In 2022, Kansas had 3,778 KPERS “Millionaires.” That is, someone who will collect at least $1 million from the Kansas retirement system in their first 20 years of retirement. Information on these millionaires, as well as all 2022 pension payments and 2022 payrolls, can be found on KansasOpenGov.org.
The top-earning millionaire was a former employee of Blue Valley Schools that has made over $4.3 million from their pension over the last 20 years. This is likely Tom Trigg, who retired from Blue Valley in 2015…and has since been a superintendent at Highland Park, Texas for an annual salary of $325,000 plus $13,800 in car and technology allowances, and a $1.2 million interest-free loan to buy a house.
The top four were all former employees of school districts. Of the 20 highest earners, seven were employees of school districts, six were city employees, five were county employees, three were employees in other education agencies, two were law enforcement officers, then the last two were a firefighter and a hospital employee.
There could very well be more millionaires, but lump payments prior to 2014 aren’t matched with current monthly payments in the information provided by KPERS.
Truth in Accounting’s Financial States of the States Report for 2022 ranked Kansas 28th in the country in fiscal health, largely due to the $2.4 billion in debt putting a burden of $2,600 on each taxpayer. This debt is primarily from unfunded retirement obligations, of which Kansas has set aside only 77 cents for every promised dollar.
As recently as August 2020, the state of Kansas has considered slowing its current input into the Kansas Public Employees Retirement System (KPERS) and delaying payments to spend elsewhere. Thankfully, that didn’t happen but it’s happened before and will certainly happen again. A pension is a form of debt: if the debt isn’t paid off now, its size and the interest on it grow into the future. Pew Trusts notes that Tennessee, Wisconsin, and South Dakota, which maintained about 90% pension funding alongside low contribution payroll rates from 2014 to 2018, did so by maintaining predictable and transparent cost-sharing features. These measures are resilient against boom-and-bust cycle budgets, which often mislead legislators about pension health. The boom-and-bust is seemingly a feature not of a bug of Kansas’ pension experience.
Lest there be any confusion, we’re not saying that KPERS debt is bad, per se. Our government employees warrant retirement savings and those promises must be honored. The question is how to do so in a fiscally responsible way that is roughly on par with workers in the private sector.
One solution to this is changing the payment system from one based on fixed statutes to one designed by actuaries and with less subjective input from legislators. Between 2001 and 2017, KPERS’ unfunded liabilities expanded by $4 billion due to caps on contributions and overall decreased contributions to the program. Furthermore, the majority of KPERS’ high rate of pension returns at 7.75% leads to misguided investment expectations. This excludes alternative pension plans for positions like police, firefighters, judges, and the cash balance plans put into place for new hires. Reducing these assumed rates of returns in tandem with better planning provisions could help keep pension payments stable for the future.
The COVID-19 pandemic is a perfect example of how an uncertain future could derail healthy pension payments. Methods to prepare for these uncertainties in future pension plans include stress testing at the state level and cost-sharing plans between employers and employees.