TOPEKA, Kan.—Improved returns on investments helped reduce the shortfall in Kansas' public employee pension system, but it is still facing a $7.6 billion deficit.
A prominent Kansas lawmaker who heard the report on Thursday said the system's budget problems will be one of the Legislature's top priorities during the next session.
Glenn Deck, executive director of the Kansas Public Employee Retirement System, told a joint House-Senate committee that Wall Street gains last year reduced the KPERS deficit by $602 million.
The difference between KPERS' assets and future obligations to retirees peaked at $8.2 billion the end of 2008.
The system, which has a portfolio of $11.2 billion, covers 250,000 teachers and government employees. The unfunded liability doesn't jeopardize current payments to retirees.
Senate President Steve Morris, R-Hugoton, and chairman of the House-Senate Committee on Pensions, Investments, and Benefits, said lawmakers must make the pension problems a priority next year.
"We are not in a crisis, but if we don't take action in the near future, we could be," he said.
Fixing the problem would require the state to increase its contribution to the system, he said. One plan, which Morris said he favors, would increase the state's contribution by about $58 million per year.
A recent report by Pew Center for the States rated KPERS as one of the most underfunded pension systems in the country.
Patricia Beckham, an Omaha, Neb., consultant to KPERS, said the K-12 school fund was the most severely underfunded portion of the fund, with the unfunded liability for Kansas teachers at $4.9 billion at the end of last year.
"It's the largest group and least well-funded," Beckham said. "That is the group that is at risk."
She said the primary objective was to produce a funded ratio in each KPERS employee group ranging from 60 percent to 80 percent.
KPERS' overall funding ratio stood at 64 percent at the end of 2009. Individual segments were: judges, 82 percent; state government, 78 percent; police and firefighters, 76 percent; local government, 64 percent; and public schools, 56 percent.
Beckham told legislators that calculations were based on an anticipated 8 percent annual return on investment.
