KS
Kansas Senate Bill SB34

Kansas 2025-2026 Regular Session

Kansas Senate Bill SB34 Compare Versions

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11 Session of 2025
22 SENATE BILL No. 34
33 By Senator Bowser
44 1-16
55 AN ACT concerning retirement and pensions; relating to the Kansas public
66 employees retirement system; authorizing the board of trustees to invest
77 up to 10% of the moneys of the Kansas public employees retirement
88 fund in bitcoin exchange-traded products; providing requirements,
99 limitations and definitions regarding such investments; amending
1010 K.S.A. 2024 Supp. 74-4921 and repealing the existing section.
1111 Be it enacted by the Legislature of the State of Kansas:
1212 Section 1. K.S.A. 2024 Supp. 74-4921 is hereby amended to read as
1313 follows: 74-4921. (1) There is hereby created in the state treasury the
1414 Kansas public employees retirement fund. All employee and employer
1515 contributions shall be deposited in the state treasury to be credited to the
1616 Kansas public employees retirement fund. The fund is a trust fund and
1717 shall be used solely for the exclusive purpose of providing benefits to
1818 members and member beneficiaries and defraying reasonable expenses of
1919 administering the fund. Investment income of the fund shall be added or
2020 credited to the fund as provided by law. All benefits payable under the
2121 system, refund of contributions and overpayments, purchases or
2222 investments under the law and expenses in connection with the system
2323 unless otherwise provided by law shall be paid from the fund. The director
2424 of accounts and reports is authorized to draw warrants on the state
2525 treasurer and against such fund upon the filing in the director's office of
2626 proper vouchers executed by the chairperson or the executive director of
2727 the board. As an alternative, payments from the fund may be made by
2828 credits to the accounts of recipients of payments in banks, savings and loan
2929 associations and credit unions. A payment shall be so made only upon the
3030 written authorization and direction of the recipient of payment and upon
3131 receipt of such authorization such payments shall be made in accordance
3232 therewith. Orders for payment of such claims may be contained on:
3333 (a) A letter, memorandum, telegram, computer printout or similar
3434 writing; or
3535 (b) any form of communication, other than voice, which is registered
3636 upon magnetic tape, disc or any other medium designed to capture and
3737 contain in durable form conventional signals used for the electronic
3838 communication of messages.
3939 (2) The board shall have the responsibility for the management of the
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7676 fund and shall discharge the board's duties with respect to the fund solely
7777 in the interests of the members and beneficiaries of the system for the
7878 exclusive purpose of providing benefits to members and such member's
7979 beneficiaries and defraying reasonable expenses of administering the fund
8080 and shall invest and reinvest moneys in the fund and acquire, retain,
8181 manage, including the exercise of any voting rights and disposal of
8282 investments of the fund within the limitations and according to the powers,
8383 duties and purposes as prescribed by this section.
8484 (3) Moneys in the fund shall be invested and reinvested to achieve the
8585 investment objective which is preservation of the fund to provide benefits
8686 to members and member beneficiaries, as provided by law and accordingly
8787 providing that the moneys are as productive as possible, subject to the
8888 standards set forth in this act. No moneys in the fund shall be invested or
8989 reinvested if any investment objective is for economic development or
9090 social purposes or objectives.
9191 (4) In investing and reinvesting moneys in the fund and in acquiring,
9292 retaining, managing and disposing of investments of the fund, the board
9393 shall exercise the judgment, care, skill, prudence and diligence under the
9494 circumstances then prevailing, which persons of prudence, discretion and
9595 intelligence acting in a like capacity and familiar with such matters would
9696 use in the conduct of an enterprise of like character and with like aims by
9797 diversifying the investments of the fund so as to minimize the risk of large
9898 losses, unless under the circumstances it is clearly prudent not to do so,
9999 and not in regard to speculation but in regard to the permanent disposition
100100 of similar funds, considering the probable income as well as the probable
101101 safety of their capital.
