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Minutes for SB321 - Committee on Ways and Means
Short Title
Amortizing the state and school KPERS unfunded actuarial liability over a 25-year period and authorizing the transfer of $268,412,000 from the state general fund to the KPERS fund during fiscal year 2020 and eliminating certain level-dollar employer contribution payments.
Minutes Content for Mon, Feb 10, 2020
Chairperson McGinn opened the hearing on SB 321. David Wiese, Office of the Revisor of Statutes provided an overview of the bill. (Attachment 1)
Larry Campbell, Director of the Budget, testified as a proponent of the bill. He believes all can agree to three things: that reamortization does no harm nor does it diminish or weaken members' benefits; that the likelihood that we will make full payments on time over the next fifteen years is almost zero; and that the likelihood of reamortization in the near future is likely. This would smooth out the KPERS payments for the next 25 years, make it more probable that we can make the payments and help out the State General Fund at the same time. Mr. Campbell responded to questions from Committee members. (Attachment 2)
Alan Conroy, Executive Director of the Kansas Public Employees Retirement System (KPERS), spoke in opposition to the bill. The KPERS Board of Trustees has a year-long process of looking at their amortization policy as well as actuarial and economic assumptions. The board completed their review in January and did not make any adjustments to the amortization rate at that time. This bill would extend the current amortization by ten years. It also would have long-term fiscal impacts including lower contributions in the early years and higher contributions in later years. This would also result in the funded ratio for the State/School group remains lower for a longer period of time. We would still be heading in the right direction but this flattens out the curve and puts us in cautionary position for a longer period of time. Mr. Conroy responded to questions from Committee members. (Attachment 3)
Jarold Boettcher, former KPERS Trustee, stood in opposition to the bill. He served as a Board Trustee for a total of 17 years and, when he started on the Board of Trustees, KPERS did not even have an investment officer. We are here because of decisions made by legislative predecessors who perpetually kicked this can down the road and decided to let somebody else deal with it. The responsible thing to do is to say it ends here and it ends now. (Attachment 4)
Ernie Claudel, Kansas Association of Retired School Personnel and Co-Chair, Kansas Coalition of Public Retirees, spoke against the bill. In all the time he has been involved with KPERS, there has never been a question about whether KPERS had the capability of properly investing the money, the question was always if there was enough money. This is the first time since 1994 the actuarial recommended payment was authorized. Mr. Claudel responded to questions from Committee members. (Attachment 5)
Written testimony in opposition to the bill was submitted by Michael Austin, Director of the Sandlian Center for Entrepreneurial Government. (Attachment 6)
There being no further conferees, Chairperson McGinn closed the hearing on SB 321.
