TOPEKA, Kan. (AP) — Kansas Gov. Sam Brownback appointed an attorney, a cattleman and three people in the financial services industry Monday to a new commission that will study whether Kansas should move toward a 401(k)-style pension plan for new teachers and government workers.
The commission was created under a law enacted this year to address the long-term financial problems facing the Kansas Public Employees Retirement System. The study panel can look at a variety of options, but the Republican governor has said repeatedly that he favors starting a 401(k)-style plan or a "hybrid" for new public employees.
KPERS projects a $7.7 billion shortfall between revenues and the benefits promised to teachers and government workers through 2033. The new law also increases the state's annual contributions to KPERS and requires most public employees to choose between paying a higher portion of their salaries toward their pensions or seeing their future retirement benefits cut.
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Those changes won't take effect until the 13-member study commission reviews pension issues and makes recommendations to the Legislature. The panel must draft proposals by early January, and lawmakers must consider them by June 2012.
"Independent analysts have found the structure of KPERS remains unsustainable," Brownback said in announcing his appointments. "The commission needs to protect existing beneficiaries and move towards a defined contribution system for all new state employees in order to restore balance and security to KPERS."
A defined-contribution system, mirroring 401(k) plans in the private sector, would base each worker's benefits on the investment earnings from what they and the state contribute toward their pensions. Existing KPERS plans guarantee benefits up front, based on an employee's years of service and final salary.
Those who favor moving toward a 401(k)-style plan for public employees say traditional pensions can't be sustained financially. But retiree groups and public employee unions argue that a 401(k)-style plan will result in less secure and less generous benefits for workers.
Legislative leaders will appoint the commission's other eight members. Because House Speaker Mike O'Neal, a Hutchinson Republican, also favors moving the state toward a 401(k)-style plan and has two appointments, some Democrats have worried that the commission automatically will favor such a policy.
"The commission begins its meetings, obviously, with a majority favoring a defined contribution plan or a hybrid," said Senate Minority Leader Anthony Hensley, a Topeka Democrat. "But we still have to give it the benefit of a doubt and see what it comes up with."
Brownback's appointees include Edward Condon, of Leawood, an executive in a capital management firm; Christopher Long, of Mission Hills, president and founder of a capital management firm, and Richard Stumpf, a Wichita financial planner.
He also named Paul Seyferth, a member of a Kansas City-area law firm that's represented management in employment litigation, and Brian Winter, a Dodge City rancher and cattle feedlot manager.
They'll join two members already appointed by Hensley, fellow Topeka Democrat and Sen. Laura Kelly and Rebecca Proctor, a Shawnee attorney who's represented both private-sector and public unions.
Yet to announce their two appointments are O'Neal; Senate President Steve Morris, a Hugoton Republican, and House Minority Leader Paul Davis, a Lawrence Democrat.
Hensley said legislative leaders will probably decide at the end of this month when the commission will have its first meeting.
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