The Senate on Monday advanced legislation to transfer $115 million to the state pension fund despite objections from Democrats who prefer to wait until other budget areas are considered.
By making the payment to the Kansas Public Employees Retirement System, lawmakers would put a dent in the surplus Gov. Laura Kelly's budget depends upon for a slate of priorities, including public school funding, child welfare reform and Medicaid expansion.
Sen. Rick Billinger, R-Goodland, said the state should pass Senate Bill 9 to make up for a missed payment of $97 million two years ago. The delay costs the state more than $20,000 in interest every day, Billinger said.
He said the state made a promise to make up for the payment, and lawmakers should do so while cash is available.
"There is absolutely no reason to not make this payment," Billinger said. "The money is there. I believe it's irresponsible to build our ending balances with KPERS money."
Sen. Tom Hawk, D-Manhattan, said the Legislature's first priority should be to address a court order to add inflation to a school finance package that passed last year.
Additionally, he said, his priorities would include funding for a water plan and wildfires, among other issues. And he warned of an anticipated economic downturn that could further erode long-term budget stability.
“It’s not a bad idea to put the $115 million into KPERS," Hawk said. "I don’t think it’s the best idea, though. I think it’s important for us to look at that, and perhaps it’s not the best time to do it.”
Sen. Marci Francisco, D-Lawrence, noted the Legislature relied on a series of maneuvers to avoid making full contributions to KPERS for several years. She wondered why this particular payment was different than the others.
She also said lawmakers authorized two transfers last year, contingent on a healthy budget surplus, that will contribute more than the amount owed on the missed payment. She said it would make more sense to discuss an additional contribution after passing a budget.
"I believe we could argue the Legislature has already made up this money and paid even a little bit more," Francisco said.
Senate Majority Leader Jim Denning, R-Overland Park, said the $115 million payment could only help ease the state's liability.
He drew a comparison to a provision in the governor's budget proposal to pay off a loan to the state's Pooled Money Investment Board. The PMIB loan has a 0 percent interest rate, he said, whereas the missed KPERS payment is costing the state millions per year.
"The budget committee can do whatever it wants," Denning said. "However, because we skipped the entire $115 million payment, it’s adding $630,000 in interest (per month) no matter what we do."
Senate Minority Leader Anthony Hensley, D-Topeka, noted the "historical irony" that some of those who sponsored the KPERS payment were among lawmakers who refused to help override the veto of former Gov. Sam Brownback when the Legislature rolled back a large part of his tax cuts in 2017.
"We were able to put this state back on a solvent track, get it back in much better financial shape, to where we can begin to repay KPERS," Hensley said.
Hensley said he was concerned about the timing of transferring funds to KPERS but that he would reluctantly vote in favor of the bill, which passed on a voice vote.