Brief (1)
The bill as amended includes two provisions that would grant post-retirement benefit increases:
(1) a one-time bonus payment would be authorized on October 1, 2001, for all eligible retirees, their beneficiaries and disabled members under the Kansas Public Employees Retirement System (KPERS), the Kansas Police and Firemen's (KP&F) Retirement System, and the Judges Retirement System;
(2) any former member of the Kansas School Retirement System (KSRS) who retired prior to January 1, 1971, and had 20 years of KSRS service credit would begin receiving a three-year phased-in retirement benefit adjustment beginning July 1, 2001.
One provision would increase the monthly benefit payment for anyone with 20 or more years of credited KSRS service and would raise the minimum monthly benefit to $500 in FY 2002, $625 in FY 2003, and $750 in FY 2004, provided that retirement commenced prior to January 1, 1971.
The other provision would authorize payment of a one-time bonus equal in value to one-half of a monthly benefit check and would designate as eligible recipients all retirees (or their beneficiaries) and disabled members who retired or became disabled prior to July 1, 2000.
Background
Both benefit enhancements were recommended by the House Budget Committee that reviewed KPERS issues. The House Appropriations Committee amended HB 2152 (one-time bonus) into HB 2363 (KSRS benefit). Based on the recommendation of the House Budget Committee, the Appropriations Committee narrowed the group of KSRS members who would be eligible to include only those with 20 or more years of service. HB 2363 as introduced did not include a 20-year service credit requirement.
The fiscal impact of the KSRS enhancement would be to increase the unfunded actuarial liability by $1.2 million, resulting in an increase of the employer contribution rate for State/School by 0.01 percent if the cost were not prefunded. This would result in additional state-paid employer contributions on a 32-year basis, beginning with a payment of $96,000 from the State General Fund in FY 2002.
The one-time bonus payment has an actuarial cost of $21.7 million that would increase the unfunded liability of the KPERS Fund if the cost were not prepaid. An additional cost of $1.0 million from the Group Insurance Reserve Fund is estimated to pay disabled members the one-time bonus. The FY 2002 fiscal impact would be to increase KPERS State/School retirement contributions by $960,000, State KP&F by $15,000, Judges by $18,000, Regents TIAA by $80,000, and local units by $324,000. The Group Insurance Reserve Fund has sufficient reserves to pay $1.0 million in FY 2002 which is the total unfunded liability for disabled KPERS members to receive the bonus payment.
The one-time bonus would provide an average benefit payment of $388 to retirees and their beneficiaries, based on the July 2000, average payment estimated at $776 for eligible recipients. However, the bill would require the calculation to be based on the July 1, 2001, payments.
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/fulltext.cgi