By Travis Perry │ Kansas Watchdog
OSAWATOMIE — Kansas public pension plan officials say there’s a simple explanation why they don’t know how much pension money has been given to a small group of terminated state employees based on an erroneous interpretation of state law.
No one has asked, they say, until now.
State Attorney General Derek Schmidt released an opinion on Dec. 28 regarding the Kansas Public Employee Retirement System’s apparent misunderstanding of when and how state employees can purchase service credits, which count toward their overall standing in the pension program.
In the opinion, which is not legally binding, Schmidt said KPERS wrongly interpreted state statute to allow terminated employees to buy pension credits. More than 50 former employees have been allowed to do so in the past five years, the most notorious being former Juvenile Justice Authority Deputy Commissioner Dennis Casarona.
Casarona was fired by Gov. Sam Brownback in March 2012, a few months before state auditors announced the litany of issues uncovered at the state’s juvenile detention facility in Topeka. However, KPERS sparked a firestorm after allowing Casarona to purchase a year’s worth of service credit after his termination, making him eligible for pension benefits he would not have otherwise received.
In the six months since Brownback and other state officials called for an investigation into the matter, no one in government or the media asked just how much cash has been doled out.
“Believe it or not, no – no one has requested that information,” said Laurie McKinnon, KPERS legal counsel, who said that it could take weeks for department staff to dig through data and drill down to a total figure.
Service credits are costly up front, requiring the employee to pay not only their contribution to the pension system, but the state’s share as well. The employee also has to pony up the amount that money would have earned had it been on deposit with pension managers. That sounds like a lot of money, but ultimately it’s not. All an the employee needs to do to reap the reward is keep breathing.
Once an employee has been on they state’s payroll for a decade, they qualify for a pension. That pension pays from the day of retirement until the day they die.
“Some people die eight months after they retire, and some people die 30 years after retirement,” said Kristen Basso, KPERS communications director.
As a result, there’s no way of knowing the ultimate cost of KPERS incorrect interpretation.
McKinnon, who approved the service purchases in question, defended the practice , saying it hasn’t raised many eyebrows until now. Besides, she said, the practice predates her 17-year tenure with KPERS.
“So, it’s not as simple as merely righting a wrong – again, a long-established practice and one we did not consider controversial based on our roles as fiduciaries,” McKinnon said. “We have enormous respect for the AG’s office and will consider what to do going forward.”
KPERS officials say it’s much ado about nothing. The number of people receiving the payments constitutes less than .01 percent of KPERS’ 280,000 members and has little impact on the state’s unfunded pension liability.
“One person or 53 over the last 10 years is not going to move that dial,” Basso said.