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Kansas pension blunder nears $300,000 in cost to taxpayers

By   /   April 25, 2013  /   2 Comments

BIG MONEY: The Kansas pension system has already wrongfully paid out nearly $300,000 to 13 former state employees. The figure will only continue to rise as long as they are alive.

By Travis Perry │ Kansas Watchdog

OSAWATOMIE — The Kansas Public Employee Retirement System wrongly awarded nearly $300,000 in the past six years – and that’s just the start.

Since 2007, KPERS has allowed 13 former public employees to buy service credits after they were terminated, state officials said this week. The credits – measured quarterly – count toward an employee’s overall standing in the pension system and, ultimately, their payout after retirement.

The revelation stems from the dismissal of Dennis Casarona, former deputy commissioner for the Juvenile Justice Authority and a holdover from the administrations of Democratic Govs. Kathleen Sebelius and Mark Parkinson.

Gov. Sam Brownback fired Casarona in March 2012, only months before state auditors announced a  litany of issues uncovered at the state’s juvenile detention facility in Topeka. However, KPERS ignited a firestorm by allowing Casarona to buy a year’s worth of service credits after his termination, making him eligible for pension benefits he would not have otherwise received.

KPERS officials initially defended the action, saying they were simply following state statute. But Kansas Attorney General Derek Schmidt set the record straight in December after he released an opinion stating KPERS’ interpretation of the law was flat wrong. Since then the state agency has implemented policy and procedural changes to prevent such mistakes.

“It will never happen again,” said Alan Conroy, KPERS executive director. “The door has been closed, and it will not happen in the future.”

Alan Conroy, KPERS executive director

Alan Conroy, KPERS executive director

But the damage has been done.

Kristen Basso, KPERS communications director, emphasized that service credits don’t harm the state’s $9.3 billion unfunded pension liability because employees assume the full cost.

Indeed, such purchases aren’t cheap. Employees must 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.

Of the 13 individuals examined, the most expensive purchase topped-out at nearly $75,000, though the average was closer to $17,000. But while it may seem pricey, it really isn’t. There is but one requirement to recoup the cost: stay alive.

Total benefits incorrectly awarded by KPERS already exceed the $226,000 in service credit payments made by the 13 former state employees; the nearly $300,000 figure will only increase. Conroy said the state has no plans to reclaim the wrongly awarded pension benefits.

Once an employee has been on the state’s payroll for a decade, he qualifies for a pension. That pension pays from the day of retirement until the day that person dies.

“Some people die eight months after they retire, and some people die 30 years after retirement,” Basso told Kansas Watchdog in a previous interview.

Essentially, there is still no way to tell just how much this blunder will ultimately cost Kansas taxpayers.

Initial reports said 53 individuals had been allowed to buy credits after their termination. But Basso clarified that all but 13 were flagged incorrectly. She also noted that these individuals comprise .05 percent of the nearly 26,000 public employees that have retired since 2007.

Contact Travis Perry at travis@kansaswatchdog.org, or follow him on Twitter at @muckraker62. Like Watchdog.org? Click HERE to get breaking news alerts in YOUR state!

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Travis Perry is an investigative reporter covering news and politics for Watchdog.org's Kansas bureau. Before joining the organization, Travis graduated cum laude from Washburn University and cut his teeth as news editor for the Osawatomie Graphic, where he received numerous awards from the Kansas Press Association.

  • http://www.facebook.com/profile.php?id=673191162 Michael N. Ruff

    So what does 9.3 billion unfunded mean?

  • charleygrapes

    It means the legislature hasn’t been putting money into the system as they were obligated to do. It went to other state expenditures instead. A lot of states have done the same thing, and therefore have the same problem. Also, this is over a 30-year time period, not one year.