Kansas Gov. Sam Brownback signed off on a bill to issue $1 billion in pension obligation bonds for the $16 billion Kansas Public Employees Retirement System, Topeka.
The measure, aimed at boosting assets and reducing the state’s contributions to the pension fund, was signed into law by the governor Thursday.
The law, which passed out of the General Assembly on April 2, is a compromise measure and is less than the $1.5 billion previously proposed by Mr. Brownback and approved by the House in March. It is the same amount that was approved by the Senate in February.
The bond issuance, which still requires the approval of the State Finance Council, is expected to save the state $63.6 million total in pension contributions from its general fund in fiscal years 2016 and 2017 and reduce KPERS’ unfunded liability to $6.28 billion from $7.26 billion, according to a conference committee report.
KPERS funding ratio is also expected to increase to 66% from 60.7%.
The bonds could be issued in one or more series as early as May.
KPERS spokeswoman Kristen Basso previously said KPERS’ investment staff will develop an investment plan for the bond proceeds with direction from its board of trustees and input from its investment consultant, Pension Consulting Alliance.
State Rep. Steven Johnson previously told Pensions & Investments that the $1 billion is a “reasonable amount” and the current low-interest-rate environment makes the bond issuance attractive.
State Sen. Laura Kelly, who voted against the measure, said in an e-mail Friday, “I've always believed you only put at risk in the stock market money you can afford to lose. Kansas has no money to lose. That’s why I voted no.”
A spokesman for the governor could not be reached for comment by press time.