Bill to cap KPERs benefits for higher-earning members scheduled for hearing Thursday

A bill that would cap retirement contributions and benefits for higher-earning Kansas Public Employees Retirement System members is scheduled for a hearing Thursday in the Senate Financial Institutions Committee.

KPERS executive director Alan Conroy says the bill may require some technical clean-up work if the committee wants to advance it. KASB is continuing to study the implications of the bill. As introduced, SB 395 would set a maximum final average salary amount for purposes of computing retirement benefits for certain members of KPERS, Kansas Policy and Fire and the retirement system for judges. The maximum would be based on the Kansas Governor’s salary of $99,636.

The bill would apply to members of the KPERS system hired after the bill is passed. The salary cap would also apply to existing members who enter into a contract with their employer after April 1, 2018.

KPERS-covered employees hired since January 1, 2015 receive “Tier III’ benefits, which are not tied to a final average salary. Tier III is different from the traditional KPERS plan which bases benefits on a multiplier based on years of service and three-year final average salary.

Tier III members make a six percent contribution, with an employer contribution on a sliding scale based on length of service. The account is guaranteed to grow at least four percent per year and is converted to an annuity upon retirement. For school district employees, the employer contribution is made by the state, not the local district.

Conroy says to make the concept of a cap work on the new system, contributions by both the employee and employer would likely stop when the employee’s annual salary reaches the cap of $99,636 annually, plus an annual percentage increase equal to the annual percentage increase in the contribution and benefit base for social security. Contributions would begin again the following year and continue until the cap is reached.

Employees could continue to make contributions for retirement savings and school districts could contribute through 403(b) and KPERS 457 accounts, but these contributions would not be part of the KPERS benefits and no contribution would be made by the state.

According to a KASB research department review of Kansas State Department of Education data, there are 198 Superintendents whose contracted 2017-18 salary is over $100,000. This represents 69.5 percent of the 285 Superintendents reported. There are 129.1 (FTE) Principals whose contracted 2017-18 salary is over $100,00. This represents 10.8 percent of the 1,194.2 (FTE) Principals reported.

According to KASB surveys, there have been 185 Central Office Staff reported for 2017-18 with salaries over $100,000. This represents 16.0 percent of the 1,157 Central Office Staff reported. These include: 4 Board Clerks, 16 Board Treasurers, 28 Administrators, 4 Assistant Directors, 54 Assistant Superintendents, 4 Coordinators, 42 Education Directors, 59 Support Directors and 11 Supervisors.

To provide oral or written testimony on the bill, contact Suzanne Nelson, Committee Assistant at 785-296-7361.

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