Rep. Sean Tarwater’s assessment of KPERS option for new government workers: It ‘sucks’

TOPEKA — Rep. Sean Tarwater spoke bluntly on behalf of fellow legislators and other government employees in Kansas about comparative financial shortcomings of the state retirement option created a decade ago when the state was mired in massive budget problems.

People hired after January 2015 have the option of enrolling in Tier 3 of the Kansas Public Employees Retirement System, which was designed to reduce obligations of taxpayers by raising the mandatory employee contribution and offering newcomers a cash balance benefit more akin to a 401(k)-style account. More than 50,000 Tier 3 public employees in KPERS don’t have access to the more generous defined benefit provided to Tier 1 and Tier 2 members.

“I don’t think you need to do an audit to find out Tier 3 sucks,” said Tarwater, a Stilwell Republican and chairman of the Legislature’s auditing committee.

Sen. Caryn Tyson, a Parker Republican, said state auditors should be tasked with examining options for converting Tier 3 to some other form more conducive to funding a person’s retirement.

“That is not a good personal investment tool,” Tyson said. “It may be solvent, but it’s not the best option for state employees.”

The House-Senate audit committee directed staff to explore complaints the underwhelming payoff of Tier 3 was a negative influence on hiring and retention decisions and contributed to the state government’s workforce shortage.

In 2012, then-Gov. Sam Brownback signed a bill to begin moving KPERS away from providing a guaranteed income to retirees enrolled in Tier 1 or Tier 2. Brownback said at that time the financially sustainable Tier 3 would present members an alternative more reliant on the investment marketplace rather than promises by politicians. The benefit gap within KPERS has proven to be such an irritation that state employees, including House and Senate members, have increasingly offered public rebukes of Tier 3.

“That has basically been conveyed to me by a number of folks on both sides of the aisle in both chambers as well as our employees,” said Rep. Nick Hoheisel, the Wichita Republican chairing the House Financial Institutions and Pensions Committee.

The audit committee recently directed the Kansas Division of Post Audit to complete within the next year an examination of Tier 3.

The joint legislative committee voted down a proposal to direct auditors to study options for a state-funded cost-of-living adjustment for KPERS retirees. There is no requirement KPERS provide a COLA to retirees, but pressure to do so has broadened with persistently high inflation.

“It’s time to dig into it and see what we find,” said Sen. Mary Ware, a Wichita Democrat who lost the vote to GOP committee members concerned such an audit would become leverage at the Capitol for consideration of a COLA.

University DEI programs

Meanwhile, the committee agreed to assign auditors to investigate Kansas Board of Regents university expenditures on diversity, equity and inclusion programs and to provide analysis of international spending on research, tuition and other activities at the six public universities in Kansas.

Rep. Steven Howe, R-Salina, sought the DEI audit after asserting higher education officials engaged in a document form of the filibuster when responding to requests from the House’s higher education budget committee for information on DEI investments at Kansas State University, University of Kansas and the four other state universities.

He said the Kansas Board of Regents forwarded a 76-page report to his committee that was not uniform in presentation, riddled with subjects outside scope of the request and shaped to hide needles in the haystack.

“I kind of felt like they snowed me with information,” Howe said. “I want to look under the hood of state universities and see what’s actually going on.”

During the 2023 legislative session, Howe and other Republicans worked to make a political issue of diversity, equity and inclusion initiatives. DEI programs have been started at colleges, schools, government agencies and businesses to address inequities against historically marginalized groups. Initiatives addressing DEI issues feature training, policies and practices intended to alter organizational culture.

Sen. J.R. Claeys, a Salina Republican, led an effort this session to forbid post-secondary institutions from spending money on DEI, which he linked to critical race theory and social-emotional learning as “branches of the same rotten tree that stokes division.” The senator said university employees were being compelled to sign “loyalty oaths” that amounted to reverse racism.

In terms of state auditors’ exploration of DEI at universities, Democratic state Sen. Ethan Corson of Prairie Village opposed adding fuel to that fire.

“All we’re going to get is more finger pointing,” Corson said. “This is a political hot-button issue.”

“I don’t know what problem is trying to be solved,” said Rep. Jason Probst, D-Hutchinson.

Howe said his objective was to protect “integrity” of state universities. He argued “what’s there to worry about” unless universities had something to hide.

Howe also secured committee consent for auditors to chronicle financial investments of foreign countries in state universities based on  research, grants, exchange programs or tuition. The GOP lawmaker said it would be wrong to take lightly concern expressed by former U.S. Secretary of State Mike Pompeo about China infiltrating colleges and universities in this country.

Howe noted Saudi Arabia paid more than $3 million in tuition to K-State, while Tyson expressed concern half of graduates from Fort Hays State University were from China. For more than 20 years, FHSU has offered online academic programs for students in China.

Financial estimates

Leaders of the Kansas Senate requested the audit committee order a study of state budget division estimates of how bills introduced in the Legislature might influence state revenue or expenditures. Over many years, concern was raised that state agencies providing input into those estimates colored their analysis based whether the sitting governor was supportive or opposed to the bill.

“Many of us discard them because we can’t rely on them,” said Rep. Kristey Williams, a Republican from Augusta.

The budget division is required to produce a fiscal note within seven days of a bill’s introduction, but Williams and other lawmakers complained estimates weren’t necessarily updated as details of a bill changed during House and Senate debate.

The committee also approved an audit of whether the Kansas Department of Revenue was properly collecting sales tax on vehicle transactions. Questions were raised about whether the department had procedures necessary to monitor individual and business compliance with sales tax law, while others raised the issue of people falsely claiming all-terrain vehicles were for agricultural use to avoid paying sales tax on purchases.

Legislators agreed to consider whether more than a decade of reform to tighten eligibility for the Temporary Assistance for Needy Families, or TANF, undermined effectiveness of the federally funded program in Kansas. The idea was to consider how the flow of TANF aid to impoverished families had changed and whether the Legislature’s diversion of TANF funding might have influenced outcomes.

In fiscal year 2022, Kansas had an average of 3,000 recipients of TANF. Oklahoma’s average for that fiscal year was 7,800 and in Nebraska the average was 6,100.

Ware, the Wichita Democratic senator, said: “We have been squeezing this assistance for a very long time.”

Other approved audits would dive into effectiveness of tax increment financing by cities earmarking property tax revenue to economic development projects and whether regulations adopted by the Kansas Housing Resources Corp. were limiting effectiveness of the federal low-income housing tax credit program in Kansas.