In a strategic move to bolster teacher recruitment and retention, the Kansas Legislature is considering House Bill 2129, which aims to transfer certified public school teachers from the current KPERS Tier 3 retirement plan to the more advantageous KPERS Tier 2 plan.
This proposed shift underscores the state’s commitment to providing better financial security for educators and addressing the growing teacher shortage.
Understanding KPERS Tiers
The Kansas Public Employees Retirement System (KPERS) is structured into different tiers, each offering varying benefits:
- Tier 1: For employees hired before July 1, 2009.
- Tier 2: For employees hired between July 1, 2009, and January 1, 2015.
- Tier 3: For employees hired on or after January 1, 2015.
The distinctions between these tiers significantly impact retirement benefits, with Tier 3 generally offering less favorable terms compared to Tier 2.
Comparative Analysis: Tier 2 vs. Tier 3
A comparative analysis highlights the financial implications of the proposed transition:
| Criteria | KPERS Tier 2 | KPERS Tier 3 |
|---|---|---|
| Eligibility | Employees hired between July 1, 2009, and January 1, 2015 | Employees hired on or after January 1, 2015 |
| Retirement Benefit Formula | Final Average Salary x Years of Service x Multiplier (1.85%) | Cash Balance Plan: Account balance based on contributions and interest credits |
| Retirement Age | 60 with 30 years of service; 65 with 5 years of service | 60 with 30 years of service; 65 with 5 years of service |
| Employee Contribution | 6% of salary | 6% of salary |
| Employer Contribution | Actuarially determined rate | Actuarially determined rate |
| Vesting Period | 5 years | 5 years |
| Retirement Benefit | Defined benefit based on formula | Account balance paid as lump sum or annuity |
Note: The above table provides a simplified comparison between KPERS Tier 2 and Tier 3 plans.
Financial Impact of the Transition
The proposed transition from Tier 3 to Tier 2 is expected to have significant financial implications:
- Enhanced Retirement Benefits: A teacher retiring at age 60 with 30 years of service under Tier 3 currently receives an annual benefit ranging from $26,000 to $36,000. In contrast, under Tier 2, the same teacher would receive approximately $45,000 annually.
- State’s Financial Commitment: Alan Conroy, Executive Director of KPERS, estimates a one-time cost of approximately $220 million to cover the unfunded liability associated with this transition. If amortized over 20 years, this equates to an annual cost of about $18 million.
Support and Advocacy
The proposal has garnered support from various educational leaders and organizations:
- Superintendent Tonya Merrigan of Blue Valley School District emphasized that enhancing retirement benefits would positively influence teacher retention and recruitment, especially as the district competes with neighboring states and the private sector.
- Shannon Kimball of the Kansas Association of School Boards highlighted that improved retirement benefits would attract young professionals to teaching and encourage experienced educators to remain in the classroom.
- The Kansas State Board of Education and the Kansas-National Education Association (K-NEA) have expressed conditional support, advocating for the inclusion of all school personnel, not just certified teachers, in the transition to Tier 2.
Addressing the Teacher Shortage
Kansas is currently grappling with a significant teacher shortage:
- Vacancies: The number of teaching vacancies increased from 1,600 in 2022 to 1,950 in 2024.
- Attrition: The state ranks second nationally in terms of teachers leaving the profession.
- Pipeline Decline: Over the past decade, there has been a 45% decrease in students entering teacher preparation programs nationwide.
By transitioning to a more favorable retirement plan, Kansas aims to make the teaching profession more attractive and retain its current educators.
The proposed legislative move to transfer certified teachers from KPERS Tier 3 to Tier 2 represents a strategic effort to enhance the financial well-being of educators in Kansas.
By offering more robust retirement benefits, the state seeks to address the pressing challenges of teacher recruitment and retention, ensuring a stable and effective educational workforce for the future.