KPERS reports steady funding progress; trustees, staff flag salary growth and deferred 2022 market losses

KPERS Executive Director Alan Conroy told the House Financial Institutions and Pensions Committee that the system's 2024 actuarial valuation shows “steady progress,” with all employer groups paying the actuarially required contribution and the state‑school funded ratio ticking up slightly to 75.3%.

Conroy said the system's overall funded ratio remained about 74% and that the unfunded actuarial liability for the system increased “about $300 million” from roughly $9.7 billion to about $10.0 billion in the most recent valuation. He described the 2022 market downturn — a sharp drop in December 2022 that the staff estimated erased several hundred million dollars in market value — as still being partially reflected through actuarial smoothing and noted there are roughly $900 million to $1.0 billion in deferred investment losses that will be recognized over the next two valuations.

Why it matters: the valuation sets employer contribution rates that feed into state budgeting and local school finance. Conroy emphasized that the continuing improvement in funding derives largely from employers paying the full actuarially required contribution and from recent strong investment returns.

Investment and membership detail: Chief Investment Officer Bruce Fink and staff briefed the committee that calendar‑year investment returns were positive (staff reported a market basis return of about 8.8% for calendar 2024 and a 10.3% fiscal‑year total return through June 30), and that the trust fund’s market value was reported at roughly $29.3 billion at fiscal‑year end, with staff noting the fund passed the $30 billion milestone around the time of the committee meeting. Conroy and Fink also described how actuarial smoothing spreads gains and losses over five years, which is why the big 2022 market loss still factors into employer rates.

Membership and benefit detail: KPERS staff told the committee there are about 155,000 active members and roughly 117,000 retirees and beneficiaries; the average KPERS retiree benefit was stated at roughly $17,000 per year. Conroy noted CAPERS 3 membership (the 2015 cash‑balance tier) accounts for a majority of active members and that Capers 1 active membership is declining as older cohorts retire.

Policy context and bills: staff reviewed a number of pension‑related bills that were active or had hearings during the legislative session, including bills that became law (Senate Bill 64) and other measures in committee (for example HB2086, HB2129, HB2130 and SB282). Committee members pressed staff on wage growth, funding horizons and the implications of pay increases for future liabilities.

Outlook: KPERS staff said that, if recent assumptions hold, the state‑school employer contribution rate is projected to stabilize in the low‑to‑mid 11% range; staff repeated that the system’s long‑term funding prospects depend on employers continuing to remit full actuarial rates and on achieving the assumed investment return over time.

Ending: Committee members thanked staff for the presentation and raised follow‑up questions about salary assumptions, the schedule for actuarial assumption reviews, and operational details that staff said they will provide in follow up.