The Trillion Dollar Gap: Kansas

Kansas' management of its long-term pension liability is cause for serious concern and needs to improve how it handles its retiree health care and other benefit obligations. It has funded only 59 percent of its total pension bill—well below the 80 percent benchmark that the U.S. Government Accountability Office says is preferred by experts—and faces an unfunded liability of $8.3 billion. The state has failed to meet actuarially required contributions during the past 10 years, funding less than 80 percent annually. Because Kansas conducts its actuarial valuation on December 31, financial reports for its pension plan reflect the decline in investment returns during the second half of 2008; however, its pension system was only 71 percent funded prior to the financial collapse. In 2007, Kansas created a new pension plan tier, with new service requirements and increased employee contributions. Meanwhile, Kansas has set aside less than 1 percent of the total longterm bill for its relatively limited retiree health care and other benefits, which total $316.6 million.