102102 (5) Notwithstanding subsection (4):
103103 (a) Total investments in common stock may be made in the amount of
104104 up to 60% of the total book value of the fund;
105105 (b) the board may invest or reinvest moneys of the fund in alternative
106106 investments if the following conditions are satisfied:
107107 (i) The total of the annual net commitment to alternative investments
108108 does not exceed 5% of the total market value of investment assets of the
109109 fund as measured from the end of the preceding calendar year;
110110 (ii) if in addition to the system, there are at least two other qualified
111111 institutional buyers, as defined by section (a)(1)(i) of rule 144A, securities
112112 act of 1933;
113113 (iii) the system's share in any individual alternative investment is
114114 limited to an investment representing not more than 20% of any such
115115 individual alternative investment;
116116 (iv) the system has received a favorable and appropriate
117117 recommendation from a qualified, independent expert in investment
118118 management or analysis in that particular type of alternative investment;
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162162 (v) the alternative investment is consistent with the system's
163163 investment policies and objectives as provided in subsection (6);
164164 (vi) the individual alternative investment does not exceed more than
165165 2.5% of the total alternative investments made under this subsection. If the
166166 alternative investment is made pursuant to participation by the system in a
167167 multi-investor pool, the 2.5% limitation contained in this subsection is
168168 applied to the underlying individual assets of such pool and not to
169169 investment in the pool itself. The total of such alternative investments
170170 made pursuant to participation by the system in any one individual multi-
171171 investor pool shall not exceed more than 20% of the total of alternative
172172 investments made by the system pursuant to this subsection. Nothing in
173173 this subsection requires the board to liquidate or sell the system's holdings
174174 in any alternative investments made pursuant to participation by the
175175 system in any one individual multi-investor pool held by the system on the
176176 effective date of this act, unless such liquidation or sale would be in the
177177 best interest of the members and beneficiaries of the system and be
178178 prudent under the standards contained in this section. The 20% limitation
179179 contained in this subsection shall not have been violated if the total of such
180180 investment in any one individual multi-investor pool exceeds 20% of the
181181 total alternative investments of the fund as a result of market forces acting
182182 to increase the value of such a multi-investor pool relative to the rest of the
183183 system's alternative investments; however, the board shall not invest or
184184 reinvest any moneys of the fund in any such individual multi-investor pool
185185 until the value of such individual multi-investor pool is less than 20% of
186186 the total alternative investments of the fund;
187187 (vii) the board has received and considered the investment manager's
188188 due diligence findings submitted to the board as required by subsection
189189 (6);
190190 (viii) prior to the time the alternative investment is made, the system
191191 has in place procedures and systems to ensure that the investment is
192192 properly monitored and investment performance is accurately measured;
193193 and
194194 (ix) the total of alternative investments does not exceed 25% of the
195195 total investment assets of the fund. The 25% limitation contained in this
196196 subsection shall not have been violated if the total of such alternative
197197 investments exceeds 25% of the total investment assets of the fund, based
198198 on the fund total market value, as a result of market forces acting to
199199 increase the value of such alternative investments relative to the rest of the
200200 system's investments. However, the board shall not invest or reinvest any
201201 moneys of the fund in alternative investments until the total value of such
202202 alternative investments is less than 25% of the total investment assets of
203203 the fund based on the market value. If the total value of the alternative
204204 investments exceeds 25% of the total investment assets of the fund, the
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248248 board shall not be required to liquidate or sell the system's holdings in any
249249 alternative investment held by the system, unless such liquidation or sale
250250 would be in the best interest of the members and beneficiaries of the
251251 system and is prudent under the standards contained in this section;
252252 (c) for purposes of this section, "alternative investment" includes a
253253 broad group of investments that are not one of the traditional asset types of
