SESSION OF 2023
SUPPLEMENTAL NOTE ON HOUSE BILL NO. 2275
As Amended by House Committee of the Whole
Brief*
HB 2275, as amended, would make several changes to
a tax credit available for certain purchases from qualifying
vendors employing individuals with disabilities and create a
matching grant program to facilitate the transition of certain
employers toward paying employees at least minimum wage.
Tax Credit Changes
Changes to the tax credit would include naming the
credit, modifying the duration and extent of the credit,
expanding the definition of “individuals with disabilities,” and
restructuring the definition of “qualified vendor” from whom
purchases may be made.
Name Change
The provisions of the tax credit would be named the
Disability Employment Act (Act).
Duration and Extent of Credit
The bill would eliminate the provision specifying the
credit to expire after tax year 2023. The bill would provide for
a cap on the aggregate amount of credits under the Act to be
$5.0 million in tax years 2019 through 2023, $10.0 million in
tax years 2024 through 2028, and $10.0 million for each
successive five tax years starting in tax year 2029.
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*Supplemental notes are prepared by the Legislative Research
Department and do not express legislative intent. The supplemental
note and fiscal note for this bill may be accessed on the Internet at
http://www.kslegislature.org Individuals with Disabilities Definition
The bill would expand the definition of “individuals with
disabilities” to include individuals who are certified by a
healthcare provider, as determined by the Department of
Revenue, who can substantiate an individual as having a
physical or mental impairment that constitutes a substantial
barrier to employment. The bill would also eliminate a
requirement that individuals with disabilities work a minimum
number of hours per week to qualify for health insurance
coverage.
Qualified Vendor Definition
The bill would provide for three options by which an
entity may qualify as a qualified vendor:
●A not-for-profit business qualifying as a certified
business pursuant to KSA 75-3740 that:
○Does business primarily in Kansas or
substantially all of its production in Kansas;
○Employs at least 30.0 percent of its
employees in an integrated setting;
○Offers to contribute at least 75.0 percent of
the premium cost for health insurance
coverage for each eligible employee; and
○Does not employ individuals under a
certificate issued by the U.S. Secretary of
Labor under 29 U.S. Code section 214(c).
●A qualified vendor pursuant to KSA 75-3317 that:
○Employs at least 30.0 percent of its
employees in an integrated setting;
○Offers to contribute at least 75.0 percent of
the premium cost for health insurance
coverage for each eligible employee, offers a
company-sponsored insurance plan under the
2- 2275 Affordable Care Act, pays the required
subsidy to the Internal Revenue Service for
employees to purchase insurance through the
open market, or offers assistance to
employees to cover at least 75.0 percent of
their health insurance costs through legal and
appropriate methodology; and
○Does not employ individuals under a
certificate issued by the U.S. Secretary of
Labor under 29 U.S. Code section 214(c).
●A division of a Kansas not-for-profit organization
that:
○Does business primarily in Kansas or
substantially all of its production in Kansas;
○Within such division, employs at least 30.0
percent of its employees in an integrated
setting;
○Within such division, offers to contribute at
least 75.0 percent of the premium cost for
health insurance coverage for each eligible
employee, offers a company-sponsored
insurance plan under the Affordable Care Act,
pays the required subsidy to the Internal
Revenue Service for employees to purchase
insurance through the open market, or offers
assistance to employees to cover at least
75.0 percent of their health insurance costs
through legal and appropriate methodology;
and
○Does not employ individuals under a
certificate issued by the U.S. Secretary of
Labor under 29 U.S. Code section 214(c)
within such division or any other division of
the not-for-profit corporation.
Current law limits qualified vendors to not-for-profit
businesses qualifying as certified businesses pursuant to
KSA 75-3740 and qualified vendors pursuant to KSA 75-3317
3- 2275 and prohibits any employment by the vendor under a
certificate issued by the U.S. Secretary of Labor under 29
U.S. Code section 214(c).
Sheltered Workshop Transition Grant Program
The bill would create a grant program to assist Kansas
sheltered workshop employers away from employing
individuals with disabilities under a certificate issued by the
U.S. Secretary of Labor under 29 U.S. Code section 214(c)
and toward paying all such employees at least the minimum
wage.
