TOPEKA — Virgil Funk is nervous about Gov. Laura Kelly's proposal to refinance the pension obligations of retired state workers and public teachers.
Funk, 82, retired in 1998 after working for 27 years as an educator in Topeka schools. He joined about 100 others from the Kansas Coalition of Public Employees in a rally Monday at the Statehouse.
Kelly for a second year in a row has called on lawmakers to extend debt payments to the Kansas Public Employees Retirement System by 10 years as a means of lowering annual payments now. The process, which is similar to taking out a second mortgage on a house, is known as reamortizing.
"What we're really doing by reamortizing is continuing the process of not paying KPERS properly," Funk said. "And I understand the argument about it — it's too big a bill to pay at one time. But if they had taken care of that in a professional, responsible way, we wouldn't be in this situation."
As the retirees gathered in the first-floor rotunda, lawmakers in a House committee meeting heard testimony on Kelly's proposal.
To pay off decades worth of debt to KPERS, lawmakers in 1993 installed a 40-year payment plan. Annual payments have escalated with interest as the Legislature routinely skipped or delayed payments while struggling with depleted revenues under former Gov. Sam Brownback.
The current annual payment of $702 million is scheduled to escalate to $1.091 billion by 2033. Under Kelly's plan, which includes an immediate transfer of $268 million to offset missed payments, the annual cost would drop below $600 million next year.
Her plan also adds $4.4 billion to the overall payment plan.
Jarold Boettcher, a retired investor who served as a KPERS trustee from 1991 to 2008, testified before the House Financial Institutions and Pensions Committee about his concerns with the governor's plan.
Refinancing isn't about saving money, he said, but about spending it somewhere else.
"Does anyone believe that school funding, highways, health care obligations, higher education, etc., are going to need less funding in the future?" Boettcher said. "I don't believe that, and given lifespans, I won't be around to tell you 'I told you so' when there is evidence of a decision to again defer KPERS obligations created by even more of a funding crisis, 10, 15, 20 or 25 years out."
Larry Campbell, the governor's budget director, emphasized to lawmakers that refinancing doesn't affect benefit payments for retirees. He suggested the historical record of the Legislature suggests the ability to maintain payments under the current schedule was as likely as "purple monkeys flying into this room."
"We're here today because we've not been making our payments," Campbell said. "Simple as that. We are in this condition because the state has a track record of not paying payments on time, period."