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Minutes for SB9 - Committee on Appropriations
Short Title
Authorizing the transfer of $115,000,000 from the state general fund to the Kansas public employees retirement fund during fiscal year 2019.
Minutes Content for Tue, Feb 12, 2019
Chairman Waymaster opened the hearing on the bill.
David Wiese, Office of the Revisor of statutes, presented a briefing on the bill (Attachment 1). The bill authorizes the transfer of $115 million from the State General Fund (SGF) to the Kansas Public Employees Retirement Fund during fiscal year 2019. He noted that in FY 2016 there was a special allotment authority which the governor used to delay $97.4 million in KPERS contributions, which would be repaid with an 8 percent interest rate to be paid by the end of FY 2018. The FY 2017 legislature moved the $115 million to the unfunded actuarial liability.
Senator Denning presented testimony as a proponent of the bill (Attachment 2).. If the bill passes, the $115 million would be paied and credited to the KPERS school group in FY 2019. Presently the school group is at a 60 percent funding ratio. By postponing payments, there is an additional monthly cost of $630,000, he noted. A review of the Actual and Projected State/School Employer Contributions, and Unfunded Liability and Funded Ratio for KPERS followed (See attachment 2). He noted that the bill passed unanimously in the Senate.
Senator Denning responded to questions from committee members. This payment would bring the funding ratio to approximately 70 percent, he stated.
Senator Billinger presented testimony as a proponent of the bill (Attachment 3). He stated that this is at a monthly cost of $630,000 to the unfunded liability/interest expense. Making this payment would result in the actuarial required payment being made for the first time in 25 years. In FY 2018, the ending balance was $317 million more than expected in the 4th quarter, and has already cost KPRES $19 million with the payment postponement 30 months ago, he added.
Representative Baumgardner presented testimony as a proponent of the bill (Attachment 4). She emphasized the importance of assuring a stable retirement, disability and survivor system for active and retired KPERS members, and preserving the state's fiduciary duty.
Alan Conroy, Executive Director, Kansas Public Employees Retirement System, presented testimony as a proponent of the bill (Attachment 5). He discussed the actuarial impact and stated that the $115 million payment would reduce the actuarial contribution at .23 percent from 2023 through 2035. The projected savings over 30 years would be approximately $186.1 million.
Alan Conroy responded to questions by committee members. He noted that the Legislative Research Department profiles focus on expenditures. The judges, police and fire KPERS funds have always been paid at the actuarial rate. The $115 million payment would realize a 70 percent actuarial rate and the actuarial rate for the total system would be at 69 percent. The KPERS state contribution began in 1961 and the KPERS school fund began in 1971, creating various KPERS groups.
JG Scott, Legislative Research Department, provided a review of the profile which reflects expenditures that are approved for FY 2019 and projected.
Michael Austin, Director, Center for Entrepreneurial Government, provided written testimony as a proponent of the bill (Attachment 6).
Chairman Waymaster closed the hearing on the bill.
