This Kansas teacher retired 23 years ago — and her pension payment is frozen in time
Thousands of retired public employees in Kansas have never seen an increase to their pension pay, and inflation is eating away the value of those payments. Advocates argue the Legislature owes them a boost.
WICHITA, Kansas — More than two decades ago, Janet Greer retired from teaching and began collecting her Kansas pension.
The former reading specialist, now 85, spent the bulk of her career helping elementary school students learn to read in Wichita Public Schools. That makes her one of more than 100,000 people drawing payments from the state retirement system as a benefit for years of service.
When she retired in 2000, Greer was set to earn roughly $16,000 a year from the Kansas Public Employees Retirement System, also known as KPERS.
Today, Greer makes the exact same amount despite inflation eating away the buying power of the payments over the last 23 years.
“It’s not a lot to live on,” Greer said, “but I’m making it.”
Most state pension retirees in Kansas have never received a permanent cost-of-living adjustment to their payout.
A much higher rate of inflation over the last couple of years has sped up the erosion of the pension value. Cost-of-living adjustments, or COLAs, are meant to counteract that. Yet, Kansas lawmakers have not provided one since 1998.
The Kansas Coalition of Public Retirees wants that to change. The group contends the lack of adjustments and inflation are hurting the oldest retirees most. The group’s latest proposal calls for an increase of up to 5%, with the oldest retirees earning the highest adjustment to their pensions, also known as defined benefit plans.
That plan could cost the state up to $263 million annually. But Ernie Claudel, the chair for the group, says despite a $2 billion budget surplus, state lawmakers aren’t interested.
He said he hears legislators argue that the state can’t afford it or defined benefit pensions don’t include cost-of-living increases.
“And that’s not accurate,” Claudel said.
Many states built in automatic cost-of-living increases as part of their retirement systems. Kansas has not. It is one of just a few states that requires state lawmakers to approve any increase.
But the Republican-controlled Kansas Legislature has different ideas on changes to the public retirement system.
Republican Rep. Nick Hoheisel, who leads the House’s Financial Institutions and Pension Committee, said raising pension payments would cost the state hundreds of millions of dollars and could be difficult to pass.
He said Republican lawmakers are interested in other ways of helping retired Kansans overcome inflation, like cutting state taxes.
“We understand folks on fixed income, inflation hurts them the most,” Hoheisel said. “We’re trying to figure out a plan to address the entirety of all our retirees in Kansas.”
KPERS Executive Director Alan Conroy told lawmakers earlier this year that the Legislature has provided 16 COLAs to pension payments since 1961. But the most recent was 1998 — about 25 years ago.
“So that means,” Conroy said, “90% of our retirees and their beneficiaries have not received a cost-of-living adjustment.”
Inflation has taken a significant toll on people like Greer who have been retired for decades. According to the Consumer Price Index inflation calculator, $1 in January 2000 would have the same buying power as $1.81 in July 2023.
Greer said she can still afford to live in her retirement home, thanks to the pension and other savings from selling her house. But if she needed more support, like a nursing home, she would be in financial trouble.
“If I fall and break something,” Greer said, “and have to have assisted living, my money would be gone in probably a year.”
Claudel formed the Kansas Coalition of Public Retirees in 2004 because he was concerned about the lack of COLAs. He has been fighting the same fight for decades, yet lawmakers still have not provided pension pay raises.
Claudel said the Legislature’s unwillingness to provide an adjustment puts Kansas at the bottom of states in the country in helping its retirees deal with inflation.
‘We are leading the race,” Claudel said, “in something we don't want to lead.”
Other states provide raises without problems. Alex Brown, a researcher for the National Association of State Retirement Administrators, said most states provide COLAs automatically.
But even among the handful of states that require legislative action to do it, Kansas is behind. Pennsylvania, for example, last enacted a payment hike 2001. Lawmakers there this year advanced bills that would enact COLAs for thousands of retired public employees.
“Kansas is among the plans,” Brown said, “that have gone the longest time without providing a COLA.”
Still, an adjustment in Kansas does not appear to be on the horizon.
Lawmakers could decide the state pay for the plan through a 15-year amortized debt arrangement. However, it would increase the state’s unfunded liability to KPERS by $353 million. That would add a complication to the effort to reduce KPERS debt.
The state has worked to decrease its outstanding debt to KPERS, which has historically been underfunded. KPERS shows the state’s promised portion of funding in KPERS is at 73%, which is a 17% improvement since 2012.
Adding the proposed cost-of-living adjustment would likely reverse that trend and possibly disrupt the state’s ongoing plan to improve the financial health of KPERS.
Hoheisel said the state would also need to require employers — like school districts, local governments and police departments — to increase their contribution on behalf of employees to help negate the shortfall. And many don’t have the financial resources to pay for it.
“That would put a lot of financial strain on their budgets,” Hoheisel said. “I'm not I'm not sure local governments can handle that share right now.”
Instead, Hoheisel said Republican lawmakers want to address inflation by cutting taxes.
Lawmakers earlier this year proposed slashing all taxes on retirement income. It would include Social Security and 401(k) plans for private business employees. That alone would have cut $450 million from the state’s budget.
But Kelly vetoed that bill, even though she supports reducing taxes on Social Security. She opposed the plan because it was bundled with other tax cuts she opposes, like a flat income tax rate.
Hoheisel said that plan would have provided relief to all retirees in Kansas, not just those on KPERS. He also said Republicans want to eliminate the food sales tax — which is already scheduled to be phased out — and reduce property taxes.
“It would be wiser for us to address all retirees in the state of Kansas,” Hoheisel said. “The focus in the Kansas House, amongst the Republicans at least, is a much broader plan.”
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