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 9  AN ACT concerning retirement and pensions; relating to the Kansas
10    public employees retirement system and systems thereunder; relat-
11    ing to definitions; life insurance; survivor provisions; purchase of par-
12    ticipating service credit district magistrate judges; state school re-
13    tirement system; benefits and contributions; arrearages;
14    long-term disability benefits and retirement annuity for disabled
15    judges; annual final average salary adjustment; real estate in-
16    vestment standards; elected board members; hearing officers;
17    earnings after retirement; amending K.S.A. 20-2609, 20-2610, 20-
18    2620 and 72-5501 and K.S.A. 1996 Supp. 20-2601, 74-4902, 74-
19    4904, 74-4905, 74-4908, 74-4910, 74-4911f, 74-4913, 74-4914,
20    74-4914e, 74-4919a, 74-4919c and, 74-4919h, 74-4920, 74-4921,
21    74-4927, 74-4952, 74-4957, 74-4957a, 74-4966 and 74-4990 and
22    repealing the existing sections.
23
24  Be it enacted by the Legislature of the State of Kansas:
25    Section 1.  K.S.A. 1996 Supp. 20-2601 is hereby amended to read as
26  follows: 20-2601. As used in K.S.A. 20-2601 et seq. and amendments
27  thereto, unless the context otherwise requires:
28    (a)  ``Fund'' means the Kansas public employees retirement fund cre-
29  ated by K.S.A. 74-4921 and amendments thereto;
30    (b)  ``retirement system for judges'' means the system provided for in
31  the acts contained in article 26 of chapter 20 of the Kansas Statutes An-
32  notated and any acts amendatory thereof or supplemental thereto;
33    (c)  ``judge'' means any duly elected or appointed justice of the su-
34  preme court, judge of the court of appeals or judge of any district court
35  of Kansas, who serves in such capacity on and after the effective date of
36  this act and commencing with the first day of the first payroll period of
37  the fiscal year ending June 30, 1994, any district magistrate judge who
38  makes an election as provided in K.S.A. 20-2620 and amendments thereto
39  or who is elected or appointed on or after July 1, 1993;
40    (d)  ``member'' means a judge who is making the required contribu-
41  tions to the fund, or any former judge who has made the required con-
42  tributions to the fund and has not received a refund of the judge's ac-
43  cumulated contributions;
SB 154--Am.
                                     

 1    (e)  ``prior service'' means all the periods of time any judge has served
 2  in such capacity prior to the effective date of this act except that district
 3  magistrate judges who have service credit under the Kansas public em-
 4  ployees retirement system must make application to the board and make
 5  payment as required by the board to transfer service credit from the
 6  Kansas public employees retirement system to the retirement system for
 7  judges;
 8    (f)  ``current service'' means the period of service any judge serves in
 9  such capacity from and after the effective date of this act;
10    (g)  ``military service'' means active service of any judge in any of the
11  armed forces of the United States or in the United States public health
12  service prior or subsequent to the effective date of this act, provided such
13  service commenced while such judge was holding the office of judge. The
14  board has the power to determine when a national emergency exists or
15  has existed for the purpose of applying this definition and provision;
16    (h)  ``total years of service'' means the total number of years served as
17  a judge, including prior service, military service and current service as
18  defined by this section, computed to the nearest quarter;
19    (i)  ``salary'' means the statutory salary of a judge;
20    (j)  ``final average salary'' means that determined as provided in sub-
21  section (b) of K.S.A. 20-2610 and amendments thereto;
22    (k)  ``beneficiary'' means any natural person or persons or estate des-
23  ignated by a judge in the latest designation of beneficiary received in the
24  retirement system office to receive any benefits as provided for by this
25  act. Except as provided in subsection (n), if there is no named beneficiary
26  living at the time of the judge's death, any benefits provided for by this
27  act shall be paid to: (1) The judge's surviving spouse; (2) the judge's
28  dependent child or children; (3) the judge's dependent parent or parents;
29    (4) the judge's nondependent child or children; (5) the judge's nonde-
30  pendent parent or parents; (6) the estate of the deceased member; in the
31  order of preference as specified in this subsection. Any payment made to
32  a named beneficiary shall be a full discharge and release to the system
33  from any further claims. Any payment made to a beneficiary as provided
34  in clauses (1), (2), (3), (4), (5) or (6) of this subsection, as determined by
35  the board, shall be a full discharge and release to the system from any
36  further claims. Whenever any payment is payable to more than one ben-
37  eficiary such payment shall be made to such beneficiaries jointly. Any
38  benefits payable to a beneficiary or beneficiaries who are minor children
39  or incompetent persons shall be made in the name of the beneficiary or
40  beneficiaries and delivered to the lawfully appointed conservator of such
41  beneficiaries who was nominated by will or as otherwise provided by law,
42  except that in those cases where the benefit involves only the payment of
43  the judge's accumulated contributions with interest as provided by this
SB 154--Am.
                                     

