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Kansas House Bill HB2298

Kansas 2025-2026 Regular Session

Kansas House Bill HB2298 Compare Versions

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11 Session of 2025
22 HOUSE BILL No. 2298
33 By Representatives Weigel and Helgerson
44 2-5
55 AN ACT concerning state moneys; creating the liability reduction fund of
66 the Kansas public employees retirement system and transferring
77 $1,000,000,000 from the budget stabilization fund to such fund; using a
88 portion of the interest earnings of the liability reduction fund to provide
99 a cost-of-living adjustment to certain retirants of Kansas public
1010 employees retirement system and systems thereunder; authorizing
1111 certain transfers of such employer contribution savings from the state
1212 general fund to the budget stabilization fund; establishing requirements
1313 for the expenditure or transfer of moneys from the budget stabilization
1414 fund; amending K.S.A. 2024 Supp. 75-6706 and repealing the existing
1515 section.
1616 Be it enacted by the Legislature of the State of Kansas:
1717 New Section 1. (a) The retirement benefit, pension or annuity
1818 payments accruing after June 30, 2025, to each retirant shall be increased
1919 by a cost-of-living adjustment in an amount as provided in subsection (b).
2020 Such payments shall be paid by the retirement system to the retirant
2121 utilizing a portion of the interest earnings of the liability reduction fund
2222 created in section 2, and amendments thereto.
2323 (b) Each retirant whose date of retirement is on or before July 1,
2424 2020, and who is entitled to receive a retirement benefit, pension or
2525 annuity payment from the retirement system on July 1, 2025, shall have
2626 such retirement benefit, pension or annuity increased by 2% of the
2727 retirement benefit, pension or annuity payment in effect on July 1, 2025.
2828 (c) As used in this section:
2929 (1) "Insured disability benefit recipient" means any person receiving
3030 an insured disability benefit under K.S.A. 74-4927, and amendments
3131 thereto;
3232 (2) "retirement system" means the Kansas public employees
3333 retirement system, the Kansas police and firemen's retirement system, the
3434 state school retirement system and the retirement system for judges; and
3535 (3) "retirant" means any:
3636 (A) Person who is a member or special member of the retirement
3737 system pursuant to the provisions of K.S.A. 74-4901 et seq., and
3838 amendments thereto, and who retired on or before July 1, 2020;
3939 (B) person who is a joint annuitant or beneficiary of any member
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7676 described in subparagraph (A); and
7777 (C) insured disability benefit recipient.
7878 (d) The provisions of this section shall be a part of and supplemental
7979 to K.S.A. 74-4901 et seq., and amendments thereto.
8080 New Sec. 2. (a) There is hereby created in the state treasury the
8181 liability reduction fund. The purpose of such fund shall be to reduce the
8282 unfunded actuarial liability of the Kansas public employees retirement
8383 system. Subject to subsection (b), such fund shall be administered by the
8484 board of trustees of the Kansas public employees retirement system. All
8585 expenditures from the fund shall be made in accordance with appropriation
8686 acts upon warrants of the director of accounts and reports issued pursuant
8787 to vouchers approved by the chairperson of the board, the executive
8888 director of the system or the executive director's designee.
8989 (b) The state treasurer shall retain control of the moneys of the
9090 liability reduction fund and shall credit such moneys to the budget
9191 stabilization fund for the purpose of responding to an extraordinary
9292 occasion pursuant to K.S.A. 75-6706, and amendments thereto, when
9393 authorized by an appropriation or other act of the legislature or by the state
9494 finance council, acting on this matter which is hereby characterized as a
9595 matter of legislative delegation and subject to the guidelines prescribed in
9696 K.S.A. 75-3711c(c), and amendments thereto. The crediting of such
9797 moneys from the liability reduction fund to the budget stabilization fund
9898 shall occur only after all other moneys in the budget stabilization fund
9999 have been expended or transferred to respond to an extraordinary occasion.
100100 (c) The board of trustees shall be responsible for the management and
101101 investment of the moneys in the fund and shall discharge the board's duties
102102 with respect to such moneys solely in the interests of the liability reduction
103103 fund and shall invest and reinvest such moneys and acquire, retain,
104104 manage, including the exercise of any voting rights, and dispose of
105105 investments of such moneys within the limitations and according to the
106106 powers, duties and purposes as prescribed by this section.
