Kansas committee hears bill to create CRISP defined-contribution option for new state hires

The committee opened a hearing on Senate Bill 282 on the creation of the Kansas Retirement Investment and Savings Plan, or CRISP, which would make a default defined-contribution retirement plan available to new state and local employees beginning July 1, 2027.

Committee advisor Eileen gave a quick overview of the bill, saying it "would establish the Kansas Retirement Investment and Savings Plan Act," would add new statutory sections and would amend KSA 70-44-920. Eileen said the plan would take effect on July 1, 2027, and that the statute reserves the legislature's right to change the plan's provisions prospectively.

The bill would direct the KPERS board to establish a CRISP program and ancillary components, including a deferred compensation plan. According to testimony, the bill would permit employers to fund start-up and administrative costs via a loan from the pooled money investment program (PMIP) repaid with participant fees. The bill text described member and employer contribution rules, vesting, rollover treatment, investment policy requirements, death and disability benefits, and how a member could elect distribution options after termination.

Alan Conroy, a staff member who gave actuarial and technical background, told the committee the core policy choice is who bears investment risk. "It really comes down to the key differences: who bears that investment risk," he said, contrasting defined-benefit plans where employers bear the risk and defined-contribution plans where members do. Conroy said CRISP would not apply to the Kansas Police and Fire retirement system or the judges' retirement system.

Conroy and other witnesses described projected actuarial effects. Conroy cited a 30-year projection in his testimony that estimated KPERS' unfunded actuarial liability (UAL) under the current structure at about $45,000,000,000 and described CRISP scenarios ranging from about $32,000,000,000 down to $24,000,000,000 depending on participation. He said CRISP's employer contribution would include continued payments toward the existing UAL and that CRISP itself would not add future UAL. He described an illustrative employer contribution that could be "at least 4, maybe up to 5 percent" for the new plan's normal cost, while noting much of current employer contributions go to amortize the unfunded liability.

Proponents said CRISP would give new hires portability and optionality. Senator Tyson, a bill proponent, described CRISP as "a 401(k) with guardrails" and said it would allow employees to choose options such as a Roth feature, a loan option for hardships, and portability if employees leave service. Dennis Hull of Americans for Tax Reform said moving new hires to a defined-contribution structure would reduce taxpayers' exposure to future investment shortfalls and predicted the state's unfunded liability would stop growing under the reform.

Opponents raised recruitment, retirement-security and administrative concerns. Ernie Claddell, who identified himself as a CAPERS board member speaking for himself and KCPE/CARP, said the uncertainty of investment returns could harm retirees and argued it was cheaper to fund benefits up front. "If they run out of money ... it's going to fall on the state to help them," Claddell said, warning of a foreseeable cost shift to taxpayers. Wendy Stark of the League of Kansas Municipalities said about 25% of KPERS members are local government employees and argued a defined-contribution default could hinder cities' ability to recruit and retain staff. Nate Glassy of the National Tax-Deferred Savings Association also expressed concerns that an auto-enrolled supplemental option could reduce educators' access to independent advisors.

Neutral and technical witnesses recommended careful implementation. Zachary Christiansen of the Reason Foundation and other neutral witnesses said optional DC plans can suit many modern hires who do not remain long enough for DB plans to be optimal, but stressed the need for member education and administrative details.

The committee did not take a vote. The chair said the committee would "take a deeper dive" with the Joint Committee on Pensions, Benefits and Investments at a later meeting and closed the SB 282 hearing.

Details and context: the bill text as summarized in committee testimony would (per Eileen) amend KSA 70-44-920; set July 1, 2027, as the effective date for participation by employees first employed on or after that date; permit a one-time 30-day election window for certain employees to opt into or out of the new plan; provide employer contributions described in testimony as roughly 4% plus possible matching of voluntary contributions (up to a combined illustrative 5% employer-side figure in testimony); and specify vesting and distribution mechanics. Start-up costs would be expected to be funded by a loan from the PMIP and repaid with participant fees, according to the overview given to the committee.

The hearing record includes actuarial projections and disagreements about assumptions; committee members and conferees indicated they will request additional data and schedule follow-up sessions to examine the actuarial modeling, recruitment effects and implementation details.

No formal action was taken on SB 282 during this hearing. The committee noted it will continue review in a subsequent joint pension committee meeting.