In Kansas, Pension System Prepares To Be Target of Spending Cuts

scissors cutting one dollar bill in half

Kansas lawmakers will need to cut almost $300 million in spending to balance the 2014 budget, and even steeper cuts are being predicted for 2015.

History shows that states consistently look to one place for “easy” cuts: annual payments to pension systems.

Kansas pension officials are now being asked by lawmakers how decreased state payments would alter the system’s liabilities.

From the Lawrence Journal-World:

New concerns were raised Monday that those gains could come undone if Kansas lawmakers decide to cut back on the state’s contributions to the pension system to address a looming $715 million revenue shortfall.

Sen. Laura Kelly, D-Topeka, asked KPERS officials Monday to come up with projections about what that would do to the system’s unfunded liability.

“Those of us who have been around here long enough know that when tough times come, we have either reduced or eliminated our KPERS contributions,” Kelly said during a meeting of the Legislature’s Joint Committee on Pensions and Investments.

Last week, state budget officials released new revenue projections showing lawmakers will need to cut $279 million in spending to balance this year’s budget. And for the next fiscal year, which begins July 1, they will need to carry those cuts forward and make another $435.7 million in spending cuts.

Some lawmakers vocally opposed cutting payments to the pension system:

Republican leaders on the panel said there is little chance of cutting back on KPERS contributions to make up for the revenue shortfalls, although they left open the possibility that the funding may have to come from money other than the state general fund.

“We need to keep those commitments,” said Sen. Jeff King, R-Independence, who chairs the panel. “I am always open to suggestions — what we’ve seen from other states; new proposals to more efficiently make those commitments we’ve made — but keeping the commitment to paying down the unfunded liability is vital.”

The Kansas Public Employees Retirement System manages $14.4 billion in assets.


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