107107 (d) Moneys specified in subsection (c) shall be invested and
108108 reinvested to achieve the investment objective which is preservation of
109109 such moneys and accordingly providing that the moneys are as productive
110110 as possible, subject to the standards set forth in this section. No such
111111 moneys shall be invested or reinvested if the sole or primary investment
112112 objective is for economic development or social purposes or objectives.
113113 (e) In investing and reinvesting moneys specified in subsection (c)
114114 and in acquiring, retaining, managing and disposing of investments of the
115115 moneys, the board of trustees shall exercise the judgment, care, skill,
116116 prudence and diligence under the circumstances then prevailing, which
117117 persons of prudence, discretion and intelligence acting in a like capacity
118118 and familiar with such matters would use in the conduct of an enterprise of
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162162 like character and with like aims by diversifying the investments of the
163163 moneys so as to minimize the risk of large losses, unless under the
164164 circumstances it is clearly prudent not to do so, and not in regard to
165165 speculation but in regard to the permanent disposition of similar moneys,
166166 considering the probable income as well as the probable safety of their
167167 capital.
168168 (f) In the discharge of such management and investment
169169 responsibilities the board of trustees may:
170170 (1) Contract for the services of one or more professional investment
171171 advisors or other consultants in the management and investment of such
172172 moneys and otherwise in the performance of the duties of the board of
173173 trustees under this section; and
174174 (2) arrange for the custody of such moneys as the board of trustees
175175 considers advisable with one or more member banks or trust companies of
176176 the federal reserve system or with one or more banks in the state of
177177 Kansas, or both, to be held in safekeeping by the banks or trust companies
178178 for the collection of the principal and interest or other income or of the
179179 proceeds of sale.
180180 (g) The board of trustees shall require that each person contracted
181181 with under subsection (f) to provide services shall obtain commercial
182182 insurance that provides for errors and omissions coverage for such person
183183 in an amount to be specified by the board of trustees. The amount of such
184184 coverage specified by the board of trustees shall be at least the greater of
185185 $500,000 or 1% of the funds entrusted to such person up to a maximum of
186186 $10,000,000. The board of trustees shall require a person contracted with
187187 under subsection (f) to provide services to give a fidelity bond in a penal
188188 sum as may be fixed by law or, if not so fixed, as may be fixed by the
189189 board of trustees, with corporate surety authorized to do business in this
190190 state. Such persons contracted with the board of trustees pursuant to
191191 subsection (f) and any persons contracted with such persons to perform the
192192 functions specified in subsection (c) shall be deemed to be fiduciary agents
193193 of the board of trustees in the performance of contractual obligations.
194194 (h) (1) Subject to the objective set forth in subsection (c) and the
195195 standards set forth in subsection (d), the board of trustees shall formulate
196196 and adopt policies and objectives for the investment and reinvestment of
197197 such moneys and the acquisition, retention, management and disposition of
198198 investments of the moneys. Such policies and objectives shall be in writing
199199 and shall include:
200200 (A) Specific asset allocation standards and objectives;
201201 (B) establishment of criteria for evaluating the risk versus the
202202 potential return on a particular investment; and
203203 (C) a requirement that all investment advisors, and any managers or
204204 others with similar duties and responsibilities as investment advisors, shall
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248248 immediately report all instances of default on investments to the board of
249249 trustees and provide such board of trustees with recommendations and
250250 options, including, but not limited to, curing the default or withdrawal
251251 from the investment.
252252 (2) The board of trustees shall review such policies and objectives,
253253 make changes considered necessary or desirable and readopt such policies
254254 and objectives on an annual basis.
255255 (i) All interest or other income of the investments of the moneys
256256 invested under this section, after payment of any management fees, shall
257257 be deposited annually in the state treasury to the credit of the liability
258258 reduction fund. The board shall prepare a summary report that shall be
259259 submitted to the joint committee on pensions, investments and benefits no
260260 later than January 1 of the year that follows the end of the fiscal year in
261261 which the reporting is required.
262262 (j) Such interest or other income of the liability reduction fund shall
263263 be considered assets of the Kansas public employees retirement system
264264 within the actuary's annual valuation under K.S.A. 74-4907(2), and
265265 amendments thereto.