 1  act in an amount not to exceed $500, the board is hereby authorized in
 2  its discretion without the appointment of a conservator or the giving of a
 3  bond to pay such amount as is due to the minor or minors themselves,
 4  any payment so made shall be a full discharge and release to the system
 5  from any further claims. Effective January 1, 1998, a member may des-
 6  ignate a beneficiary or beneficiaries for any death benefits payable under
 7  the provisions of K.S.A. 74-4927 through 74-4927h, and amendments
 8  thereto, which are different from any beneficiary or beneficiaries the
 9  member may have designated for any other benefits. Designations of ben-
10  eficiaries by a member who is a member of more than one retirement
11  system made on or after July 1, 1987, shall be the basis of any benefits
12  payable under all systems unless otherwise provided by law;
13    (l)  ``annuity'' means a series of equal monthly payments, payable at
14  the end of each calendar month during the life of a retired judge, of
15  which payments the first payment shall be made as of the end of the
16  calendar month in which such annuity was awarded and the last payment
17  shall be at the end of the calendar month in which such judge dies. The
18  first payment shall include all amounts accrued since the effective date
19  of the award of annuities, including a pro rata portion of the monthly
20  amount of any fraction of a month elapsing between the effective date of
21  such annuity and the end of the calendar month in which such annuity
22  began;
23    (m)  ``board'' means the board of trustees of the Kansas public em-
24  ployees retirement system;
25    (n)  ``trust'' means an express trust created by any trust instrument,
26  including a will, and designated by a member to receive benefits and other
27  amounts payable under K.S.A. 20-2607, 20-2610a and 20-2612, and
28  amendments thereto, instead of a beneficiary. A designation of a trust
29  shall be filed with the board. If there is a designated trust at the time of
30  the member's death, all benefits and other amounts payable under K.S.A.
31  20-2607, 20-2610a and 20-2612, and amendments thereto, shall be paid
32  to the trust instead of the member's beneficiary. If no will is admitted to
33  probate within six months after the death of the member or no trustee
34  qualifies within such six months or if the designated trust fails, for any
35  reason whatsoever, any benefits and other amounts payable under K.S.A.
36  20-2607, 20-2610a and 20-2612, and amendments thereto, shall be paid
37  to the member's beneficiary and any payments so made shall be a full
38  discharge and release to the retirement system for judges from any fur-
39  ther claims;
40    (o)  ``accumulated contributions'' means the sum of all contributions
41  by a member to the retirement system for judges which are credited to
42  the member's account, with interest allowed thereon after June 30, 1982;
43  and
SB 154--Am.
                                     

 1    (p)  except as otherwise provided in K.S.A. 20-2601 et seq. and
 2  amendments thereto, words and phrases used in K.S.A. 20-2601 et seq.
 3  and amendments thereto shall have the same meanings ascribed to them
 4  as are defined in K.S.A. 74-4902 and amendments thereto.
 5    Sec. 2.  K.S.A. 20-2609 is hereby amended to read as follows:
 6  20-2609. (a) Any judge who has become permanently physically or
 7  mentally disabled and who is not entitled to retire under K.S.A. 20-
 8  2608 and amendments thereto may, upon being found so disabled
 9  by the supreme court, retire under this section, and upon such re-
10  tirement such judge shall be entitled to receive an annuity, each
11  monthly payment of which shall be in an amount equal to 3.5% of
12  the final average salary of the judge, determined as provided in
13  subsection (b) of K.S.A. 20-2610 and amendments thereto, multi-
14  plied by the number of total years of service, but for any judge who
15  becomes disabled as provided in this section on or after July 1, 1997, such
16  monthly benefits shall be at least 25% 50% but shall not exceed 70%
17  of the final average salary of the judge, determined as provided in
18  subsection (b) of K.S.A. 20-2610 and amendments thereto.
19    (b)  Any judge, or the conservator of any judge, desiring to retire
20  under the provisions of this section shall file an application for such
21  retirement with the clerk of the supreme court, which application
22  shall be in such form and contain such information as the supreme
23  court shall require. The court may require such judge to be exam-
24  ined by a physician appointed by the court and may require such
25  other evidence and proof of disability as it deems necessary to reach
26  a determination as to whether such judge is so permanently disa-
27  bled. If the supreme court shall determine that any such judge is so
28  permanently disabled it shall promptly notify the board and there-
29  upon such judge shall be placed on retirement by the board and
30  monthly receive the retirement annuity as provided in this section.
31    (c)  Any judge receiving an annuity under the provisions of this
32  section shall be considered an active judge for the purposes of K.S.A.
33  20-2608 and amendments thereto and shall, upon reaching age 65
34  or upon making application for retirement, have such judge's re-
35  tirement under this section terminated and such judge shall be
36  placed on retirement under the provisions of K.S.A. 20-2608 and
37  amendments thereto.
38    (d)  In the event that a judge eligible for a disability annuity
39  authorized by this section shall be disabled for a period of five years
40  or more immediately preceding retirement, such judge's final av-
41  erage salary shall be adjusted upon retirement by the actuarial sal-
42  ary assumption rates in existence during such period of disability.
43  Effective July 1, 1993, such judge's final average salary shall be
SB 154--Am.
                                     

 1  adjusted upon retirement by 5% for each year of disability after
 2  July 1, 1993, but before July 1, 1997. Effective July 1, 1997, such judge's
 3  final average salary shall be adjusted upon retirement by an amount equal
 4  to the lesser of: (1)  The percentage increase in the consumer price index
 5  for all urban consumers as published by the bureau of labor statistics of
 6  the United States department of labor minus one percent; or (2) four
 7  percent per annum, measured from the month the disability occurs to the
 8  month that is two months prior to the month of retirement, for each year
 9  of disability after July 1, 1997.
10    (e)  The provisions of law in effect on the retirement date of a
11  judge under the retirement system for judges shall govern the re-
12  tirement benefit payable to the judge, any joint annuitant and any
13  beneficiary.
14    Sec. 3.  K.S.A. 20-2610 is hereby amended to read as follows:
15  20-2610. (a) (1) A judge who retires under K.S.A. 20-2608, and
16  amendments thereto, shall be entitled to receive an annual annuity
17  payable in monthly amounts subject to subsection (b), each monthly
18  payment such annual annuity of which shall be in an amount equal
19  to the total of 5% of the final average salary of the judge, determined
20  as provided in subsection (b), multiplied by the number of the jud-
21  ge's years of service up to 10 years, and 3.5% of the final average
22  salary of the judge, determined as provided in subsection (b), mul-
23  tiplied by the number of the judge's years of service in excess of 10
24  years, but such monthly benefits annual annuity shall not exceed 70%
25  of the final average salary of such judge, determined as provided in
26  subsection (b). A judge who retires under K.S.A. 20-2608 and
27  amendments thereto, and who became a member of the system after
28  June 30, 1987, shall be entitled to receive an annual annuity payable
29  in monthly amounts subject to subsection (b), each monthly payment
30  such annual annuity of which shall be in an amount equal to the total
31  of 3.5% of the final average salary of the judge, determined as pro-
32  vided in subsection (b), multiplied by the number of the judge's
33  years of service, but such monthly benefits annual annuity shall not
34  exceed 70% of the final average salary of the judge, determined as
35  provided in subsection (b).
36    (2)  For purposes of this subsection, the date of membership for a
37  district magistrate judge who became a member of the system as provided
38  by K.S.A. 20-2620 and amendments thereto and who purchased service
39  as provided in subsection (c) of K.S.A. 20-2620 and amendments thereto
40  shall be the day such district magistrate judge became a district magistrate
41  judge and if such district magistrate judge's membership date as deter-
42  mined in this subsection is earlier than July 1, 1987, such district mag-
43  istrate judge shall be entitled to the 5% of final average salary calculation
SB 154--Am.
                                     

