SESSION OF
2002
SUPPLEMENTAL NOTE
ON HOUSE BILL NO. 2622
As Recommended by House Committee on
HB 2622 would
eliminate one of the two statutory methods that might be used to
calculate the contribution rate for cities maintaining local police
and fire pension plans, such as the City of Wichita. It would leave
in statute the actuarial method historically used to calculate the
contribution rate: the rate would be the sum of the normal cost
rate plus the amortization of any unfunded actuarial liability over
a 20-year period.
HB 2622 would eliminate the other current requirement that until the plan has no unfunded actuarial liability, the local unit of government must contribute an amount not less than the total amount of pension payments paid in the prior plan year.
Background
HB 2622 was
recommended by the Joint Committee on Pensions, Investments and
Benefits concluding its 2001 Interim study. The bill would impact
only local pension plans, not the Kansas Police and Fireman's
Retirement System (KP&F). There would be no actuarial or
administrative cost for KPERS. The KPERS Board of Trustees must
approve any actuary used by a local plan, or the plan may use the
KPERS actuary. Using a different actuary is required to be approved
by the KPERS Board. As of July 1, 2001, the KPERS actuary has been
used. In addition, there is a requirement for review of the
actuarial valuation for local plans at least once every three years
in order to determine if the valuation meets actuarial standards,
with reporting of results to the KPERS Board of Trustees. The KPERS
actuary reviewed the proposal for HB 2622 and told the Joint
Committee on Pensions, Investments and Benefits that the change was
reasonable.
A representative from the City of Wichita supported HB 2622. The City of Wichita operates its own Police and Fire Retirement System. The City recognizes the necessity for adequate funding measures to ensure the availability of pension benefits to the active police and fire employees as well as to retirees and beneficiaries. It is the City’s belief that revision of the statute will ensure its funding requirements to meet the needs of local police and fire pension plans while allowing a reduction in funding requirements while the plan is fully funded. In the case of Wichita, the actuarial calculation currently produces an amount which is less than the amount required by a second provision in law, namely that until there is no unfunded liability, payments must be at least as much as the previous years total benefit payments to retired members. Because the Wichita plan is fully funded, the actuarial method has been used and will continue to be used in calculating the contribution rate.
*Supplemental notes are prepared by the Legislative Research Department and do not express legislative intent. The supplemental note and fiscal note for this bill may be accessed on the Internet at http://www.accesskansas.org/legislature