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Senate committee recommended $500 million state transfer to KPERS trust fund to reduce unfunded liability
Summary
Researchers recommended a $500 million one-time transfer from the State General Fund to the KPERS trust fund to reduce an estimated $10 billion unfunded actuarial liability; committee and KPERS staff discussed who would shoulder future contribution obligations and the timeline for a $75 million modernization project.
The committee heard a recommendation to transfer $500,000,000 from the State General Fund into the Kansas Public Employees Retirement System (KPERS) trust fund in fiscal year 2026 to reduce KPERS' unfunded actuarial liability.
"Putting $500,000,000 in now will reduce the required contributions in the future," said Jared Waldner, planning and research officer at KPERS. "The idea of having a large lump sum payment earlier is like trying to pay off a mortgage earlier."
KLRD researcher Mike Ditch presented the interim committee report that listed the transfer as the first recommendation. The report also recommended supporting HB 2086, which would lower the dividend-eligibility threshold and modestly increase the discretionary dividend credit for KPERS 3 members.
KPERS staff described the scale of the system: about 350,000 total members across active, inactive and retired groups; approximately 156,000 active members; and annual benefit payments of roughly $2.3 billion in fiscal year 2025. KPERS' revenue mix, staff said, is roughly 15% member contributions, 35% employer contributions and 50% investment earnings.
Waldner explained how contributions are currently allocated: employee contribution rates are fixed in statute (6% of pay for KPERS members), while the employer portion is variable. "If funding falls behind and there needs to be an increase in those contributions that will fall on the employer side because the employee contributions are fixed by statute," he said.
Committee members questioned whether a large state general-fund transfer would shift the burden to taxpayers rather than employers or employees. Waldner said the lump-sum payment would lower future employer contribution requirements but stressed that the unfunded liability must be paid eventually, either now or over time.
KPERS officials also described a modernization effort for their pension-administration system. Chief Financial Officer Chris Holm said the five-year project is estimated at about $75,000,000, financed from the trust fund, and is scheduled to complete implementation in November 2029. Staff emphasized that the agency budget presented to the committee covers administrative and modernization costs but not benefit payments, which are funded from the trust fund and employer/other sources.
The committee did not take a formal vote on the $500 million recommendation during the session; researchers said the proposal would be considered by the Senate Ways and Means and House Appropriations committees as part of the appropriations process.
