A state accounting change next year could make it more difficult for local governments and school districts in Kansas to borrow money. The change has to do with how a long-term, unfunded deficit in the state pension plan is calculated. KPR’s Stephen Koranda reports.
The Kansas Public Employees Retirement System, or KPERS, currently faces a $10 billion shortfall in the coming decades. The change means some of that financial liability will be moving from the state’s reports to the balance sheets of some of the cities and counties that employ workers enrolled in KPERS. Senator Jeff Longbine, an Emporia Republican, says the change could hurt the credit ratings of local governments.
“So our balance sheet would actually look better, and the local’s is actually going to look worse by the time we spread that out,” says Longbine.
A debt like the KPERS liability will likely be noted by creditors when local governments are looking to issue new bonds. The change in reporting comes because of a new policy in national accounting standards. The KPERS unfunded liability is forecast to be eliminated by 2033.