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KPERS Investments Return Less Than Hoped In 2015 And 2016

Stephen Koranda

The Kansas employee pension plan has not been getting a very good return on its investments recently.

KPERS officials said on Monday that stock market volatility led to a return of only 0.2 percent last year. So far this year, the KPERS investments have returned 3 or 4 percent. The retirement plan assumes a long-term return of 8 percent. If that goal isn’t met, the plan will need more money from the state and KPERS members to make up the difference.

But Republican state Sen. Jeff King says the report wasn’t all bad news.

“While the investment returns are below 8 percent, they are substantially higher than market averages. Our board’s doing a great job in this investment climate. It illustrates the dangers of having an 8 percent investment return assumption that you base your entire retirement system on,” King says.

King says KPERS may need to reconsider its assumption that investments will return 8 percent over the long term. KPERS officials will meet regarding that issue later this year.

Also at issue is a delayed $100 million payment to the public pension system. Some lawmakers are skeptical the state will live up to its promise to repay that money.

Kansas lawmakers created the option to delay the payment to help manage a tight budget. The bill they passed said it would have to be paid back into KPERS by the state with interest, but so far they haven’t started doing that. Democratic Rep. Ed Trimmer wants to pay it back, but he says without some new state revenue, that’s a pipe dream.

“It’s a promise I don’t believe. I don’t think we’ll ever make that payment. Economically, I don’t see how the state can,” Trimmer says. Republican Rep. Steven Johnson believes the delayed money will be paid back to KPERS, eventually.

“It’s just how much longer does it continue to accrue interest, essentially, at 8 percent while we don’t pay it? It just makes it bigger and harder to pay in the future,” Johnson says.

Under current law, the payment is supposed to be paid back by 2018.

Stephen Koranda is Statehouse reporter for Kansas Public Radio and the Kansas News Service, a collaboration of KCUR, KMUW, Kansas Public Radio and High Plains Radio covering health, education and politics.