 1  for up to 10 years of service as provided in this subsection. Any additional
 2  cost associated with the provisions of this subsection shall be paid by such
 3  district magistrate judge by means of a single lump-sum payment. No
 4  participating employer shall pay all or any part of any cost associated
 5  with the provisions of this subsection.
 6    (b)  For any judge who retires under K.S.A. 20-2608 or 20-2609,
 7  and amendments thereto, on or after July 1, 1975, the annuity shall
 8  be based on the final average salary of such judge as provided in
 9  this subsection. The final average salary of a judge who becomes
10  permanently physically or mentally disabled and who is retired un-
11  der K.S.A. 20-2608 or 20-2609, and amendments thereto, shall be
12  determined as if such judge had retired on the date such judge be-
13  came permanently physically or mentally disabled. The final av-
14  erage salary of a former judge whose service is terminated without
15  retiring and who later retires under K.S.A. 20-2608, and amend-
16  ments thereto, shall be determined as if such former judge had re-
17  tired at the time such service was terminated.
18    In the case of judges who retire on or after July 1, 1993, the final
19  average salary shall mean the average highest annual salary paid
20  to the judge for any three years of the last 10 years of service as a
21  judge immediately preceding retirement or termination of employ-
22  ment, or if service as a judge is less than three years, then the final
23  average salary shall be the average annual salary paid to the judge
24  during the full period of service as a judge, or if service as a judge
25  is less than one year, then the final average salary shall be computed
26  by multiplying the amount of monthly salary such judge was re-
27  ceiving at the time of retirement by 12.
28    (c)  The provisions of law in effect on the retirement date of a
29  judge under the retirement system for judges shall govern the re-
30  tirement benefit payable to the judge, any joint annuitant and any
31  beneficiary.
32    (d)  A judge who retires under K.S.A. 20-2608 and amendments
33  thereto, and who, after such retirement, again is appointed or elected as
34  a judge, shall have the judge's retirement annuity suspended as provided
35  in this subsection. Such judge shall become an active member and make
36  employee contributions to the system and receive service credit for any
37  service after the date of commencement of service in such position. Upon
38  again retiring, any credited service such member subsequently accrues
39  shall be added to all previous service and the retirement annuity shall be
40  recalculated in accordance with the provisions of this section.
41    Sec. 4.  K.S.A. 20-2620 is hereby amended to read as follows:
42  20-2620. (a) Except as otherwise provided, each district magistrate
43  judge holding such position on the effective date of this act may
SB 154--Am.
                                     

 1  become a member of the retirement system for judges on the first
 2  day of the payroll period of the fiscal year ending June 30, 1994,
 3  only by filing with the board of trustees of the Kansas public em-
 4  ployees retirement system on or before the first day of the payroll
 5  period of the fiscal year ending June 30, 1994, a written election to
 6  become a member of the system. Failure to file such written election
 7  shall be presumed to be an election not to become a member of the
 8  system. Such election, whether to become a member or not to be-
 9  come a member, shall be irrevocable. In addition, any such district
10  magistrate judge who makes the election previously provided in this
11  section, may elect to transfer such district magistrate judge's service
12  credit from the Kansas public employees retirement system as pro-
13  vided in subsection (e) of K.S.A. 20-2601 and amendments thereto
14  and subsection (c). The date of membership for a district magistrate
15  judge who became a member of the system as provided in this section and
16  who purchased service as provided in subsection (c) shall be the day that
17  such district magistrate judge became a district magistrate judge.
18    (b)  Each person who becomes a district magistrate judge on or
19  after the effective date of this act shall become a member of the
20  retirement system for judges on the first day such person holds the
21  position of district magistrate judge.
22    (c)  The board of trustees of the Kansas public employees retire-
23  ment system shall transfer to the credit of the district magistrate
24  judge under the retirement system for judges such amounts as may
25  be presently credited to a district magistrate judge's account for
26  contribution under the Kansas public employees retirement system
27  and an equivalent amount to the employer's account for contribu-
28  tions for such district magistrate judge whenever an application for
29  conversion of service under the Kansas public employees retirement
30  system is received from a district magistrate judge. Any district
31  magistrate judge may purchase such service by electing such pur-
32  chase prior to retirement by means of a single lump sum payment
33  or equal annual payments for not to exceed five years. The lump
34  sum or annual payments shall be determined by the system's actu-
35  ary by using the member's final average salary at the time of ap-
36  plication, actuarial assumptions and tables currently in use by the
37  system and the member's attained age. No participating employer
38  shall pay all or any part of the cost of service credit purchased by
39  a member under this section.
40    Sec. 5.  K.S.A. 72-5501 is hereby amended to read as follows:
41  72-5501. As used in this act, unless the context otherwise requires:
42    (a)  ``Retirement system'' means the state school retirement sys-
43  tem;
SB 154--Am.
                                     