The bill would create the Kansas Sheltered Workshop
Transition Fund (Fund), to be administered by the Kansas
Secretary of Labor (Secretary), and provide for an annual
transfer of $1.0 million to the Fund from the state Economic
Development Initiatives Fund (EDIF).
Workshop employers seeking to receive grants would be
required to provide a transition plan to the Secretary
demonstrating how the applicant will use the grant to
transition away from the use of a 214(c) certificate. The
workshop employers would be required to commit to
completing the plan and would be required to match grants
on a dollar-for-dollar basis with nonstate funds. Workshop
employers would be required to provide information to the
Secretary regarding the use of grant funds and associated
nonstate funds and the progress made towards achieving the
goal of the transition plan.
The Secretary would be required to consult with the
Secretary for Children and Families and the Secretary of
Aging and Disability Services or other appropriate state
agency in determining the approval of grants. If the Secretary
approves the transition plan and determines the workshop
employer has sufficient nonstate funds, the Secretary would
award the grant in an amount determined by the Secretary.
The Secretary would be permitted to award subsequent
4- 2275 grants to the same employer upon a showing of satisfactory
progress towards the employer’s transition plan.
The bill would define “Kansas sheltered workshop
employer” and “workshop employer” to be a private nonprofit,
state, or local government institution that provides
employment opportunities for individuals with intellectual,
developmental, or physical disabilities and provides such
employment opportunities for all or a portion of such
individuals under a certificate issued by the U.S. Secretary of
Labor under 29 U.S. Code section 214(c).
The bill would require, beginning in January 2024, the
Kansas Department of Labor to provide annual reports to the
House Committee on Commerce, Labor and Economic
Development and the Senate Committee on Commerce, or
their successor committees, on the amounts and uses of
grant funds by employers and the progress made by each
employer towards paying all employees at least the minimum
wage. The grant program would expire and all funds in the
Fund would be transferred to the State General Fund on July
1, 2033.
Background
The bill was introduced by the House Committee on
Commerce, Labor and Economic Development at the request
of Representative Mason.
5- 2275 House Committee on Commerce, Labor and Economic
Development
In the House Committee hearing, proponent testimony
was provided by representatives of Cerebral Palsy Research
Foundation of Kansas, Goodwill Industries of Kansas, and
Interhab. The proponents generally stated the bill would
extend and expand a program that helps facilitate
employment opportunities for individuals with disabilities who
would otherwise likely be dependent on public support.
Written-only proponent testimony was provided by
Representative Mason and representatives of Envision, Multi
Community Diversified Services, and the Wichita Regional
Chamber of Commerce.
Opponent testimony was provided by representatives of
Disability Rights Center of Kansas, Kansas Council on
Developmental Disabilities, and the Self Advocate Coalition of
Kansas. The opponents generally stated changes in the bill
would extend the benefits of the tax credit to organizations
who pay less than minimum wages to individuals with
disabilities.
Written-only opponent testimony was provided by
representatives of the Self Advocate Coalition of Kansas and
a private citizen.
The House Committee recommended the bill be passed
on February 14, 2023, but the bill was withdrawn from the
House Calendar and referred to the House Committee on
Appropriations on February 23, 2023. The bill was then
withdrawn from the House Committee on Appropriations and
rereferred to the House Committee on Commerce, Labor and
Economic Development on March 1, 2023. The House
Committee again recommended the bill be passed on March
6, 2023.
6- 2275 House Committee of the Whole
The House Committee of the Whole amended the bill to
eliminate the extension of the tax credit to organizations who
pay less than minimum wages to individuals with disabilities
and to create the Sheltered Workshop Transition Grant
program.
Fiscal Information
According to the fiscal note prepared by the Division of
the Budget on the bill, as introduced, the Department of
Revenue estimates enactment of the bill would reduce state
revenues by approximately $500,000 per year beginning in
fiscal year 2025.
The House Committee of the Whole amendment would
create an annual transfer of $1.0 million from the state
Economic Development Initiatives Fund to the Kansas
Sheltered Workshop Transition Fund beginning in fiscal year
2024.
Any fiscal effect associated with the bill is not reflected
in The FY 2024 Governor’s Budget Report.
Taxation; income tax; tax credit; Disability Employment Act; matching grants; Kansas
Sheltered Workshop Transition Fund
7- 2275