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An AP News Analysis

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The stakes are high. KPERS projects a $7.7 billion gap between its anticipated revenues and the benefits already promised to public employees through 2033. Republican Gov. Sam Brownback lists passage of a pension bill as among his top priorities for the final days of the Legislature's annual session.

"We are not in any sort of stable situation right now," Brownback said during his latest Statehouse news conference. "It has to be dealt with."

A big part of the gap was caused by the battering of KPERS investment returns by the Great Recession. Also, public employee groups and many legislators, even some Republicans, contend the state shorted its contributions to KPERS for years.

But conservative economists suggest traditional public retirement plans can't be sustained because promised benefits aren't tied to investment earnings, as they are in 401(k) plans. Instead, benefits are guaranteed up front, based on a worker's salary and years of service. They argue that as long as a state continues a traditional plan, each new employee adds to the long-term funding gap and for that reason, private companies have moved to 401(k) plans in droves.

Supporters of moving Kansas toward a 401(k)-style plan note Utah is starting a "hybrid" plan giving employees hired after June the option of a traditional plan with scaled-back benefits or a 401(k)-style plan. The overhaul of its pension system originated with legislation pushed by Utah state Sen. Dan Liljenquist, a Salt Lake City-area Republican who traveled to Kansas last week to advocate that the Sunflower State move in the same direction.

Liljenquist faced similar calls for a study in Utah, and he viewed them as an attempt to delay changes.

"I don't think this is something that needs to be studied, over and over and over again," he said. "Getting ahold of this pension liability is crucial. You do it by acting."

Liljenquist said flaws in a such a plan can be remedied later — given that employees who are hired now are not likely to be retiring for years.

Yet Kansas state Sen. Jeff King, an Independence Republican and his chamber's lead negotiator, said lawmakers in his state have reasons to be cautious. A 1993 law was supposed to close the KPERS unfunded liability that existed then and didn't; in fact, it had provisions making the problem worse.

"We rushed to judgment on KPERS reform, and we've paying for the mistakes the Legislature made then ever since," he said. "We can't afford to rush to judgment."

Kansas legislators reconvened last week after their annual spring break and expect to wrap up the year's business by mid-May. The negotiators working on the final version of pension legislation have had several rounds of talks.

The Senate's plan increases the state's annual contribution to KPERS by $23 million a year, starting July 1, 2013, and it would require most public employees to pay a higher percentage of their salaries into KPERS as well. It sets up the study commission, orders it to make recommendations by December and requires legislators to vote on them by June 2012.

The House plan mandates a 401(k)-style plan for workers hired after June 2013 and cuts the future benefits of other public employees if they don't join such a plan and decide to stay in traditional KPERS plans. It also increases the state's annual contributions to KPERS by $10 million.

In negotiations, senators have said they're willing to consider cuts in future benefits for existing public employees, but they're not backing off creating the commission to study whether the state should start a 401(k)-style plan. A recent KPERS report noted that starting a 401(k)-style plan leaves the state with the cost of contributing to the new plan and still closing the funding gap on the old ones, and said the Senate plan would cost the state and local governments $1.2 billion less in contributions to KPERS through 2033.

"All of the data shows that if you do a 401(k) not only to do the benefits go down, the costs are going to be immense," said Jane Carter, executive director of the Kansas Organization of State Employees. "That's what's clear."

But House Pensions and Benefits Committee Chairman Mitch Holmes, a St. John Republican and his chamber's lead negotiator, said moving to a 401(k)-style plan is important to the state pension system's long-term health because, ultimately, it will end the possibility that KPERS will face an unfunded liability in the future, when benefits are tied to investment earnings.

"I can see some objections because of start-up costs, but in the long run, 50 years from now, we'll be a lot better off," he said.

Holmes is willing to accept a study — if the state has already committed to a 401(k)-style plan and uses the new commission to hash out the details.

For a bill to emerge from negotiations, either he and other House Republicans must capitulate, or King and his fellow senators must surrender.