KPERS challenges continue to loom over state budget

The Kansas Public Employees Retirement System continues to need major increases in state funding to meet its long-term obligations, and those needs will complicate the Legislature’s response to the Gannon school funding case before the Kansas Supreme Court. 

The court ruled in October that the Kansas Legislature did not demonstrate an increase of nearly $300 million in general state funding spread over two years would provide adequate funding to raise student achievement. Although the court did not tell the Legislature how much would be required, plaintiffs say it will require at least $600 million. 

At the same time, KPERS Executive Director Alan Conroy recently told the Legislature Budget Committee state contributions for state and school district employees have generally been running about $200 million below the level required to keep the system on track to pay off its unfunded liability in 2034. 

Because of on-going budget issues in recent years, the Legislature delayed $258 million in payments in fiscal years 2017, 2018 and 2019, which is to repaid over the next 20 years, and essentially cancelled $115 million in payments that are added to the unfunded liability of the system. 

To get back on track, KPERS payments for school district and state employees are supposed to increase over $220 million in 2020. That increase would be in addition to any increase in general school funding. 

Although there is not an official state revenue estimate for 2020, legislative research staff estimate that state general fund revenue will increase by about $114 million, and mandatory human service caseloads (mostly medical aid) by $70 million. 

As a result, budget projections suggest any significant increase in school funding would require an equally significant increase in taxes or cuts in areas of the budget outside of K-12 state aid and caseloads. Earlier this week, state agencies briefed the Special Committee on a Comprehensive Response to the School Finance Decision on the impact of an 18 percent reduction. 

Legislators are concerned about either the choice of another large tax increase (following last session) or deep cuts to state programs and services in an election year. But avoiding those options will make responding to Supreme Court on school funding extremely difficult. 

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