To the editor:
Citizens of Great Bend,
Last November, voters overwhelmingly approved the following sales tax question to provide funding to improve the retirement system for emergency services personnel.
Shall the City of Great Bend, Kansas be authorized to impose a two tenths of one percent (0.20%) City-wide retailers’ sales tax (the “Sales Tax”), for the purposes of financing the operations of the City’s police and fire departments, including the funding of pension plans therefore, and to provide property tax relief; with the collection of the Sales Tax to commence on April 1, 2022, or as soon thereafter as permitted by law; all pursuant to the provisions of K.S.A. 12-187 et seq. as amended?
Since that time, there has been a lot of discussion regarding the topic. Unfortunately, not all the information shared has been accurate. It is my intent that this letter would help bring clarity to the issue and correct any misinformation.
The sales tax is projected to generate $755,000 in annual revenues, and the city council is committed that the entirety of those monies will be used to improve the retirement system.
A big misconception has been that the passage of the sales tax question authorized the city to join Kansas Police & Fire (KP&F) the State of Kansas’ retirement system. However, the council has never made a commitment to a specific solution. I apologize if you believed you were voting to approve joining KP&F. I take full responsibility for failing to ensure that everyone was accurately informed. Neither I nor the city council would ever intentionally mislead you.
My team and I have presented the city council with three viable options for their consideration. The basics of each plan are as follows.
1. Join Kansas Police & Fire. KP&F is a defined benefit plan that is designed specifically to meet the unique retirement needs of emergency service personnel. It is a well-known and highly respected system. The downsides are it is expensive and once the city elects to join, it will never be able to reverse that decision. Sales tax will not be able to cover the entire cost for the life of the plan. Current projections show that the plan’s cost will exceed sales tax revenues in 2033.
2. Enhance the contribution levels of the City’s current Money Purchase Plan. This is a 401(a)-style retirement system. The city currently contributes 9.5% of the employee’s salary and the employee contributes 4.5%. We have made two proposals to raise the city’s contribution levels to either 17.5% or 22%. The employee contributions would increase as well. However, these proposals are tiered approaches that would allow employees to contribute at a rate which best fits their financial situation. Like KP&F, sales tax would not be able to cover the entire cost for the life of either of these plans. Projections show that the costs will exceed sales tax revenues in 2046 and 2036 respectively.
3. Create a Profit-Sharing Plan. This would create a new 401(a) Profit-Sharing Plan that would distribute the sales tax to the employees, by a yet to-be-determined formula. This plan would be designed so that it would never cost more than the sales tax generated.
Each plan has pros and cons, of which the council has been made aware and which they will factor into their decision making.
The city council fully supports the men and women of our emergency services. Furthermore, they understand the need for and desire to provide a retirement system that adequately provides for the financial well-being of the employee upon the completion of their service. As responsible servants, they must weigh all the information and make a data-driven decision that best meets the needs of the employees and the city alike.
Kendal Francis
City Administrator
