Division of the Budget
Landon State Office Building Phone: (785) 296-2436
900 SW Jackson Street, Room 504 adam.c.proffitt@ks.gov
Topeka, KS 66612 http://budget.kansas.gov
Adam C. Proffitt, Director Laura Kelly, Governor
Division of the Budget
March 20, 2024
The Honorable William Sutton, Chairperson
House Committee on Insurance
300 SW 10th Avenue, Room 218-N
Topeka, Kansas 66612
Dear Representative Sutton:
SUBJECT: Fiscal Note for HB 2834 by House Committee on Appropriations
In accordance with KSA 75-3715a, the following fiscal note concerning HB 2834 is
respectfully submitted to your committee.
HB 2834 would transfer all powers, duties, and functions of the staff of the Division of the
State Employee Health Benefits Program (SEHBP) of the Department of Administration to the
Insurance Department under the direction of the Insurance Commissioner. The bill would transfer
all officers and employees of the SEHBP who are engaged in the exercise and performance of the
powers, duties, and functions involving the administration of the State Employee Health Benefits
Plan, as well as all officers and employees of the Department of Administration who are
determined by the Insurance Commissioner to be engaged in providing administrative, technical,
or other support services, to the Insurance Department. Transferred employees would retain all
retirement benefits, leave balances, and rights that had accrued prior to the transfer. The service
of each transferred employee or officer would be considered continuous. Any layoffs or abolishing
of classified positions must be made in accordance with the Kansas Civil Service Act. The bill
would prohibit the transfer from affecting the classified status of any transferred person.
The bill would make the Insurance Department the successor in every way to the powers,
duties, and functions of the SEHBP. The bill specifies that any statute that references the
Department of Administration in regard to the SEHBP would apply to the Insurance Department.
All rules and regulations, orders, and directives of the SEHBP of the Department of Administration
would continue to be effective and would be deemed to be apply to the rules and regulations,
orders, and directives of the Insurance Commissioner. The balances of all funds or accounts of
the SEHBP of the Department of Administration would be transferred to the Insurance
Department. Liability for all accrued compensation or salaries of transferred officers and
employees would be assumed and paid by the Insurance Department. The Insurance Department
would succeed to all property, property rights, contracts, and records of the SEHBP, and if any
conflict arises as to the disposition of any personnel, property, property right, contract, record,
power, duty, function, or unexpended balance of any appropriation, such conflict would be
resolved by the Insurance Commissioner. No suit, action, or other proceeding, judicial or
administrative, lawfully commenced, or that could have been commenced, by or against the
SEHBP of the Department of Administration or by or against the Secretary of Administration, The Honorable William Sutton, Chairperson
Page 2—HB 2834
could abate by reason of the transfer. No criminal action commenced or that could have been
commenced by the state could abate by reason of the transfer.
The bill would designate the Insurance Commissioner as the Chairperson of the Kansas
State Employees Health Care Commission. The Insurance Commissioner would administer all
budgeting, purchasing, and related management functions of the Commission. Under current law,
the technical administrator of the State Health Care Benefit Program is under the direction and
supervision of the Secretary of Administration. The bill would place the technical administrator
under the direction and supervision of the Insurance Commissioner. The bill would require the
Insurance Commissioner to appoint the technical administrator.
The Insurance Department indicates that enactment of the bill would be net neutral, as all
fund balances, revenues, and expenditures from the Department of Administration would be
transferred to the Insurance Department.
The State Employee Health Benefits Program (SEHBP) of the Department of
Administration indicates that additional staff would need to be hired to fill support roles for the
Program and to submit services currently provided through other Department of Administration
offices. The Department of Administration is not able to calculate the costs that may be incurred
The Department of Administration states that the SEHBP and the State Self Insurance Fund (SSIF)
are currently procuring a new data warehouse to be implemented in FY 2024. This project would
need to be rebid as it was a joint program bid and both plans would see additional costs to rebid
this along with a delayed implementation. The Department of Administration states that prior to
the SEHBP moving into the Department of Administration, it had a memorandum of understanding
in place for the Department of Administration to handle payroll processing of medical, health
savings account, flexible spending account, and other payroll processing. At that time, the SEHBP
paid over $119,000 annually for this service. The Department of Administration also notes that
the SEHBP and SSIF staff currently occupy the same building space. If expenditures for rent are
greater for SEHBP staff to be located at the Insurance Department, enactment of the bill may
increase expenditures for rent. Due to the variety of unknown factors, the Department of
Administration is unable to estimate a precise fiscal effect.
The Division of the Budget notes that budgeted expenditures from the SEHBP in the
Department of Administration total $643.3 million in FY 2024 and $667.9 million in FY 2025, all
from agency fee funds. These amounts include $607.5 million in FY 2024 and $631.8 million in
FY 2025 for employee healthcare premium payroll deductions for payment of claims. Any fiscal
effect associated with HB 2834 is not reflected in The FY 2025 Governor’s Budget Report.
Sincerely,
Adam C. Proffitt
Director of the Budget
cc: Bobbi Mariani, Insurance Department
Tamara Emery, Department of Administration