 1    (b)  ``board'' means the board of trustees of the Kansas public
 2  employees retirement system;
 3    (c)  ``school year'' means either the twelve-month period begin-
 4  ning on September first, or the legal school term during such period.
 5  In case of doubt the board shall decide what constitutes a school
 6  year; but it shall not give credit for a school year that represents
 7  less than 140 days, except that the board may give credit for a school
 8  year if not less than 80 days of actual service has been rendered
 9  and if continuance in school service was prevented by illness or
10  other emergency beyond the control of the person entitled to such
11  credit. No person shall receive credit for more than one school year
12  during any twelve-month period beginning on September 1. The
13  board shall give credit for 1/2 of a school year for 1/2 school year of
14  continuous full-time service;
15    (d)  ``school employees'' means persons who have performed or
16  who shall hereafter perform school services as classroom teachers,
17  administrators, supervisors, librarians, nurses, clerks, janitors, or
18  in any other full-time capacity in the public schools, area voca-
19  tional-technical schools or community junior colleges of the state
20  of Kansas and who are citizens of the United States and it shall
21  include (1) persons who have performed service as a county super-
22  intendent of public instruction or as an employee appointed by and
23  under the supervision of a county superintendent, (2) persons who
24  have performed service as a state superintendent of public instruc-
25  tion or as an employee appointed by and under supervision of a
26  state superintendent, (3) persons who have performed services as
27  an employee appointed by the former state board for vocational
28  education, except that prior to the time of accepting such employ-
29  ment by such county superintendent, state superintendent or state
30  board for vocational education such employees had performed
31  school service in Kansas as a teacher, principal, supervisor, or su-
32  perintendent, (4) persons who are employees appointed by and un-
33  der the supervision of the constitutional state board of education,
34  including those employees transferred to the state department of
35  education at its inception in January of 1969, and who prior to the
36  time of accepting such employment by the state board of education
37  had performed school service in Kansas as a teacher, principal, su-
38  pervisor, or superintendent, (5) the commissioner of education if
39  such commissioner exercises an option to be covered by the state
40  school retirement system in lieu of being covered by the Kansas
41  public employees retirement system, which option shall be exercised
42  by written notice of the commissioner of education at the time of
43  appointment, such notice to be directed to the state school retire-
SB 154--Am.
                                     

 1  ment board and the board of trustees of the Kansas public employ-
 2  ees retirement system, (6) all instructional employees for the school
 3  for the blind and such employees shall be excluded from partici-
 4  pation in any other state retirement system, and (7) teachers and
 5  supervisors of instruction at the state institutions under the man-
 6  agement of the director of penal institutions and those under the
 7  management of the state board of social welfare which provide reg-
 8  ular classroom instruction for their inmates or patients if such in-
 9  structional personnel have valid certificates issued by the state
10  board of education, but excepting such employees who have elected
11  or shall elect at the time of employment by the institution to par-
12  ticipate in the Kansas public employees retirement system. The term
13  ``school employees'' shall not include any employee while a member
14  of a separate retirement system operated by any board of education
15  but if any such employee at any time becomes eligible to participate
16  in the state retirement as provided by this act, the years such person
17  served in a school system in Kansas which maintains a separate
18  retirement system shall be included in determining years of service
19  of such person under this act. An employee performing service in a
20  school system maintaining its own separate retirement system in
21  Kansas may qualify for service credit in the state system by discon-
22  tinuing membership in such separate retirement system prior to the
23  time of retirement and accepting a position which is covered by the
24  state retirement system, and continuing in such service for at least
25  one school year. Such employee shall contribute to the state retire-
26  ment system an amount of money equal to that which was deducted
27  from such employee's salary for services rendered after September
28  1, 1941, in the city maintaining its own retirement system and this
29  amount shall be credited to the savings account of the employee. If
30  such employee was for any reason excluded from participation in
31  the separate retirement system, the board shall give credit for such
32  nonmember service in the public schools in the city maintaining a
33  separate retirement system without the required transfer of funds.
34  After September 1, 1971, no person shall be deemed a school em-
35  ployee for the purposes of this act;
36    (e)  ``school service'' means: (1) Service performed as a school
37  employee prior to September 1, 1941, if such years of service in-
38  clude at least six months during the years 1938-39 or 1939-40 or
39  1940-41; service performed by any employee who was not in school
40  service in any of the school years from 1938 to 1941, but who reen-
41  tered school service after September 1, 1941, and continued in such
42  service for at least five years; all service prior to September 1, 1941,
43  of any annuitant who retired prior to September 1, 1961, and who
SB 154--Am.
                                     

