Brief(1)
S.B. 358, as introduced, would require that the actuarial cost of any cost-of-living or postretirement benefit adjustment passed by the Legislature shall be included in the employer contribution rate in the fiscal year immediately following an enactment. This legislation would apply to the Kansas Public Retirement System (KPERS) and the different public plans administered, including the Kansas Judges Retirement System, the Kansas Police and Fire Retirement System, and the KPERS plan that covers most state, school, and local public employees. The bill would be effective on July 1, 1999, and any future COLAs enacted by the Legislature would be subjected to this funding requirement, unless otherwise provided by law.
Background
The bill was recommended by a Senate subcommittee on the KPERS budget in its report to the Senate Ways and Means Committee. After review of the fiscal impact of 1998 S.B. 11 which granted a COLA on July 1, 1998, the subcommittee expressed concern about the $88 million actuarial liability to be paid over 15 years and the fact that the initial employer contributions to pay for the 1998 COLA will not be collected until FY 2001 when the first employer remittances are required under current law. The 1998 Legislature prefunded $20 million of the COLA cost from the State General Fund in FY 1999.
KPERS indicates that the estimated cost of the delay in collecting the state's employer contributions of the state and school payments for the 1998 COLA is $17.8 million of unrealized income for the System. The estimate assumes an 8.0 percent annual investment rate of return which the KPERS Board of Trustees uses in other actuarial projections.
1. *Supplemental notes are prepared by the Legislative Research Department and do not express legislative intent. The supplemental note and fiscal note for this bill may be accessed on the Internet at http://www.ink.org/public/legislative/bill_search.html