266266 (k) The provisions of this section shall be a part of and supplemental
267267 to K.S.A. 74-4901 et seq., and amendments thereto.
268268 Sec. 3. K.S.A. 2024 Supp. 75-6706 is hereby amended to read as
269269 follows: 75-6706. (a) On July 1, 2017, the budget stabilization fund is
270270 hereby established in the state treasury. The legislature shall strive to
271271 maintain a balance in the budget stabilization fund that is between 15%
272272 and 20% of the amount of expenditures from the state general fund in the
273273 preceding fiscal year.
274274 (b) On or before the 10
275275 th
276276 day of each month commencing July 1,
277277 2017, the director of accounts and reports shall transfer from the state
278278 general fund to the budget stabilization fund interest earnings based on:
279279 (1) The average daily balance of moneys in the budget stabilization
280280 fund, for the preceding month; and
281281 (2) the net earnings rate of the pooled money investment portfolio for
282282 the preceding month.
283283 (c) On and after July 1, 2017 2025, except for the transfer authorized
284284 in subsection (e), no moneys in the budget stabilization fund shall be
285285 expended pursuant to this subsection or transferred unless the expenditure
286286 either or transfer has been approved by an appropriation or other act of the
287287 legislature or has been approved by the state finance council acting on this
288288 matter which is hereby characterized as a matter of legislative delegation
289289 and subject to the guidelines prescribed in K.S.A. 75-3711c(c), and
290290 amendments thereto, in order to respond to the following extraordinary
291291 occasions:
292292 (1) Financial emergency caused by a natural disaster;
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336336 (2) deep downturn in state revenues of greater than 10% from the
337337 immediately preceding fiscal year; or
338338 (3) crippling healthcare emergency caused by the deaths or illnesses
339339 of a significant percentage of the state's population.
340340 (d) (1) The legislative budget committee shall study and review the
341341 policy concerning the balance of, transfers to and expenditures from the
342342 budget stabilization fund. The legislative budget committee study and
343343 review shall include, but not be limited to, the following:
344344 (A) Risk-based budget stabilization fund practices utilized in other
345345 states.
346346 (B) The appropriate number of years to review the state general fund:
347347 (i) Revenue variances from projections; and
348348 (ii) expenditure variances from budgets.
349349 (C) The entity to certify the amount necessary in the budget
350350 stabilization fund to maintain the appropriate risk-based balance.
351351 (D) Plan to fund the budget stabilization fund.
352352 (E) Process and circumstances to reach the appropriate risk-based
353353 balance, including the amount of risk that is acceptable.
354354 (F) Circumstances under which expenditures may be made from the
355355 fund.
356356 (2) The legislative budget committee may make recommendations
357357 and introduce legislation as it deems necessary to implement such
358358 recommendations.
359359 (e) On July 1, 2021 2025, the director of accounts and reports shall
360360 transfer all moneys in $1,000,000,000 from the budget stabilization fund to
361361 the state general liability reduction fund of the Kansas public employees
362362 retirement system.
363363 (f) On July 1, 2026, and each July 1 thereafter, the director of the
364364 budget, in consultation with the executive director of the Kansas public
365365 employees retirement system, shall determine and certify to the director of
366366 accounts and reports the amount of annual employer contributions from
367367 the state general fund to the Kansas public employees retirement system
368368 that were the actual cost savings as a result of the transfer of moneys
369369 authorized in subsection (e) minus the annual cost of the cost-of-living
370370 adjustment authorized in section 1, and amendments thereto. The baseline
371371 shall be calculated from the December 31, 2024, actuarial valuation of the
372372 Kansas public employees retirement system. Upon receipt of each such
373373 certification, or as soon thereafter as moneys are available, the director of
374374 accounts and reports shall transfer such certified amount from the state
375375 general fund to the budget stabilization fund. When the director of the
376376 budget transmits such certification to the director of accounts and reports,
377377 the director of the budget shall transmit a copy to the director of
378378 legislative research.
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422422 Sec. 4. K.S.A. 2024 Supp. 75-6706 is hereby repealed.
423423 Sec. 5. This act shall take effect and be in force from and after its
424424 publication in the statute book.
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