 1  was granted a service annuity for one or more years as a contrib-
 2  uting member of the school retirement system; all service prior to
 3  September 1, 1941, of any employee who served for at least six
 4  months during one of the qualifying years from 1938 to 1941 in a
 5  school system maintaining its own separate retirement system in
 6  Kansas, if such employee has not qualified, nor will in the future
 7  qualify, for retirement benefits under the separate retirement sys-
 8  tem; all service as a school employee, including out-of-state service
 9  as a school employee, for a period of 12 10 or more years prior to
10  September 1, 1938, except that service annuities paid by the state
11  of Kansas to such school employees shall not include such out-of-
12  state service as a school employee, unless otherwise provided by
13  law; and (2) service as a school employee after September 1, 1941,
14  and prior to age 70 as a contributing member of the school retire-
15  ment system. No service credit shall be granted to a school employee
16  who established or shall hereafter establish membership later than
17  September 1, 1941, for a period of time between September 1, 1941,
18  and the date of becoming a contributing member of the retirement
19  system. School service shall include only full-time employees, ex-
20  cept that 1/2 year of credit shall be given to instructional employees
21  who perform school service on at least a 1/2 time basis throughout a
22  school year. No school service credit shall be given in fractional
23  units of less than 1/2 year. The board may grant service credit to
24  employees, who were performing school service at the time of their
25  induction into the armed forces of the United States, equal to the
26  time spent in the armed forces between September 1, 1940, and
27  September 1, 1947, and between June 25, 1950, and July 27, 1953
28  and between August 5, 1964, and August 15, 1973, but no such
29  service credit shall be granted for a period of more than five years
30  spent in the armed forces between September 1, 1940, and Septem-
31  ber 1, 1947, or for a period of more than two years spent in the
32  armed forces between June 25, 1950, and July 27, 1953 or for a
33  period of more than two years spent in the armed forces between
34  August 5, 1964 and August 15, 1973. In the event the employee
35  served during the periods between September 1, 1940, and Septem-
36  ber 1, 1947, and between June 25, 1950, and July 27, 1953, such
37  employee shall be granted a service credit for the actual time spent
38  in the armed forces between June 25, 1950, and July 27, 1953, nor
39  shall such service credit be granted to any employee unless such
40  employee shall reenter school service and continue in such service
41  for at least one school year. The board may grant service credit to
42  an employee who was performing school service prior to the time
43  of becoming employed as a veterans' instructional on-the-farm
SB 154--Am.
                                     

 1  training instructor equal to the time spent as such instructor be-
 2  tween the dates of September 1, 1946, and September 1, 1961. The
 3  board may grant service credit to an employee who prior to per-
 4  forming school service was a faculty member of the Kansas voca-
 5  tional school at Topeka, known part of the time as the Kansas tech-
 6  nical institute, which operated under the Kansas state board of
 7  regents prior to 1956 equal to the time spent as instructor at such
 8  school. In case of doubt the board shall decide what constitutes
 9  school service;
10    (f)  ``school annuitant'' means any person who is entitled to re-
11  ceive a school annuity;
12    (g)  ``school annuity'' means the monthly payments due to any
13  school annuitant. Such payments shall continue for life, and be paid
14  in monthly installments;
15    (h)  ``service annuity'' means that part of the school annuity
16  which is based upon the service record of the person concerned, and
17  which is paid by the state;
18    (i)  ``savings annuity'' means that part of the school annuity
19  which results from the accumulated contributions of the school em-
20  ployee and interest thereon less the proportionate share of the ex-
21  pense of the administration of this act;
22    (j)  ``disability annuity'' means a school annuity granted to a
23  school employee who suffers such physical or mental disability as
24  to be unable to perform school service;
25    (k)  ``standard annuity'' means the school annuity which is
26  granted to a school employee at the age of 65 years, as prescribed
27  by this act; the standard annuity shall be used as the basis in com-
28  puting actuarially equivalent annuities granted at ages prior to 65
29  years;
30    (l)  ``service record'' means the individual record kept by the
31  board for each school employee. It shall show the number of school
32  years of school service, the salary or wages earned, the date of birth,
33  and such other data as the board may require;
34    (m)  ``age'' and ``attained age'' shall be computed as of Septem-
35  ber 1 of the calendar year under consideration;
36    (n)  ``deductions'' means the amounts withheld, as provided in
37  this act, from warrants issued in payment for school services; and
38    (o)  ``actuarial computation'' means computation in accordance
39  with some standard actuarial table. The board shall determine
40  which one of the standard actuarial tables shall be used. The legal
41  minimum standard for the valuation of annuities shall be Mc-
42  Clintock's ``table of mortality among annuitants,'' with interest at
43  2% per annum.
SB 154--Am.
                                     

 1    Sec. 2. 6.  K.S.A. 1996 Supp. 74-4902 is hereby amended to read as
 2  follows: 74-4902. As used in articles 49 and 49a of chapter 74 and amend-
 3  ments thereto, unless otherwise provided or the context otherwise re-
 4  quires:
 5    (1)  ``Accumulated contributions'' means the sum of all contributions
 6  by a member to the system which are credited to the member's account,
 7  with interest allowed thereon;
 8    (2)  ``acts'' means K.S.A. 74-4901 to 74-4929, inclusive, and amend-
 9  ments thereto;
10    (3)  ``actuarial equivalent'' means an annuity or benefit of equal value
11  to the accumulated contributions, annuity or benefit, when computed
12  upon the basis of the actuarial tables in use by the system;
13    (4)  ``actuarial tables'' means the actuarial tables approved and in use
14  by the board at any given time;
15    (5)  ``actuary'' means the actuary or firm of actuaries employed or
16  retained by the board at any given time;
17    (6)  ``agent'' means the individual designated by each participating em-
18  ployer through whom system transactions and communication are di-
19  rected;
20    (7)  ``beneficiary'' means any natural person or persons or estate
21  named by a member to receive any benefits as provided for by this act.
22  Designations of beneficiaries by a member who is a member of more
23  than one retirement system made on or after July 1, 1987, shall be the
24  basis of any benefits payable under all systems unless otherwise provided
25  by law. Effective January 1, 1998, a member may designate a beneficiary
26  or beneficiaries for any death benefits payable under the provisions of
27  K.S.A. 74-4927 through 74-4927h, and amendments thereto, which are
28  different from any beneficiary or beneficiaries the member may have des-
29  ignated for any other benefits. Except as otherwise provided by subsection
30  (33) of this section, if there is no named beneficiary living at time of
31  member's death, any benefits provided for by this act shall be paid to:
32  (A) The member's surviving spouse; (B) the member's dependent child
33  or children; (C) the member's dependent parent or parents; (D) the
34  member's nondependent child or children; (E) the member's nondepen-
35  dent parent or parents; (F) the estate of the deceased member; in the
36  order of preference as specified in this subsection. Any payment made to
37  a named beneficiary shall be a full discharge and release to the system
38  from any further claims. Any payment made to a beneficiary as provided
39  in clauses (A), (B), (C), (D), (E) or (F) of this subsection, as determined
40  by the board, shall be a full discharge and release to the system from any
41  further claims. Whenever any payment is payable to more than one ben-
42  eficiary such payment shall be made to such beneficiaries jointly. Any
43  benefits payable to a beneficiary or beneficiaries who are minor children
SB 154--Am.
                                     

