Get breaking news alerts via email

Click here to manage your alerts
U.S. settles with Kansas over alleged pension fraud
Allegations » State changed system after SEC said it misled investors about pension problems.
First Published Aug 11 2014 03:37 pm • Last Updated Aug 11 2014 03:37 pm

Wichita • Federal authorities announced Monday that Kansas has agreed settle a securities fraud charge accusing the state of misleading investors about the financial health of its public employee pension system in 2009 and 2010 — at the time the second-worst underfunded system of its kind in the nation.

The Securities and Exchange Commission said Monday that the state has consented to its cease-and-desist order to settle the case, without admitting or denying its findings. No financial sanctions were imposed. The SEC noted Kansas has since made changes and blamed insufficient procedures and poor communication between state agencies for the problem, which happened under the administration of then-Gov. Mark Parkinson, a Democrat.

Join the Discussion
Post a Comment

"Kansas failed to adequately disclose its multi-billion-dollar pension liability in bond offering documents, leaving investors with an incomplete picture of the state’s finances and its ability to repay the bonds amid competing strains on the state budget, said LeeAnn Ghazil Gaunt, chief of the agency’s enforcement unit dealing with public pensions.

She also noted in a news release that in determining the settlement, the agency considered the state’s "significant remedial actions" to mitigate the issues and the cooperation of state officials during the investigation.

Between August 2009 and July 2010, the Kansas Development Finance Authority raised $273 million through eight series of bonds without disclosing in its offering the existence of the significant underfunded pension liability in its Kansas Public Employees Retirement System, according to the SEC order. The failure to disclose the information resulted from insufficient procedures and poor communication between the state’s Development Finance Authority and the Kansas Department of Administration, SEC said.

Gov. Sam Brownback said in a written statement that his administration has improved transparency in the reporting system and taken decisive actions to meet its obligations.

"Since taking office, I have made restoring the health of our KPERS system a priority," Brownback said.

The Legislature in 2012 approved changes that included boosting employer and employee contributions and creating a new cash balance plan for people hired after 2015 that made "significant strides" in reducing the state’s projected pension debt by almost $500 million, the governor said.

Kansas Secretary of Administration Jim Clark also said in a statement that the agency is pleased SEC did not seek any financial penalties or make any claims of intentional misconduct based on the actions of prior administrations.

Copyright 2014 The Salt Lake Tribune. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Top Reader Comments Read All Comments Post a Comment
Click here to read all comments   Click here to post a comment

About Reader Comments

Reader comments on sltrib.com are the opinions of the writer, not The Salt Lake Tribune. We will delete comments containing obscenities, personal attacks and inappropriate or offensive remarks. Flagrant or repeat violators will be banned. If you see an objectionable comment, please alert us by clicking the arrow on the upper right side of the comment and selecting "Flag comment as inappropriate". If you've recently registered with Disqus or aren't seeing your comments immediately, you may need to verify your email address. To do so, visit disqus.com/account.
See more about comments here.
Staying Connected
Contests and Promotions
  • Search Obituaries
  • Place an Obituary

  • Search Cars
  • Search Homes
  • Search Jobs
  • Search Marketplace
  • Search Legal Notices

  • Other Services
  • Advertise With Us
  • Subscribe to the Newspaper
  • Access your e-Edition
  • Frequently Asked Questions
  • Contact a newsroom staff member
  • Access the Trib Archives
  • Privacy Policy
  • Missing your paper? Need to place your paper on vacation hold? For this and any other subscription related needs, click here or call 801.204.6100.