Kansas PERS | Pension360

Kansas Retirees Rally at Capitol Against Gov.’s Plan to Cut State Pension Contributions

Members of the Kansas Public Employee’s Retirement System (KPERS) gathered at the state capitol on Wednesday to rally against Gov. Sam Brownback’s plan to cut state contributions to the pension system.

Kansas is facing a $340 million budget shortfall in fiscal year 2014-15.

To address the shortfall, Brownback plans to slash state pension contributions by $58 million this year.

Additionally, the state would issue $1.5 billion in bonds, with money going to the pension system’s investment fund.

Pension officials have warned that the plan could have long-term consequences.

The Topeka Capital-Journal has more from the rally:

Dennis Phillips, chairman of the Kansas Coalition of Public Retirees, said lawmakers had a responsibility to deliver financial certainty to 280,000 Kansas teachers, judges, firefighters and others participating in the retirement program. Sidestepping state payments to KPERS doesn’t make sense, he said.

“We need your support,” Phillips told retirees. “The governor wants to remove $60 million from KPERS this year. It is real money.”

“How many more of these payments will be deferred?” said Rep. Ed Trimmer, D-Winfield.

House Minority Leader Tom Burroughs, D-Kansas City, said actions undermining integrity of the system betrayed people who dedicated themselves to government service.

“Your pension plan, KPERS, was our commitment to you for standing up and taking these jobs,” he said.

Kansas PERS was 56.4 percent funded as of the end of 2013.

Photo credit: “Seal of Kansas” by [[User:Sagredo|Sagredo]][[User talk:Sagredo|⊙☿♀♁♂♃♄]] – http://www.governor.ks.gov/Facts/kansasseal.htm. Licensed under Public Domain via Wikimedia Commons – http://commons.wikimedia.org/wiki/File:Seal_of_Kansas.svg#mediaviewer/File:Seal_of_Kansas.svg

Kansas Pension Officials: State’s Plan to Delay Pension Payments Could Cost Billions in Long-Run

Kansas Gov. Sam Brownback in December diverted a $58 million payment from the pension system and used the money to plug holes in the state’s general budget.

The governor is seeking to delay more state payments to the pension fund, and is also looking to offset some of the costs by issuing pension obligation bonds.

But pension officials told lawmakers Tuesday that such a decision could end up costing the state between $3.7 billion and $9 billion in the long run.

From the Kansas City Star:

Changes to the state’s pension system proposed by Gov. Sam Brownback could cost Kansas $3.7 billion in the long run, lawmakers learned Tuesday.

The governor seeks to delay payments intended to shore up the state’s pension system to save money in the short term.

The Kansas Public Employees Retirement System faced an unfunded liability of $9.8 billion at the beginning of 2014. The state was on pace to pay it down to zero by 2033 because of reforms enacted during Brownback’s first term.

Instead, Brownback proposed Friday to pay down the unfunded liability more slowly, by 2043, to save money during the ongoing state budget crisis.

“It’s like the mortgage on your house. If you pay less, you’re going to pay longer and you’re going to pay more,” Alan Conroy, the executive director of KPERS, told the House Appropriations Committee.

The delay would increase costs overall by $9.1 billion. But Brownback proposes issuing $1.5 billion in bonds, and the profits from the interest on those bonds would partially offset that cost.

Rep. Kathy Wolfe Moore, a Kansas City, Kan., Democrat, said the state was undoing the progress it had made in reforming the pensions system.

“It costs us $9 billion with a B (to enact the governor’s plan). … So we’re doubling what we have now? We’re doubling our unfunded actuarial liability?” Wolfe Moore said. “We’re going in exactly the wrong direction as far as I can see.”

Kansas PERS was 56.4 percent as of the end of 2013.

Kansas Gov. Proposes Issuing $1.5 Billion in Bonds for Pension Funding

Kansas Gov. Sam Brownback, looking for ways to improve state pension funding after he cut $60 million from Kansas’ annual contribution, is now proposing issuing $1.5 billion of bonds to help cover the pension shortfall.

From Chron.com:

Gov. Sam Brownback is proposing that Kansas issue $1.5 billion in bonds and lengthen its schedule for closing a long-term funding gap to lower annual costs tied to pensions for teachers and government workers.

The Republican governor outlined the measures Friday. Brownback described escalating annual public pension costs as a long-term concern.

The state has committed to additional spending to bolster the long-term financial health of the Kansas Public Employees Retirement System. Benefits are only 60 percent funded through 2033, but the commitments would help close the $9.8 billion shortfall by then.

Brownback proposed extending the payoff period to 2043.

The bond funding would go to the Kansas Public Employees Retirement System (PERS).

The success of the plan depends on pension investment returns exceeding annual bond payments.

The state’s Budget Director, Shawn Sullivan, says he’s confident that will happen.

Kansas Pension Plans To Commit $350 Million To At Least Six Real Estate Funds

The Kansas Public Employees Retirement System (PERS) is planning to ramp up its real estate commitments in 2015. The fund will invest up to $350 million in at least a half-dozen real estate funds. More from IPE Real Estate:

The pension fund will split the capital, with $200m for core strategies and as much as $150m for non-core investments.

An increased allocation and separate-account asset sales have given the pension fund substantial core capital to deploy.

Kansas PERS will invest the core capital with its existing core managers: JP Morgan Strategic Property Fund, Morgan Stanley Prime Property Fund, LaSalle Property Fund, Heitman America Real Estate Trust, UBS Trumbull Property Fund and Jamestown Premiere Property Fund.

It could also place capital in a new, core, open-ended fund as it evaluates the merits of adding a seventh core fund.

Non-core capital would be invested in funds targeting assets in the US, as well as Europe or Asia.

Kansas PERS, which typically makes $40m commitments, would consider approving three or four commitments next year.

The pension fund said it believed non-core strategies offered the potential for attractive risk-adjusted returns.

On an unleveraged basis, value-add investments are being underwritten to premiums of 200 basis points or more above core returns, it said.

Kansas PERS said it would continue to target skilled managers focused to their core competencies, rather than those accepting additional risk and new strategies to reach for outsized returns.

The System’s real estate portfolio returned 15 percent last fiscal year.