In just over a month, the state of Kansas could be borrowing $1 billion to inject into the state’s pension plan, the Kansas Public Employees Retirement System. A group made up of the governor and legislators has given final approval to the plan. As KPR’s Stephen Koranda reports, the money would be given to KPERS to invest.
The idea is that Kansas would borrow a billion dollars and the return from investing that cash will be more than the interest paid to borrow the money. The bonds would only be issued if the interest rate is less than 5 percent.
Republican House Majority Leader Jene Vickrey believes the move will pay off.
“If you look at our performance even through the downturn in ’08, ’09, we still performed at over 8 percent,” Vickrey says.
Democratic Sen. Anthony Hensley says Kansas should not be taking on loan payments right now.
“When we don’t have money in reserve to really make the debt service payments. I think it will be very problematic for us to do that into the future,” Hensley says.
If the investment return ends up being less than the cost of borrowing the money, then the whole move will have been a money loser.