 1  or incompetent persons shall be made in the name of the beneficiary or
 2  beneficiaries and delivered to the lawfully appointed conservator of such
 3  beneficiaries who was nominated by will or as otherwise provided by law,
 4  except that in those cases where the benefit involves only the payment of
 5  the member's accumulated contributions with interest as provided by this
 6  act in an amount not to exceed $500, the board is hereby authorized in
 7  its discretion without the appointment of a conservator or the giving of a
 8  bond to pay such amount as is due to the minor or minors themselves,
 9  any payment so made shall be a full discharge and release to the system
10  from any further claims;
11    (8)  ``board of trustees,'' ``board'' or ``trustees'' means the managing
12  body of the system which is known as the Kansas public employees re-
13  tirement system board of trustees;
14    (9)  ``compensation'' means all salary, wages and other remuneration
15  payable to a member for personal services performed for a participating
16  employer, including maintenance or any allowance in lieu thereof pro-
17  vided a member as part of compensation, but not including reimburse-
18  ment for travel or moving expenses or on and after July 1, 1994, payment
19  pursuant to an early retirement incentive program made prior to the
20  retirement of the member. Beginning with the employer's fiscal year
21  which begins in calendar year 1991 or for employers other than the state
22  of Kansas, beginning with the fiscal year which begins in calendar year
23  1992, when the compensation of a member who remains in substantially
24  the same position during any two consecutive years of participating serv-
25  ice used in calculating final average salary is increased by an amount which
26  exceeds 15%, then the amount of such increase which exceeds 15% shall
27  not be included in compensation, except that (A) any amount of com-
28  pensation for accumulated sick leave or vacation or annual leave paid to
29  the member, (B) any increase in compensation for any member due to a
30  reclassification or reallocation of such member's position or a reassign-
31  ment of such member's job classification to a higher range or level and
32  (C) any increase in compensation as provided in any contract entered into
33  prior to January 1, 1991, and still in force on the effective date of this act,
34  pursuant to an early retirement incentive program as provided in K.S.A.
35  72-5395 et seq. and amendments thereto, shall be included in the amount
36  of compensation of such member used in determining such member's
37  final average salary and shall not be subject to the 15% limitation provided
38  in this subsection. Any contributions by such member on the amount of
39  such increase which exceeds 15% which is not included in compensation
40  shall be returned to the member. Unless otherwise provided by law, be-
41  ginning with the employer's fiscal year coinciding with or following July
42  1, 1985, compensation shall include any amounts for tax sheltered an-
43  nuities or deferred compensation plans. Beginning with the employer's
SB 154--Am.
                                     

 1  fiscal year which begins in calendar year 1991, compensation shall include
 2  amounts under sections 403b, 457 and 125 of the federal internal revenue
 3  code of 1986 and, as the board deems appropriate, any other section of
 4  the federal internal revenue code of 1986 which defers or excludes
 5  amounts from inclusion in income;
 6    (10)  ``credited service'' means the sum of participating service and
 7  prior service and in no event shall credited service include any service
 8  which is credited under another retirement plan authorized under any
 9  law of this state;
10    (11)  ``dependent'' means a parent or child of a member who is de-
11  pendent upon the member for at least 1/2 of such parent or child's support;
12    (12)  ``effective date'' means the date upon which the system becomes
13  effective by operation of law;
14    (13)  ``eligible employer'' means the state of Kansas, and any county,
15  city, township, special district or any instrumentality of any one or several
16  of the aforementioned or any noncommercial public television or radio
17  station located in this state which receives state funds allocated by the
18  Kansas public broadcasting commission whose employees are covered by
19  social security. If a class or several classes of employees of any above
20  defined employer are not covered by social security, such employer shall
21  be deemed an eligible employer only with respect to such class or those
22  classes of employees who are covered by social security;
23    (14)  ``employee'' means any appointed or elective officer or employee
24  of a participating employer whose employment is not seasonal or tem-
25  porary and whose employment requires at least 1,000 hours of work per
26  year, but not including: (A) Any person covered by or eligible for or who
27  will become eligible for a retirement annuity under the provisions of
28  K.S.A. 74-4925 and amendments thereto except as otherwise specifically
29  provided in subsection (3) of K.S.A. 74-4925 and amendments thereto
30  and this subsection; (B) any employee who is a contributing member of
31  the United States civil service retirement system; (C) any employee of an
32  eligible employer who is a participant in public service employment under
33  title II and title VI of the federal comprehensive employment and training
34  act of 1973; (D) any employee or class of employees specifically exempted
35  by law. After June 30, 1975, no person who is otherwise eligible for mem-
36  bership in the Kansas public employees retirement system shall be barred
37  from such membership by reason of coverage by, eligibility for or future
38  eligibility for a retirement annuity under the provisions of K.S.A. 74-4925
39  and amendments thereto, except that no person shall receive service
40  credit under the Kansas public employees retirement system for any pe-
41  riod of service for which benefits accrue or are granted under a retirement
42  annuity plan under the provisions of K.S.A. 74-4925 and amendments
43  thereto. After June 30, 1982, no person who is otherwise eligible for
SB 154--Am.
                                     

