Tuesday, December 3, 2013

Who cares about KPERS?

As a young teacher in Bazine, Kansas, I had no idea what KPERS was, nor did I care.  A retirement plan?  I was worried about having the cash to make the payments on my brand new Honda CB900F.  But now no-shave November means being reminded daily that grey has replaced the brown and 30-some years and several motorcycles have passed since I didn’t care about KPERS.  Some of you may be able to relate.

If only I had paid attention back then to my KPERS.  I made my 4% contribution like clockwork, because I had no choice.  But policy-makers (and advocates) in Topeka were not as diligent.  They didn’t have to be.  In years that the market performed well, they didn’t feel the need to contribute their full share.  In years when the market didn’t perform, fingers were pointed, studies were done, inquiries were made, and the can got kicked down the road.

The following chart shows Per Pupil Funding adjusted by CPI. (2012-13 is the base year.)  Fourteen years ago KPERS amounted to a CPI adjusted amount of $242 of per pupil funding in Kansas.  In 2012-13 that amount is $742 per pupil, nearly tripled. (Column H)  For those of us with a vested interest in the solvency of KPERS, that is worth noting.

It is also worth noting that , for the most part, an underfunded retirement system is not the work of those currently serving in legislative or executive office in Kansas.  It is a decades old problem.  In fact, testimony was provided in a KPERS committee hearing that the statutorily required amount hasn’t been funded for the past 19 years. And to be fair, was anyone besides a few policy wonks arguing for increased funding to the KPERS system 20 years ago?  And it is a problem that has to be addressed.

There are more arguments about KPERS funding that should be explored because the answers are not as clear.  Some argue that it is not appropriate to count KPERS as part of the expenses that are included in providing an education to students.  This argument is really about whether a strong retirement system helps recruit and retain a quality teaching force.

It is also arguable that “catching up” for past mistakes shouldn’t be counted as part of the cost of educating current students.   These points are more nuanced.  The costs of today are delayed because of our past shortsightedness.  Should students and teachers of today be slighted because of past political decisions?

An argument definitely not appropriate is comparing school district budgets that include KPERS funding to budgets that did not include KPERS funding.  This has been a technique used by those who desire to show that expenses for education have increased dramatically since 2006.  That is the year that an accounting change shifted credit for funding KPERS from the state to the local level.  Comparing those before and after numbers is simply misleading.

So who cares about KPERS?  We all should. In my opinion, a strong retirement system may not help recruit young teachers with dreams of fast motorcycles and other fancies.  But it definitely helps retain quality public education staff in Kansas.  Let’s give credit where credit is due for trying to fund the system, but lets not shy away from funding schools at appropriate levels and not trying to argue that past mistakes should affect our current students.  The rest of the chart shows a true picture of educational funding adjusted for inflation in non-KPERS areas as well.  What do these numbers mean to you?

Me? I am looking forward to someday drawing my KPERS, and I might just use some of it to buy a new motorcycle!
Some things never change...