254254 public equities, fixed income, cash or real estate. Alternative investments
255255 are generally made through limited partnership or similar structures, are
256256 not regularly traded on nationally recognized exchanges and thus are
257257 relatively illiquid, and exhibit lower correlations with more liquid asset
258258 types such as stocks and bonds. Alternative investments generally include,
259259 but are not limited to, private equity, private credit, hedge funds,
260260 infrastructure, commodities and other investments that have the
261261 characteristics described in this paragraph; and
262262 (d) except as otherwise provided, the board may invest or reinvest
263263 moneys of the fund in real estate investments if the following conditions
264264 are satisfied:
265265 (i) The system has received a favorable and appropriate
266266 recommendation from a qualified, independent expert in investment
267267 management or analysis in that particular type of real estate investment;
268268 (ii) the real estate investment is consistent with the system's
269269 investment policies and objectives as provided in subsection (6); and
270270 (iii) the system has received and considered the investment manager's
271271 due diligence findings; and
272272 (e) the board may invest and reinvest moneys of the fund in bitcoin
273273 exchange-traded products issued by an investment company registered in
274274 Kansas. The total of bitcoin investments shall not exceed 10% of the total
275275 investment assets of the fund. The 10% limitation contained in this
276276 subsection shall not have been violated if the total of such bitcoin
277277 investments exceeds 10% of the total investment assets of the fund, based
278278 on the fund total market value, as a result of market forces acting to
279279 increase the value of such bitcoin investments relative to the rest of the
280280 system's investments. However, the board shall not invest or reinvest any
281281 moneys of the fund in bitcoin investments until the total value of such
282282 bitcoin investments is less than 10% of the total investment assets of the
283283 fund based on the market value. If the total value of the bitcoin
284284 investments exceeds 10% of the total investment assets of the fund, the
285285 board shall not be required to liquidate or sell the system's holdings in any
286286 bitcoin investment held by the system, unless such liquidation or sale
287287 would be in the best interest of the members and beneficiaries of the
288288 system and is prudent under the standards contained in this section;
289289 (f) for purposes of this section:
290290 (i) "Bitcoin" means the decentralized digital currency launched in
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334334 2009 that is based on Satoshi Nakamoto's white paper entitled "bitcoin: a
335335 peer-to-peer electronic cash system" and includes the digital asset that is
336336 the basis of the bitcoin exchange-traded product regulated by the United
337337 States securities and exchange commission; and
338338 (ii) "exchange-traded product" means a financial instrument that is
339339 approved by the United States securities and exchange commission, the
340340 commodities future trading commission or the office of the securities
341341 commissioner of Kansas, is traded on a United States regulated exchange
342342 and derives its value from an underlying pool of assets, including, but not
343343 limited to, stocks, bonds, commodities or indexes.
344344 (6) (a) Subject to the objective set forth in subsection (3) and the
345345 standards set forth in subsections (4) and (5) the board shall formulate
346346 policies and objectives for the investment and reinvestment of moneys in
347347 the fund and the acquisition, retention, management and disposition of
348348 investments of the fund. Such policies and objectives shall include:
349349 (i) Specific asset allocation standards and objectives;
350350 (ii) establishment of criteria for evaluating the risk versus the
351351 potential return on a particular investment;
352352 (iii) a requirement that all investment managers submit such
353353 manager's due diligence findings on each investment to the board or
354354 investment advisory committee for approval or rejection prior to making
355355 any alternative investment;
356356 (iv) a requirement that all investment managers shall immediately
357357 report all instances of default on investments to the board and provide the
358358 board with recommendations and options, including, but not limited to,
359359 curing the default or withdrawal from the investment; and
360360 (v) establishment of criteria that would be used as a guideline for
361361 determining when no additional add-on investments or reinvestments
362362 would be made and when the investment would be liquidated.
363363 (b) The board shall review such policies and objectives, make
364364 changes considered necessary or desirable and readopt such policies and
365365 objectives on an annual basis.
