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 Proffitt, Director Laura Kelly, Governor
Division of the Budget
March 1, 2023
The Honorable Jeff Longbine, Chairperson
Senate Committee on Financial Institutions and Insurance
300 SW 10th Avenue, Room 546-S
Topeka, Kansas 66612
Dear Senator Longbine:
SUBJECT: Fiscal Note for SB 256 by Senate Committee on Ways and Means
In accordance with KSA 75-3715a, the following fiscal note concerning SB 256 is
respectfully submitted to your committee.
Under current law, KPERS Tier 3 members’ accounts earn a guaranteed 4.0 percent interest
rated each year and are eligible for a statutory dividend interest rate. This statutory formula
provides 75.0 percent of the net 5-year rolling average investment return above 6.0 percent. SB
256 would suspend the statutory formula and provide an additional 1.0 percent dividend interest
credit to all Tier 3 member accounts on December 31, 2023, with the statutory formula resumed
in subsequent years.
According to the KPERS actuary, providing an additional 1.0 percent interest credit is
considered relatively small, since most Tier 3 account balances are modest because Tier 3 has only
been in place since FY 2015. The KPERS actuary does not have complete data to perform a cost
study based on providing a 1.0 percent additional interest credit for accounts on December 31,
2023. However, based on the latest actuarial information, giving an additional 1.0 percent interest
credit for Tier 3 accounts as of December 31, 2022, would result in an increase of the unfunded
actuarial liability (UAL) of KPERS by $3.4 million, including $2.3 million for the State/School
Group and $1.1 million for the Local Group. For both the KPERS State/School Group and the
Local Group, this increase in the UAL would increase the employer contribution rate by 0.01
percent for both groups, beginning in FY 2024.
The Honorable Jeff Longbine, Chairperson
Page 2—SB 256
KPERS indicates that any additional administrative cost to implement the bill would be
negligible. Any fiscal effect associated with SB 256 is not reflected in The FY 2024 Governor’s
Budget Report.
Sincerely,
Adam Proffitt
Director of the Budget
cc: Jarod Waltner, KPERS