DALLAS — Kansas Gov. Sam Brownback and top legislative leaders vowed last week to reform structural problems they said almost ensured expenditures would continue to exceed available revenues.
The effort will focus on shrinking the state pension system’s $7.7 billion of unfunded liabilities, how to provide adequate state aid to local school districts, and reducing the cost of providing medical services to the poor and uninsured.
Failure to resolve the budget problems would ensure a continuation of revenue shortfalls, Brownback said.
Legislation reforming those areas would be introduced in the current session, the leaders said. Still, they cautioned that the situation could take several years to resolve.
Kansas is facing a budget gap of $550 million in fiscal 2012, Brownback said at a news conference on Jan. 19. He was joined in his call for action by fellow Republicans Lieut. Gov. Jeff Colyer, Senate President Steve Morris, and House Speaker Mike O’Neal.
The governor said the state faces a financial crisis due to the ongoing recession that has created uncertain funding for public education, the Medicaid system, and the state pension fund.
“We have a structural budget deficit,” Brownback said.
“We must grow our economy and restructure state government,” he said. “It begins with addressing our approach to three core responsibilities that have a major impact on our state’s budget.”
Morris said the Senate would take the lead on restoring the integrity of the Kansas Public Employee Retirement System, which provides benefits to 75,000 retired state and local workers. The system has $12.5 billion of assets but $7.7 billion of unfounded liabilities, which Morris said undermines its strength.
“With KPERS funds being invested in interests worldwide, we must be responsible yet cautiously hopeful that an economic recovery will come not only for Kansas and the U.S., but for all foreign markets as well,” he said.
Restoring the pension system will take several years, according to Morris.
“Whatever remedies we recommend will not fix the problems overnight,” he said. “Stabilizing KPERS for the long term will also require wise stewardship and will depend in part on an economic recovery.”
O’Neal said the House will seek to develop a definition of the constitutional requirement for a suitable education that would end lawsuits challenging the current system.
A coalition of Kansas school districts filed a federal lawsuit in November 2010 over funding cuts due to lower-than-expected state revenue.
The Legislature had to increase aid to education after the state lost a lawsuit in 2006.
“I’m pleased to accept the challenge,” O’Neal said. “The taxpayers of Kansas deserve a system that distributes school funds to the classroom, not the courtroom.”
Colyer, a physician and a former state senator, will lead a task force on cutting the cost of the state’s Medicaid program while increasing the level of services.
Brownback’s proposed $13.9 billion budget for fiscal 2012 includes an additional $166 million for Medicaid, a 44% increase from fiscal 2011 spending.
