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Lawmakers Mulling Bonds to Cut Kansas Pension System Debt

Photo by Stephen Koranda

A small group of lawmakers from the Kansas House and Senate are working on legislation that would issue at least $1 billion in bonds for the state’s retirement system, KPERS. The conference committee is working to smooth out differences between House and Senate proposals. As KPR’s Stephen Koranda reports, the goal is to infuse the underfunded pension program with cash.

The idea is that Kansas could invest the billion dollars and get a return that’s higher than the interest rate on the bonds. The infusion of cash and the investment returns would help lower the cost to the state. Republican Jeff King is the Senate vice president.

“What we’re doing is trying to manage our debt in the most economical way possible by getting the lowest interest rate possible for that debt. It’s worked successfully before and we’re confident it will work successfully again,” says King.

But Democratic Senator Anthony Hensley says it’s not a sure thing that the investments will pay out more than the interest on the bond.

“We don’t know what the future holds for the nation’s economy, let alone our own state’s economy. I just think this is a very risky endeavor,” says Hensley.

The risk is that if the investment doesn’t earn more than the bond’s interest rate, the whole bond process turns into a net cost for the state.

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