Governor Laura Kelly today shared details of a plan to stabilize the state budget and ensure long-term viability of the state employee pension system while protecting KPERS benefits.
Kansas accumulated a record level of debt under the previous administration, and the Kansas Public Employees Retirement System (KPERS) fund was shortchanged due to the failed tax policies of the past several years. The state skipped and greatly reduced its KPERS payments, which in turn caused the state’s annual contributions to KPERS to soar — a fiscal burden that is not sustainable moving forward.
The Kelly Plan to restore fiscal responsibility includes paying over $500 million in debt off early and avoiding future principal and interest costs. It will also include re-amortizing the legacy unfunded liability of the KPERS fund. Re-amortization has been previously proposed by Republican state lawmakers to help ensure long-term viability of the state employee pension system.
“We must act decisively to meaningfully reduce state debt, rebuild the state savings account, and protect Kansas’ ability to pay its bills in the long term,” the Governor said.
Re-amortization — basically refinancing — will recalculate the annual payments required by the state, and greatly reduce the annual cost of KPERS while staying on track to fully fund KPERS. It’s a sound, fiscally prudent tool often used in other states.
All retiree benefits of KPERS will remain safe and secure, and re-amortization will put Kansas in an even better position to protect retiree benefits by extending the timetable for covering the unfunded liability of the state pension system.
“It’s important that we keep our promises to KPERS retirees,” the Governor said. “KPERS re-amortization is a fiscally prudent way to ensure long-term stability of KPERS and the state budget.
“I’ve always said that no political party holds the monopoly on good ideas. Key elements of my plan were initially offered by Republican leaders in the past, and after reviewing carefully, I concluded that their idea merits consideration. I look forward to working across the aisle in pursuit of our common goal to get Kansas’ fiscal house in order.”