 1  membership in the Kansas public employees retirement system shall be
 2  barred from such membership by reason of coverage by, eligibility for or
 3  future eligibility for any benefit under another retirement plan authorized
 4  under any law of this state, except that no such person shall receive service
 5  credit under the Kansas public employees retirement system for any pe-
 6  riod of service for which any benefit accrues or is granted under any such
 7  retirement plan. Employee shall include persons who are in training at
 8  or employed by, or both, a sheltered workshop for the blind operated by
 9  the secretary of social and rehabilitation services. The entry date for such
10  persons shall be the beginning of the first pay period of the fiscal year
11  commencing in calendar year 1986. Such persons shall be granted prior
12  service credit in accordance with K.S.A. 74-4913 and amendments
13  thereto. However, such persons classified as home industry employees
14  shall not be covered by the retirement system;
15    (15)  ``entry date'' means the date as of which an eligible employer
16  joins the system. The first entry date pursuant to this act is January 1,
17  1962;
18    (16)  ``executive secretary'' means the managing officer of the system
19  employed by the board under this act;
20    (17)  ``final average salary'' means in the case of a member who retires
21  prior to January 1, 1977, and in the case of a member who retires after
22  January 1, 1977, and who has less than five years of participating service
23  after January 1, 1967, the average highest annual compensation paid to
24  such member for any five years of the last 10 years of participating service
25  immediately preceding retirement or termination of employment, or in
26  the case of a member who retires on or after January 1, 1977, and who
27  has five or more years of participating service after January 1, 1967, the
28  average highest annual compensation paid to such member on or after
29  January 1, 1967, for any five years of participating service preceding re-
30  tirement or termination of employment, or, in any case, if participating
31  service is less than five years, then the average annual compensation paid
32  to the member during the full period of participating service, or, in any
33  case, if the member has less than one calendar year of participating service
34  such member's final average salary shall be computed by multiplying such
35  member's highest monthly salary received in that year by 12; in the case
36  of a member who became a member under subsection (3) of K.S.A. 74-
37  4925 and amendments thereto, or who became a member with a partic-
38  ipating employer as defined in subsection (3) of K.S.A. 74-4931 and
39  amendments thereto and who elects to have compensation paid in other
40  than 12 equal installments, such compensation shall be annualized as if
41  the member had elected to receive 12 equal installments for any such
42  periods preceding retirement; in the case of a member who retires after
43  July 1, 1987, the average highest annual compensation paid to such mem-
SB 154--Am.
                                     

 1  ber for any four years of participating service preceding retirement or
 2  termination of employment; in the case of a member who retires on or
 3  after July 1, 1993, who was first hired as an employee, as defined in
 4  subsection (14) of K.S.A. 74-4902 and amendments thereto, prior to July
 5  1, 1993, the average highest annual compensation, as defined in subsec-
 6  tion (9), paid to such member for any four years of participating service
 7  preceding retirement or termination of employment or the average high-
 8  est annual salary, as defined in subsection (34), paid to such member for
 9  any three years of participating service preceding retirement or termi-
10  nation of employment, whichever is greater; and in the case of a member
11  who retires on or after July 1, 1993, and who is first hired as an employee,
12  as defined in subsection (14) of K.S.A. 74-4902 and amendments thereto,
13  on or after July 1, 1993, the average highest annual salary, as defined in
14  subsection (34), paid to such member for any three years of participating
15  service preceding retirement or termination of employment. Final aver-
16  age salary shall not include any purchase of participating service credit
17  by a member as provided in subsection (2) of K.S.A. 74-4919h and
18  amendments thereto which is completed within five years of retirement.
19  For any application to purchase or repurchase service credit for a certain
20  period of service as provided by law received by the system after May 17,
21  1994, for any member who will have contributions deducted from such
22  member's compensation at a percentage rate equal to two or three times
23  the employee's rate of contribution or will begin paying to the system a
24  lump-sum amount for such member's purchase or repurchase and such
25  deductions or lump-sum payment commences after the commencement
26  of the first payroll period in the third quarter, ``final average salary'' shall
27  not include any amount of compensation or salary which is based on such
28  member's purchase or repurchase. Any application to purchase or repur-
29  chase multiple periods of service shall be treated as multiple applications.
30  For purposes of this subsection, the date that such member is first hired
31  as an employee for members who are employees of employers that
32  elected to participate in the system on or after January 1, 1994, shall be
33  the date that such employee's employer elected to participate in the sys-
34  tem;
35    (18)  ``fiscal year'' means, for the Kansas public employees retirement
36  system, the period commencing July 1 of any year and ending June 30 of
37  the next;
38    (19)  ``Kansas public employees retirement fund'' means the fund cre-
39  ated by this act for payment of expenses and benefits under the system
40  and referred to as the fund;
41    (20)  ``leave of absence'' means a period of absence from employment
42  without pay, authorized and approved by the employer, and which after
43  the effective date does not exceed one year;
SB 154--Am.
                                     

