News Releases

Center for Applied Economics releases important study regarding KPERS system

Tuesday, September 15, 2009

The University of Kansas School of Business Center for Applied Economics recently released a study on the Kansas Public Employee Retirement System (KPERS) funding crisis. According to the report, issues with the current defined-benefit pension system have left KPERS bankrupt, putting taxpayers on the hook for hundreds of millions of dollars. The recent collapse of financial markets has contributed to a significant decrease in the value of the KPERS portfolio. However, according to the report, the financial collapse was not the only factor for the KPERS funding crisis, as there are many issues with the defined-benefit pension system.

According to the center's researchers, coordinated by Executive Director Art Hall, the problems in this defined benefit pension plan have emerged over several decades and are symptomatic of the poor incentive structure of many defined-benefit public pension plans. KPERS is facing a long-run deterioration in its funding status.

The report suggests Kansas evaluate a move to a defined-contribution system, similar to the current system used by the Kansas Board of Regents. It also explores current and past funding shortfalls in KPERS and the inherent challenges associated with the governance of defined-benefit pension plans. The study examines different measures of the magnitude of the funding shortfalls and the past legislative attempts to provide remedies.

To view the full report, The Funding Crisis in the Kansas Public Employee Retirement System, click here.


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