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Minutes for SB479 - Committee on Education
Short Title
Transferring teachers from the KPERS 3 cash balance plan to the KPERS 2 plan and defining teachers for purposes of KPERS.
Minutes Content for Tue, Mar 5, 2024
Chair Baumgardner opened the hearing.
David Wiese, Senior Assistant Revisor, The Office of the Revisor of Statutes, gave an overview of the bill. (Attachment 1)
Alan Conroy, Executive Director, Kansas Public Employees Retirement System (KPERS), briefed the committee on the current plan designs in KPERS. Each group has a different plan design. KPERS 1 and KPERS 2 are traditional defined benefit plans, where benefits are calculated using a benefit formula (years of service x final average salary x multiplier). Members contribute six percent of pay and employers contribute an amount calculated by the actuary to fund the normal cost and amortize the unfunded actuarial liability (11.42% in FY 2025 for State/School employers).
KPERS 3 is a cash balance plan, where members' lifetime benefits are based on contributions and interest earned throughout their careers. Members contribute six percent to notional accounts that earn guaranteed four percent interest each year and a possible dividend interest credit based on statutory formula three coupled to the 5-year net average rate of return. Members also have employer pay credit accounts that are credited three-six percent of pay, based on the number of years of service they have.
Employers contribute at the same actuarial contribution rate for KPERS 3 members as they contribute for KPERS1 and KPERS 2 members. Changes to KPERS' pension administration system as well as extensive work to collect additional data on "teachers" that KPERS does not currently have or collect. In addition, there will need to be education and communication efforts for the impacted members.
A comparison of Level 1 and 2 was explained as well as the actuarial costs.
This bill includes two key dates of implementation. All new teachers will be enrolled in KPERS 2 starting July 1, 2024.
All existing KPERS 3 teacher members will be converted to KPERS 2 on or before January 1, 2025. (Attachment 2)
Proponent Testimony:
Representative Robyn Essex, District 78, Kansas House of Representatives, spoke in support of this bill and said it is aimed to address the urgent challenges surrounding teacher recruitment and retention in Kansas. With hundreds of teaching positions remaining unfilled at the start of the school year, it is evident action is necessary to attract and retain qualified educators in our schools.
This bill represents a significant step forward in addressing the challenges of teacher recruitment and retention in Kansas. Providing teachers with the retirement they deserve will not only attract new educators but also retain experienced professionals who are essential to maintaining the quality of education in our state. (Attachment 3)
Leah Fliter, Assistant Executive Director of Advocacy, Kansas Association of School Boards, appeared in support of this bill based on the association's affirmed legislative policies. School Board members consistently express concerns about teacher recruitment and retention and have expressed a strong interest in improving teacher retirement benefits by moving teachers from KPERS Tier 3 to Tier 2. This would demonstrate respect for their profession. (Attachment 4)
Mary F. Sinclair, Kansas Parent Teacher Association (PTA) Advocacy Team, supports the passage of this bill and said teachers, principals and district administrators are central to the effectiveness of the public school system. The chronic vacancies in teaching positions alone call for a comprehensive approach to the recruitment and retention of K-12 teachers and future administrators. A meaningful KPERS program is a critical element of this comprehensive approach.
- The retention of experienced educators brings invaluable knowledge, skills, and continuity to the learning environment.
- Teachers are more likely to invest in education-related graduate degrees and certifications.
- Retention of teachers builds relationship and trust within neighborhood school communities.
- Financial security in retirement contributes to overall well-being and can reduce stress-related health problems among retired teachers.
- Experienced teachers become building principals and district leaders.
- Pension benefits provide a steady source of income for retirees, which can stimulate local economies as retirees spend money on goods and services.
- A strong pension program demonstrates a commitment to valuing teachers and investing in their future.
The Kansas PTA recognizes staff shortages are a national crisis and pervasive across most industries, accelerated by the global pandemic. (Attachment 5)
Proponent Written Only Testimony was submitted by:
Jim Edwards, Lobbyist representing Topeka Public Schools USD 501. (Attachment 6)
Dr. Brent Yeager, Superintendent, Olathe Public Schools (Attachment 7)
Dr. Tonya Merrigan, Superintendent, Blue Valley Schools USD 229 (Attachment 8)
Neutral Testimony:
Sheriff Jeff Easter, Sedgwick County, Legislative Committee Chair, Kansas Sheriffs Association, testified as neutral on behalf of the Kansas Sheriff's Association, Kansas Association of Chiefs of Police, and the Kansas Peace Officers Association.
