPERS also acknowledges having another $900 million in losses that won't be recognized for several years, so the market-value basis of the unfunded liability is $10.1 billion.

But even that is not the "real" unfunded liability.

The KPERS unfunded liability is based on a completely unrealistic investment assumption that says plan assets will earn an 8 percent annual return. The actual rate of return in 2011 on the market value of plan assets was less than 1 percent -- incidentally, in January, a leading pension expert told the California pension system to assume no more than 4 percent during the next decade.

A little more than a year ago, KPERS said a half-point reduction in the investment return assumption would add $1.3 billion to the unfunded liability. On that basis, the "real" unfunded liability with an assumed return of 6 percent would be $15.3 billion; a 5 percent assumed rate of return would put the unfunded liability at $17.9 billion.

An analysis last year by the Pew Center on the States put the real unfunded liability at $21.9 billion.

Each year that actual investment returns are less than 8 percent only puts more pressure on the system. Employer contributions are based on the assumed return rate; a high assumed rate of return means employers can contribute less money, which could lead to an even worse unfunded situation over time.

An unrealistic investment return assumption also forces KPERS to make riskier investments in pursuit of higher returns, which makes plan assets subject to significant losses should the financial markets take a turn for the worse. One more episode similar to 2008's losses could even endanger retiree payments over time.

The legislative "fix" that was approved earlier this year helped but there is still much more work to be done to ensure the viability of KPERS. The KPERS Board of Trustees should significantly reduce the assumed investment return rate, which would provide a more realistic picture of the long-term financial challenge, prompt higher employer and employee contributions and allow investment officers to assume less risk.

Legislators must find the courage to ignore the intense political pressure from current employees to maintain benefits that are much higher than those received by most taxpayers. For starters, the formula for calculating future benefits should be reduced and lifetime retirement benefits should not be available until age 65.

These changes would still provide employees a good retirement benefit (which they deserve) and ensure that adequate funds are available to pay benefits. Succumbing to political pressure to do nothing only risks bankrupting the entire system.

Dave Trabert is president of Kansas Policy Institute and a frequent speaker to business, legislative and civic groups.

digg delicious facebook stumbleupon google Newsvine
More News and Photos

Associated Press Videos

AP Breaking News