TOPEKA, Kan. (AP) — Kansas legislators moved closer Monday to dedicating revenues from state-owned casinos to pensions for teachers and government workers as part of a broader bill bolstering the long-term financial health of the state's retirement system.
Senators agreed during talks with House members to include a proposal in legislation overhauling the Kansas Public Employees Retirement System. Three senators and three House members are now negotiating over how much casino revenues should be set aside.
The idea has bipartisan support and the backing of Republican Gov. Sam Brownback. The House added a provision to pensions legislation before approving it in March, but the Senate didn't debate the idea before passing its version of the retirement system bill earlier this month.
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"We're on board," said Sen. Jeff King, an Independence Republican and one of the negotiators. "Certainly, we need to infuse more money into the KPERS system, so I think it's a great idea."
KPERS projects an $8.3 billion shortfall between anticipated revenues and benefits promised public employees through 2033. Last year, lawmakers enacted a law boosting the state's annual contributions to the retirement system and requiring public employees either to contribute more of their salaries or accept less generous benefits.
But many members of the GOP-controlled Legislature don't believe last year's changes were enough, and lawmakers are considering additional changes this year. Public employee groups are nervous that further changes will result in less generous benefits and argue that legislators should stop with last year's reforms.
House and Senate negotiators are hashing out a new plan for public employees hired after 2014, moving away from traditional KPERS plans guaranteeing benefits up front based on a worker's salary and years of service. Instead, the state would pay interest — the House proposed 5 percent; the Senate, 6 percent — on contributions by the state and employee, with a retiree receiving a lump sum to convert into an annuity.
"We're ready to get a deal done," said Rep. John Grange, an El Dorado Republican and another negotiator.
The House also included a proposal to allow new hires to choose a 401(k)-style plan in its pensions legislation, but the Senate rejected a 401(k)-style proposal on a 20-20 vote. Such plans, common in private industry, base retirement benefits on investment earnings, and public employee groups loathe the idea.
The proposal to use casino revenues to close the long-term KPERS funding shortfall came from House Minority Leader Paul Davis, a Lawrence Democrat. Kansas has licensed developers to build and operate casinos in Dodge City, in Kansas City and south of Wichita, and the state receives 22 percent of the gambling revenues.
The state already has committed $10.5 million a year in casino revenues through 2021 to boosting state universities' engineering programs. Davis' proposal, embraced by the House, would dedicate 75 percent of the remaining revenues to KPERS, starting in July 2013.
There are no solid estimates of how much that would be, but Davis has predicted it could be several billion dollars over the next 20 years. For the fiscal year beginning July 1, the casinos are expected to generate $80 million in revenues for the state, but that figure is expected to climb in the future.
During negotiations Monday, senators proposed setting aside 50 percent of the casino revenues remaining after engineering programs receive their dollars.
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