- Associated Press - Tuesday, January 20, 2015

TOPEKA, Kan. (AP) - Republican Gov. Sam Brownback’s proposals for reducing Kansas’ annual payments on public pensions over the next few years would increase the state’s long-term retirement costs by a total of $3.7 billion over the next three decades, legislators learned Tuesday.

The new projections could complicate Brownback’s efforts to use pension savings to help close budget shortfalls totaling more than $710 million in the current budget and the one for the fiscal year beginning in July. Legislators from both parties expressed concern about increasing the state’s long-term costs.

Brownback wants to give the state an additional 10 years, until 2043, to close a long-term $9.8 billion shortfall in funding retirement benefits for teachers and government workers. The state committed in 2012 to higher contributions to the Kansas Public Employees Retirement System to eliminate the gap by 2033, but the governor identifies escalating pension contributions as a lasting budget issue.

The governor also proposed issuing $1.5 billion in bonds to give KPERS an immediate infusion of funds, anticipating that investment earnings will outstrip annual bond payments. But the gain would not prevent an increase in long-term costs through 2046, according to projections from a KPERS consultant.

“It’s just like a mortgage, you know, on a house,” KPERS Executive Director Alan Conroy said after the House Appropriations Committee meeting, where the projections were presented. “You’re having it paid off by 2033, or you have 10 years of payments to get you out to 2043.”

Brownback’s budget assumes Kansas can save $132 million in pension payments over two years, starting in July - funds that could be used elsewhere. In his budget proposals, Brownback said the new payoff schedule is a “more sustainable path.”

“We need that extra cash flow so we can fund education and Medicaid and public safety,” said Rep. Marvin Kleeb, an Overland Park Republican and Appropriations Committee member.

The projections show that Kansas would have lower annual costs through 2032 but pay significantly more each year on pensions starting in 2033.

“It looks like any dollar we save, we’ll have to pay back a dollar and a half down the road, and I don’t necessarily know that it gets easier,” said House pensions committee Chairman Steve Johnson, an Assaria Republican, who sat in on the presentation.

Rep. Kathy Wolfe Moore, a Kansas City Democrat and Appropriations Committee member, said under Brownback’s proposals, the state would be “reneging” on stabilizing KPERS.

“None of what we’re talking about helps the KPERS pension system,” she said.

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Online:

Governor’s budget proposals: http://budget.ks.gov/gbr.htm

Kansas Legislature: http://www.kslegislature.org

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Follow John Hanna on Twitter at https://twitter.com/apjdhanna .

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