Kansas Senate Votes to Increase Death Benefit and Expand Pension System Investments in Alternative Assets

In Topeka, Kansas, the state Senate has voted to increase the lump-sum death payment for retirees in the Kansas Public Employee Retirement System (KPERS), as well as raise the maximum amount of the pension system’s portfolio tied to alternative private equity or infrastructure investments. The Senate voted 25-14 in favor of Senate Bill 172, which would raise the death benefit to $6,000 from the current $4,000. The cost of this adjustment over a 20-year period is estimated to be $108 million, to be covered by KPERS contributions and investment income.

The death benefit has not been changed for the past 30 years, leading supporters of the bill to argue that this increase is long overdue. However, opponents expressed concerns about the potential impact on KPERS’ unfunded liability. They emphasized the importance of fiscal responsibility and the need to continue working towards reducing these liabilities. KPERS currently has assets of $27 billion and experienced an 11% return on investment last year. As of July 2023, the long-term unfunded actuarial liability of KPERS stands at $9.6 billion.

In addition, the Senate voted 24-13 to increase the cap on alternative investments by KPERS from 15% to 20% of the total pension system assets. This move aims to provide KPERS with more flexibility in managing its investment portfolio. Supporters of the bill argue that restricting alternative investments could limit diversification and potentially reduce returns. However, some critics expressed concerns about the risks associated with alternative investments, referring to them as inherently “swinging for the fences.”

Meanwhile, the Senate Judiciary Committee, led by Leawood Sen. Kellie Warren, unanimously approved a bill requiring websites displaying pornography to implement commercial-grade age verification software to block individuals under the age of 18. This proposal, known as Senate Bill 394, would apply to websites where more than one-fourth of the viewed content in a calendar month could be considered harmful to minors. However, internet service providers in Kansas would not be subject to this requirement.

Sen. Warren emphasized the harmful effects of pornography addiction and argued that this bill is necessary to protect minors from accessing explicit content. Concerns were raised by Democratic senators regarding the potential misuse of the statute and the protection of adults’ personal information from hackers. Sen. Warren clarified that the attorney general would be responsible for investigating noncompliance with the law, and the courts would make determinations based on the evidence.

Additionally, Sen. Carolyn McGinn successfully pitched a bill committing Kansas to invest $50 million over 10 years in expanding passenger rail service. This investment is aimed at establishing a partnership between the Kansas Department of Transportation (KDOT) and the federal government. The plan includes the potential revival of the discontinued Heartland Flyer corridor, connecting Fort Worth, Texas, to Oklahoma City, Wichita, and Newton. Stops along the way would include cities in Oklahoma, Arkansas, and Kansas. This passenger rail expansion aligns with the state’s expectation of receiving federal grants to cover the initial period and with the state assuming funding thereafter.

Overall, the Kansas Senate has taken actions on various fronts, addressing issues related to retiree benefits, investment strategies, the regulation of explicit content online, and the improvement of passenger rail services. These measures aim to support retirees, protect minors, and enhance transportation options in the state.