366366 (7) The board may enter into contracts with one or more persons
367367 whom the board determines to be qualified, whereby the persons undertake
368368 to perform the functions specified in subsection (2) to the extent provided
369369 in the contract. Performance of functions under contract so entered into
370370 shall be paid pursuant to rates fixed by the board subject to provisions of
371371 appropriation acts and shall be based on specific contractual fee
372372 arrangements. The system shall not pay or reimburse any expenses of
373373 persons contracted with pursuant to this subsection, except that after
374374 approval of the board, the system may pay approved investment related
375375 expenses subject to provisions of appropriation acts. The board shall
376376 require that a person contracted with to obtain commercial insurance
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420420 which provides for errors and omissions coverage for such person in an
421421 amount to be specified by the board, provided that such coverage shall be
422422 at least the greater of $500,000 or 1% of the funds entrusted to such person
423423 up to a maximum of $10,000,000. The board shall require a person
424424 contracted with to give a fidelity bond in a penal sum as may be fixed by
425425 law or, if not so fixed, as may be fixed by the board, with corporate surety
426426 authorized to do business in this state. Such persons contracted with the
427427 board pursuant to this subsection and any persons contracted with such
428428 persons to perform the functions specified in subsection (2) shall be
429429 deemed to be agents of the board and the system in the performance of
430430 contractual obligations.
431431 (8) (a) In the acquisition or disposition of securities, the board may
432432 rely on the written legal opinion of a reputable bond attorney or attorneys,
433433 the written opinion of the attorney of the investment counselor or
434434 managers, or the written opinion of the attorney general certifying the
435435 legality of the securities.
436436 (b) The board shall employ or retain qualified investment counsel or
437437 counselors or may negotiate with a trust company to assist and advise in
438438 the judicious investment of funds as herein provided in accordance with
439439 the provisions of this section.
440440 (9) (a) Except as provided in subsection (7) and this subsection, the
441441 custody of money and securities of the fund shall remain in the custody of
442442 the state treasurer, except that the board may arrange for the custody of
443443 such money and securities as it considers advisable with one or more
444444 member banks or trust companies of the federal reserve system or with one
445445 or more banks in the state of Kansas, or both, to be held in safekeeping by
446446 the banks or trust companies for the collection of the principal and interest
447447 or other income or of the proceeds of sale. The services provided by the
448448 banks or trust companies shall be paid pursuant to rates fixed by the board
449449 subject to provisions of appropriation acts.
450450 (b) The state treasurer and the board shall collect the principal and
451451 interest or other income of investments or the proceeds of sale of securities
452452 in the custody of the state treasurer and pay same when so collected into
453453 the fund.
454454 (c) The principal and interest or other income or the proceeds of sale
455455 of securities as provided in this subsection shall be reported to the state
456456 treasurer and the board and credited to the fund.
457457 (10) The board shall with the advice of the director of accounts and
458458 reports establish the requirements and procedure for reporting any and all
459459 activity relating to investment functions provided for in this act in order to
460460 prepare a record monthly of the investment income and changes made
461461 during the preceding month. The record will reflect a detailed summary of
462462 investment, reinvestment, purchase, sale and exchange transactions and
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506506 such other information as the board may consider advisable to reflect a
507507 true accounting of the investment activity of the fund.
508508 (11) The board shall provide for an examination of the investment
509509 program annually. The examination shall include an evaluation of current
510510 investment policies and practices and of specific investments of the fund in
511511 relation to the objective set forth in subsection (3), the standard set forth in
512512 subsection (4) and other criteria as may be appropriate, and
513513 recommendations relating to the fund investment policies and practices
514514 and to specific investments of the fund as are considered necessary or
515515 desirable. The board shall include in its annual report to the governor as
516516 provided in K.S.A. 74-4907, and amendments thereto, a report or a
517517 summary thereof covering the investments of the fund.
518518 (12) Any internal assessment or examination of alternative
519519 investments of the system performed by any person or entity employed or
520520 retained by the board which evaluates or monitors the performance of
521521 alternative investments shall be reported to the legislative post auditor so
522522 that such report may be reviewed in accordance with the annual financial-
523523 compliance audits conducted pursuant to K.S.A. 74-49,136, and
524524 amendments thereto.
525525 Sec. 2. K.S.A. 2024 Supp. 74-4921 is hereby repealed.
526526 Sec. 3. This act shall take effect and be in force from and after its
527527 publication in the statute book.
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