Get a handle on soaring pension costs in Kansas
The Kansas City Star
Paying for public pensions has become a bigger burden on taxpayers in recent years in Johnson and Wyandotte counties. And looking ahead, those expenses are headed even higher.
Unfortunately, that development likely will cut into the money available to provide better public services and amenities to local residents.
Public employees in both counties deserve the retirement benefits they have earned.
But the too-long-ignored funding problems of the Kansas Public Employees Retirement System and the Kansas Police and Firemen’s Retirement System — which cover most local employees in both counties — are severe.
Consider: The funded ratio for the KPERS system for local workers in the state was only 61.2 percent at the end of 2011, according to the most recent data available — down from 63.2 percent in 2010. The system was far short of having enough assets to meet its future liabilities. Both figures are way below the 80 percent ratio that’s considered the minimum level for a reasonably financed pension system.
The funded ratio for the public safety retirement system was 69.8 percent at the end of 2011, down from 74.2 percent in 2010.
The financial problems exist for many reasons: The stock market collapse several years ago, low interest rates and — especially — the state’s failure to collect enough tax money from governmental units. In a sign of progress, state lawmakers have decided to collect more money to fortify the pension, although they also made changes that could reduce potential future retirement benefits, especially for new employees.
The Star recently gathered information from Johnson County and the Unified Government of Wyandotte County, plus Overland Park and Olathe, regarding pension funding for local employees.
Those total costs have soared over the last five fiscal years, from 2008 to 2012.
In Overland Park, expenses increased 50 percent, from $5.1 million a year to $7.6 million.
The Unified Government’s costs were up 38 percent, from $12.2 million annually to $16.8 million.
Johnson County’s expenses went up 33 percent, from $12.6 million a year to $16.8 million.
Olathe’s costs increased 24 percent, from $3.55 million annually to $4.41 million.
Pension contributions are becoming far larger pieces of cities’ and counties’ budgets, even while total government spending is not headed much higher during lean times.
In fact, the budgets of Overland Park and Olathe decreased by 6 percent from 2008 to 2012. Johnson County’s budget was up just 7 percent over that time, while the Unified Government’s rose 1 percent.
In interviews, several city and county officials acknowledged that the costs of pension payments were crimping their ability to provide other services to residents.
Hannas Zacharias, Johnson County manager, said payments to the local KPERS plan and the public safety agency pension system are “really out of our control.… We have to pay the freight that the state tells us to pay.”
Added Unified Government County Administrator Dennis Hays, “It’s all about KPERS. We have very little influence.”
Local officials say they think the higher pension payments from the local governments should strengthen the retirement systems.
Still, if taxpayer contributions for pensions continue to rise, that could cut into funding for public services in Johnson and Wyandotte counties unless general budget revenues begin to rise more dramatically.
So the pressure will continue on local officials to hold down employees’ raises and the number of workers. Essentially, rising pension expenses could promote leaner governments for years to come.