The July 3 article implied that the participation of some non-profit organizations that perform a quasi-governmental function is a drain on the state pension fund. This is misleading.
The non-profits participate, for the most part, in the county employee retirement system, not the state system (CERS, not KERS). While the unfunded portion of the CERS pension fund is 38.26 percent, that fund is considerably stronger than the KERS fund, where the unfunded amount is 65.5 percent.
Beyond that, the amount that the employer pays into the fund is significantly greater in the CERS than in the KERS system. Currently, the participating CERS employer pays 18.96 percent of an employee's salary into the retirement fund.
This is an amount set by an actuarial formula that is designed to make the system self-sustaining. Additionally, each employee contributes 6 percent to the fund.
Thus, for every $40,000 of a participating non-profit's payroll, the CERS receives about $10,000. When a non-profit joins CERS, it results in a huge infusion of cash for the fund that can be used to pay current retiree benefits.
In the long run, there will be a payout as these new employees retire. However, because their employees tend to be young, the payout in most instances will not be for a long time.
Non-profits tend to have a high turnover of employees. Since an employee's pension rights do not vest for five years, the fund benefits when employees turn over sooner than that.
Furthermore, when non-profit employees enter the system, they frequently purchase credit for past years of service for an actuarially determined amount.
Again, this results in a significant infusion of cash into the CERS fund.
In the final analysis, the issue is not how many employees are in the county retirement system; the issues are how old are they, what are they paying into the fund and how long they intend to participate in the CERS retirement program.
On balance, I respectfully submit, the inclusion of the quasi-governmental entities is a bargain and not a burden for the county retirement system.