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Minutes for SB395 - Committee on Financial Institutions and Insurance
Short Title
Setting a maximum final average salary amount for purposes of computing retirement benefits for certain members of KPERS, KP&F and the retirement system for judges.
Minutes Content for Thu, Feb 15, 2018
Chairperson Longbine called the meeting to order, welcomed guests and conferees, and opened the hearing on SB395.
David Wiese, Assistant Revisor of Statutes, distributed a Memorandum and gave an overview of the bill. (Attachment 1)
Neutral Informational Testimony
Alan Conroy, Executive Director of the Kansas Public Employees Retirement System (KPERS) presented neutral informational testimony regarding the final average salary cap proposed in SB395 that would apply to the Judges' Retirement System, Kansas Police and Firemen's Retirement System (KP&F), and to KPERS members, including legislators. Alan told members that SB395, as introduced, affects final average salary calculations, which is a component of a traditional defined benefit plan, e.g., KPERS1, KPERS2, KP&F and Judges. Since KPERS3 is a cash balance plan and final average salary is not used to calculate KPERS3 benefits, there would be no cap on allowable salary for KPERS3 members, which includes all new KPERS members. (Attachment 2) Mr. Conroy responded to questions from Senators Suellentrop, Rogers, Pyle, Givens, and Chairperson Longbine.
Proponent Testimony
Senator Gene Suellentrop presented testimony supporting SB395. Senator Suellentrop posed that a final average salary cap of $99,636 would positively impact KPERS by lowering the unfunded liability of the program. He related that this change would disallow any spiking of salary levels above $99,636 during an employees employment service. Lastly, he reasoned that this change will better focus the KPERS retirement program on the lower and middle-income earners, while also allowing for generous employer matching contributions of those making up to $99,636. Senator Suellentrop responded to questions from Senators Wilborn and Olson. (Attachment 3)
Opponent Testimony
Shawn Jurgensen, Special Counsel to the Chief Justice of the Kansas Supreme Court testified in opposition to SB395. Mr. Jurgensen told members that based upon a January 2017 Survey done by the National Center for State Courts (NCSC), Kansas District Judge pay ranks 50th out of 51 in the nation before adjusting for cost of living. SB395 takes that low pay and lowers it even further for retirement calculation purposes. His thoughts were that this reduced retirement benefit, when coupled with already below-market pay would negatively impact the Judicial Branch's ability to attract qualified attorneys to the bench. (Attachment 4)
Mark Tallman, Associate Director for the Kansas Association of School Boards (KASB) presented testimony against SB395. KASB's main concern was that passage of this bill would weaken KASB's ability to attract and retain qualified employees. He said they could think of no educational reason to limit public service benefits to the Governor's salary level. (Attachment 5)
Jerry Henn, Superintendent for USD 289 Wellsville, Kansas, gave opponent testimony for SB395. He told members that one of the best benefits a school administrator could have is the retirement benefit KPERS provides. Gaining a higher salary also gains a higher retirement salary. He posed the question, why would a person take on the added responsibility of becoming an administrator in our education system, but their retirement benefit would be the same as a long term teacher? (Attachment 6)
Eric B. Smith, Deputy General Counsel for The League of Kansas Municipalities (LKM), presented opponent testimony. LKM is concerned that SB395 will have a negative impact on their recruiting efforts. Setting an artificial salary limit for the calculation of benefits will likely make recruiting and hiring for upper level management positions all the more difficult. (Attachment 7)
Nathan Eberline, appearing for the Kansas Association of Counties (KAC), testified against SB395. KAC has concerns over the constitutionality of the bill, as well as concern about how the proposed change will affect recruitment and retention of individuals for high-skill positions. KAC opposes the legislation and urged the committee to vote against the legislation. (Attachment 8)
Ed Klumpp, Legislative Liaison for the Associations of Kansas Sheriffs and Kansas Peace Officers, testified in opposition to SB395. Mr. Klumpp posed that it appears under the bill, an employee would continue to pay the same contribution rate even though their final average salary would be capped, which will negatively affect their final retirement. (Attachment 9)
Dennis Butler, Ottawa Chief of Police, and also a member of the Kansas Association of Chiefs of Police (KACP), serving on the Legislative and Training Committees. He also sits on the board of the International Association of Chiefs of Police. KACP strongly opposes this bill, citing the negative effect it will have on law enforcement in Kansas. As a profession, law enforcement is already experiencing a hiring and retention crisis due to a shrinking labor force and lack of a sufficient number of qualified applicants to fill their ranks across the State. (Attachment 10)
Chairperson Longbine pointed the committee's attention to Opponent Written-Only testimony:
Dennis Phillips appearing for the Kansas State Council of Fire Fighters (KSCFF) (Attachment 11)
Chief Judge Merlin Wheeler for the Kansas Judges' Association (Attachment 12)
Judge Steven R. Ebberts, Kansas Third Judicial District (Attachment 13)
Joseph Molina for the Kansas Bar Association (Attachment 14)
The Proponent and Opponents answered the committee's questions. There being no other discussion or questions, and no other proponent, opponent, or neutral testimony submitted, Chairperson Longbine closed the hearing on SB395.
