Session of 2025
SENATE BILL No. 232
By Committee on Federal and State Affairs
2-6
AN ACT concerning retirement and pensions; relating to management and
investment by the board of trustees of the Kansas public employees
retirement system of moneys certified by the state treasurer as
equivalent to the aggregate net amount received for unclaimed
property; modifying investment standards; authorizing investments in
certain foreign governments; amending K.S.A. 2024 Supp. 75-2263
and repealing the existing section.
Be it enacted by the Legislature of the State of Kansas:
Section 1. K.S.A. 2024 Supp. 75-2263 is hereby amended to read as
follows: 75-2263. (a) (1) The state treasurer shall certify to the board of
trustees a portion of state moneys available for investment by the pooled
money investment board that is equivalent to the aggregate net amount
received for unclaimed property. The state treasurer may transfer the
amount certified to the board of trustees. All such moneys shall be
considered moneys in the state treasury for purposes of K.S.A. 75-6704,
and amendments thereto.
(2) Subject to the provisions of subsection (h), the board of trustees is
responsible for the management and investment of that portion of state
moneys available for investment by the pooled money investment board
that is certified by the state treasurer to the board of trustees as being
equivalent to the aggregate net amount received for unclaimed property
and shall discharge the board's duties with respect to such moneys solely
in the interests of the state general fund and shall invest and reinvest such
moneys and acquire, retain, manage, including the exercise of any voting
rights and disposal of investments of such moneys within the limitations
and according to the powers, duties and purposes as prescribed by this
section.
(b) Moneys specified in subsection (a) shall be invested and
reinvested to achieve the investment objective, which is preservation of
such moneys and accordingly providing that the moneys are as productive
as possible, subject to the standards set forth in this section. No such
moneys shall be invested or reinvested if the sole or primary investment
objective is for economic development or social purposes or objectives.
(c) In investing and reinvesting moneys specified in subsection (a)
and in acquiring, retaining, managing and disposing of investments of the
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moneys, the board of trustees shall exercise the judgment, care, skill,
prudence and diligence under the circumstances then prevailing that
persons of prudence, discretion and intelligence acting in a like capacity
and familiar with such matters would use in the conduct of an enterprise of
like character and with like aims by diversifying the investments of the
moneys so as to minimize the risk of large losses, unless under the
circumstances it is clearly prudent not to do so, and not in regard to
speculation but in regard to the permanent disposition of similar moneys,
considering the probable income as well as the probable safety of their
capital.
(d) In the discharge of such management and investment
responsibilities the board of trustees may:
(1) Contract for the services of one or more professional investment
advisors or other consultants in the management and investment of such
moneys and otherwise in the performance of the duties of the board of
trustees under this section; and
(2) arrange for the custody of such moneys as the board of trustees
considers advisable with one or more member banks or trust companies of
the federal reserve system or with one or more banks in the state of
Kansas, or both, to be held in safekeeping by the banks or trust companies
for the collection of the principal and interest or other income or of the
proceeds of sale; and
(3) invest in bonds, notes, debentures or other similar obligations of
a foreign government that the international monetary fund lists as an
industrial country and for which the full faith and credit of such nation has
been pledged for the payment of principal and interest so long as such
security shall be rated at least A- or better by Standard and Poor's
corporation or A3 or better by Moody's investors service or an equivalent
investment grade by a securities rating organization accepted by the
national association of insurance commissioners. The investment in such
foreign securities at any one time shall not exceed 5% of the cash
available for investment that may be invested pursuant to this section.
Under no circumstances shall investments be made in bonds, notes,
debentures or any similar obligations of a foreign government that is:
(A) Identified as a state sponsor of terrorism by the United States
department of state; or
(B) an authoritarian or totalitarian government the sovereign powers
of which are exercised through a single person or group of persons who
are not elected by any form of legitimate popular voting.
(e) The board of trustees shall require that each person contracted
with under subsection (d)(1) or (2) to provide services shall obtain
commercial insurance that provides for errors and omissions coverage for
such person in an amount to be specified by the board of trustees. The
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amount of such coverage specified by the board of trustees shall be at least
the greater of $500,000 or 1% of the funds entrusted to such person up to a
maximum of $10,000,000. The board of trustees shall require a person
contracted with under subsection (d) to provide services to give a fidelity
bond in a penal sum as may be fixed by law or, if not so fixed, as may be
fixed by the board of trustees, with corporate surety authorized to do
business in this state. Such persons contracted with the board of trustees
pursuant to subsection (d) and any persons contracted with such persons to
perform the functions specified in subsection (b) shall be deemed to be
fiduciary agents of the board of trustees in the performance of contractual
obligations.
(f) (1) Subject to the objective set forth in subsection (b) and the
standards set forth in subsection (c), the board of trustees shall formulate
and adopt policies and objectives for the investment and reinvestment of
such moneys and the acquisition, retention, management and disposition of
investments of the moneys. Such policies and objectives shall be in writing
and shall include:
(A) Specific asset allocation standards and objectives;
(B) establishment of criteria for evaluating the risk versus the
potential return on a particular investment; and
(C) a requirement that all investment advisors, and any managers or
others with similar duties and responsibilities as investment advisors, shall
immediately report all instances of default on investments to the board of
trustees and provide such board of trustees with recommendations and
options, including, but not limited to, curing the default or withdrawal
from the investment.
(2) The board of trustees shall review such policies and objectives,
make changes considered necessary or desirable and readopt such policies
and objectives on an annual basis.
(g) All interest or other income of the investments of the moneys
invested under this section, after payment of any management fees, shall
be deposited in the state treasury to the credit of the state general fund.
(h) The state treasurer shall maintain the discretionary authority to
liquidate some or a portion of such moneys transferred to the board of
trustees pursuant to subsection (a) for:
(1) Investment by the pooled money investment board; or
(2) necessary payments to owners as defined in K.S.A. 58-3934(m),
and amendments thereto.
(i) As used in this section:
(1) "Board of trustees" means the board of trustees of the Kansas
public employees retirement system established by K.S.A. 74-4905, and
amendments thereto.
(2) "Fiduciary" means a person who, with respect to the moneys
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invested under this section:
(A) Exercises any discretionary authority with respect to
administration of the moneys;
(B) exercises any authority to invest or manage such moneys or has
any authority or responsibility to do so;
(C) provides investment advice for a fee or other direct or indirect
compensation with respect to such moneys or has any authority or
responsibility to do so;
(D) provides actuarial, accounting, auditing, consulting, legal or other
professional services for a fee or other direct or indirect compensation with
respect to such moneys or has any authority or responsibility to do so; or
(E) is a member of the board of trustees or of the staff of the board of
trustees.
(3) "Pooled money investment board" means the pooled money
investment board established by K.S.A. 75-4221a, and amendments
thereto.
Sec. 2. K.S.A. 2024 Supp. 75-2263 is hereby repealed.
Sec. 3. This act shall take effect and be in force from and after its
publication in the statute book.
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