The Tier 3 plan is one of the issues causing challenges in hiring and retention of employees in many government professions. Law enforcement is no exception. About two-thirds of the agencies with about one-third of the law enforcement officers in Kansas, are not KP&F members but are members of local KPERS. One hundred percent of the support personnel, dispatchers, and non-sworn jail staff are local KPERS if the agency is under the State retirement system, which most are.
If the bill moves forward, it is asked that it be amended to extend the change beyond education employees and include all county and municipal employees. It would be a key advantage to lead people to seek government employment and to stay in government employment, helping the associations provide the public safety support our communities need. (Attachment 9)
Sarah LaFrenz, President, Kansas Organization of State Employees (KOSE), believes improving the public retirement benefit structure is a high-priority issue for Kansas public workers at all levels of government. The concept of moving current KPERS Tier 3 members to KPERS Tier 2 is perhaps the most efficient and effective manner in which to significantly improve the retirement benefit for public sector employees. However this bill targets only a portion of the public workers currently trapped in the inadequate retirement plan known as KPERS 3. This tier does not measure up and has played a significant role in the difficulty of recruiting and retaining skilled employees not only in 24/7 facilities, but across state government. Tier 3 will not contribute to a stable retirement for workers as originally hoped.
We encourage you to take positive steps to provide a fair and reasonable retirement benefit for Kansas public employees once again. (Attachment 10)
Ernie Claudel, elected member of the KPERS Board of Trustees, explained that he does not speak for or represent the KPERS Board of Trustees. His testimony represents his views and/or those of the Kansas Coalition of Public Retirees (KCPR) and the Kansas Association of Retired School Personnel (KARSP). These organizations support a plan by which all of those in Tier 3 be moved to Tier 2. The facts are that all of those enrolled in Tier 3 are in a far worse retirement plan than those KPERS members in Tiers 1 and 2.
The argument continually heard for not correcting the several ills of the retirement system is the cost to make the corrections. These ills are not the fault of the employees. It's the employer that has not contributed the actuarially calculated amount for 25 years and has only been providing funding at or above the actuarially calculated amount since 2019. There is a KPERS program entitled KPERS 457 that allows members to contribute additionally to a 401K type of program to enhance their retirement. Most members do not have the income to support an additional investment. (Attachment 11)
Timothy R.Graham, Director of Government Relations & Legislative Affairs, Kansas National Education Association (KNEA), stated there are two issues that are directly related to this bill that seem to have widespread agreement within this body. One is that teacher shortages in Kansas are real and two, KPERS Tier 3 is an inadequate retirement option for public servants in Kansas. This bill would be a step in the right direction to address both issues
Kansas Nea believes no teacher in Kansas can do their job to the fullest without the assistance of education support professionals, school counselors, librarians, school nurses, and others that are essential to the public education system. KNEA requests the committee to make the appropriate amendment to include these essential partners.
Kansas NEA believes that reform of Tier 3, by itself, will not solve the teacher shortage crisis. KNEA also believes that the shortage without an adequate retirement program for educators will continue to grow. The question of whether the existence of a healthy retirement plan is a significant tool in teacher recruitment is hard to answer, but the teacher shortage can not be solved without an adequate retirement plan as part the solution.
KNEA makes a simple appeal to fairness. Educators are public servants. The teaching profession is unique, exceptional, and critical to the fabric of our society. Ensuring they have a dignified and comfortable retirement after years of public service is simply the right thing to do. (Attachment 12)
Jerry Henn, Assistant Executive Director, USA-Kansas and Kansas School Superintendents Association, stated that the movement from Tier 3 to Tier 2 is a very good move for our educators. This testimony is neutral due to this bill not covering all the areas that have shortages within the schools. Support and Administrative staff should benefit from this change.
If this bill would include all education employees, USA-Kansas and KSSA would be in full support. It simply needs to be extended to more employee groups. (Attachment 13)
Neutral Written Only Testimony submitted by:
Keeping the Kansas Promise Coalition (Attachment 14)
Spencer Duncan, Government Affairs Director, The League of Kansas Municipalities (Attachment 15)
Northeast Johnson County Cities of Prairie Village, Mission, Merriam, Roeland Park, and Westwood Hills (Attachment 16)
Christine Huntsman, Retired Teacher (Attachment 17)
The committee requested copies of the February, 2024 Legislative Post Audit "Reviewing the KPERS 3 Retirement Plan" and received them at the March 6, 2024 meeting. (Attachment 18)
The Chair closed the hearing.
The meeting was adjourned at 2:35 PM.
The next committee meeting will be held Wednesday, March 6, 2024 at 1:30 PM in Room 144-S.
