An alternative voice on public pensions

On Tuesday, Aug. 30, the City’s Pension System Task Force got to hear an alternative viewpoint to what they’ve been hearing about public retirement systems. Hank Kim made a presentation to the group, and he is the executive director of the D.C.-based National Conference on Public Employee Retirement Systems. NCPERS is a “nonprofit network of trustees, administrators, public officials and investment professionals who collectively manage nearly $3 trillion in pension assets held in trust for approximately 21 million public employees and retirees – including firefighters, law enforcement officers, teachers and other public servants.”

On Monday, Aug. 29, Mr. Kim wrote a response to the Kansas City Star’s Sunday editorial that said he would present “one-sided points.” His letter made solid, well-rounded arguments, and here’s what it said:

“To the Editor:

"Despite the unfair assertion in your Sunday editorial (Don’t accept ‘What, me worry?’ pension views), I will not be presenting one-sided arguments to Kansas City’s Pension System Task Force on Tuesday. The task force has invited me because its members want to be fully informed about all available options before making its recommendations to Mayor James and the City Council – an approach for which they should be applauded, not criticized.

"The fact is there are a number of effective strategies for securing the health and sustainability of a public pension plan before taking the drastic and costly step of converting it to a 401(k)-style plan. Many public pension plans around the country are employing those strategies.

"It’s important to remember that public employees routinely contribute to their pension plans, paycheck after paycheck, while many government bodies – including Kansas City – have not made their required pension contributions for years. Before scapegoating public employees and threatening their retirements, policy makers and the general public should become fully and adequately informed of the facts and the available options. I hope to help with that process on Tuesday.

"While revenue shortfalls have prompted government officials to scrutinize public pension plans, we believe their focus is too narrow. The U.S. is facing an overall retirement crisis as record numbers of workers enter their retirement years. Retirement security for all Americans –whether they work in the public or private sector – must become a national priority.”


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Police retirement system is responsible, well-managed

I wrote the below as an As I See It column that was published in today's Kansas City Star:

Recent editorials and columns in the Kansas City Star proclaim the need for public pension reform in Kansas City. These articles left out some important information about the Kansas City Police Employees’ Retirement System (KCPERS) for sworn officers. The Board of Police Commissioners and I strongly stand behind our retirement system and ask you to consider some of the below facts.

Police officers contribute 10.55 percent of every paycheck to KCPERS. That is more than many other public employees pay: According to their respective web sites, Alabama teachers contribute just 5 percent of their salary to their pension system, New Jersey police and firefighters contribute 8.5 percent, and Ohio police and firefighters contribute 10 percent. Missouri just began requiring new state employees in 2010 to contribute to their pension. Previously, it was entirely state-funded.

The editorials also mentioned that the City has been under-funding its system. Actuaries, as part of their annual analysis, determined the City should have contributed more. The City has under-funded the police pension system, based on actuarial analysis, the last eight years.

Police do not pay into Social Security and thus do not have it to fall back on when they retire like most other U.S. workers. The most an officer can receive at his or her retirement is 75 percent of his or her annual salary at the time the officer reached 30 years of service. One Star column even said, “These figures do not include money invested by officers in individual retirement accounts. They also don’t account for salaries and retirement benefits retirees receive from any jobs after leaving the Police Department.”

I find it strange anyone would take issue with a strong work ethic and sound money management practices.

The Board of Police Commissioners recently voted to extend mandatory retirement from 30 to 32 years of service, thus reducing the amount of time police will draw on the pension. Board Vice President Alvin Brooks said at a recent meeting that being a police officer “is a young man’s game.” He is right. It is a physically and psychologically demanding position that generally requires an earlier retirement than a standard desk job. KCPD retirees live to an average age of 72. That’s six years below the national average life expectancy, according to the Centers for Disease Control and Prevention.

Today, officers are held to a high standard and subjected to intense public scrutiny, as they should be. But reasonable pay and retirement benefits are necessary to attract and retain quality employees. Additionally, providing those who have served the community for decades with a reasonable standard of living is good not just for the retiree but for the whole community. It keeps retirees living, paying taxes and spending in the city. 

Many public pension systems are under attack nationwide right now, and some do deserve scrutiny. The Kansas City Police Employees Retirement System, however, is by no means the kind of extravagant, Cadillac plan that has come under fire in other cities and states. It is very transparent and managed by a board composed of local business leaders and retired and active police employees. Cost-of-living adjustments are approved by the Retirement Board on an annual basis based on the previous year’s actuarial analysis. Based on this analysis in 2009, there was no increase in 2010, for example. You can learn all about the plan at www.kcpers.org.  

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