 1    (21)  ``member'' means an eligible employee who is in the system and
 2  is making the required employee contributions, or; any former employee
 3  who has made the required contributions to the system and has not re-
 4  ceived a refund, if such member is within five years of their termination
 5  of employment with a participating employer; or any former employee
 6  who has made the required contributions to the system, has not received
 7  a refund and has been granted a vested benefit;
 8    (22)  ``military service'' means service in the armed forces of the
 9  United States or in the commissioned corps of the United States public
10  health service, which service is immediately preceded by a period of em-
11  ployment as an employee or by the entering into of an employment con-
12  tract with a participating employer and is followed by return to employ-
13  ment as an employee with the same or another participating employer
14  within 12 months immediately following discharge from such military
15  service, except that if the board determines that such return within 12
16  months was made impossible by reason of a service-connected disability,
17  the period within which the employee must return to employment with
18  a participating employer shall be extended not more than two years from
19  the date of discharge or separation from military service;
20    (23)  ``normal retirement date'' means the date on or after which a
21  member may retire with full retirement benefits pursuant to K.S.A. 74-
22  4914 and amendments thereto;
23    (24)  ``participating employer'' means an eligible employer who has
24  agreed to make contributions to the system on behalf of its employees;
25    (25)  ``participating service'' means the period of employment after
26  the entry date for which credit is granted a member;
27    (26)  ``prior service'' means the period of employment of a member
28  prior to such member's the entry date for which credit is granted a mem-
29  ber under this act;
30    (27)  ``prior service annual salary'' means the highest annual salary,
31  not including any amounts received as payment for overtime or as re-
32  imbursement for travel or moving expense, received for personal services
33  by the member from the current employer in any one of the three cal-
34  endar years immediately preceding January 1, 1962, or the entry date of
35  the employer, whichever is later, except that if a member entered the
36  employment of the state during the calendar year 1961, the prior service
37  annual salary shall be computed by multiplying such member's highest
38  monthly salary received in that year by 12;
39    (28)  ``retirant'' means a member who has retired under this system;
40    (29)  ``retirement benefit'' means a monthly income or the actuarial
41  equivalent thereof paid in such manner as specified by the member pur-
42  suant to this act or as otherwise allowed to be paid at the discretion of
43  the board, with benefits accruing from the first day of the month coin-
SB 154--Am.
                                     

 1  ciding with or following retirement and ending on the last day of the
 2  month in which death occurs. Upon proper identification a surviving
 3  spouse may negotiate the warrant issued in the name of the retirant;
 4    (30)  ``retirement system'' or ``system'' means the Kansas public em-
 5  ployees retirement system as established by this act and as it may be
 6  amended;
 7    (31)  ``social security'' means the old age, survivors and disability in-
 8  surance section of the federal social security act;
 9    (32)  ``total disability'' means a physical or mental disability which pre-
10  vents the member from engaging, for remuneration or profit, in any oc-
11  cupation for which the member is reasonably suited by education, training
12  or experience;
13    (33)  ``trust'' means an express trust, created by a trust instrument,
14  including a will, designated by a member to receive payment of the in-
15  sured death benefit under K.S.A. 74-4927 and amendments thereto and
16  payment of the member's accumulated contributions under subsection
17    (1) of K.S.A. 74-4916 and amendments thereto. A designation of a trust
18  shall be filed with the board. If there is a designated trust at the time of
19  the member's death, the insured death benefit for the member under
20  K.S.A. 74-4927 and amendments thereto and the member's accumulated
21  contributions under subsection (1) of K.S.A. 74-4916 and amendments
22  thereto shall be paid to the trust in lieu of the member's beneficiary. If
23  no will is admitted to probate within six months after the death of the
24  member or no trustee qualifies within such six months or if the designated
25  trust fails, for any reason whatsoever, the insured death benefit under
26  K.S.A. 74-4927 and amendments thereto and the member's accumulated
27  contributions under subsection (1) of K.S.A. 74-4916 and amendments
28  thereto shall be paid in accordance with the provisions of subsection (7)
29  of this section as in other cases where there is no named beneficiary living
30  at the time of the member's death and any payments so made shall be a
31  full discharge and release to the system from any further claims; and
32    (34)  ``salary'' means all salary and wages payable to a member for
33  personal services performed for a participating employer, including main-
34  tenance or any allowance in lieu thereof provided a member as part of
35  salary. Salary shall not include reimbursement for travel or moving ex-
36  penses, payment for accumulated sick leave or vacation or annual leave,
37  severance pay or any other payments to the member determined by the
38  board to not be payments for personal services performed for a partici-
39  pating employer constituting salary or on and after July 1, 1994, payment
40  pursuant to an early retirement incentive program made prior to the
41  retirement of the member. When the salary of a member who remains
42  in substantially the same position during any two consecutive years of
43  participating service used in calculating final average salary is increased
SB 154--Am.
                                     

 1  by an amount which exceeds 15%, then the amount of such increase
 2  which exceeds 15% shall not be included in salary. Any contributions by
 3  such member on the amount of such increase which exceeds 15% which
 4  is not included in compensation shall be returned to the member. Unless
 5  otherwise provided by law, salary shall include any amounts for tax shel-
 6  tered annuities or deferred compensation plans. Salary shall include
 7  amounts under sections 403b, 457 and 125 of the federal internal revenue
 8  code of 1986 and, as the board deems appropriate, any other section of
 9  the federal internal revenue code of 1986 which defers or excludes
10  amounts from inclusion in income. In any case, if participating service is
11  less than three years, then the average annual salary paid to the member
12  during the full period of participating service, or, in any case, if the mem-
13  ber has less than one calendar year of participating service such member's
14  final average salary shall be computed by multiplying such member's
15  highest monthly salary received in that year by 12.
16    Sec. 7.  K.S.A. 1996 Supp. 74-4904 is hereby amended to read
17  as follows: 74-4904. (1) The system may sue and be sued in its of-
18  ficial name, but its trustees, officers, employees and agents shall not
19  be personally liable for acts of the system unless such person acted
20  with willful, wanton or fraudulent misconduct or intentionally tor-
21  tious conduct. Any agreement in settlement of litigation involving
22  the system and the investment of moneys of the fund is a public
23  record as provided in K.S.A. 45-215 et seq. and amendments thereto
24  and subject to the provisions of that act. The service of all legal
25  process and of all notices which may be required to be in writing,
26  whether legal proceedings or otherwise, shall be had on the execu-
27  tive secretary at such executive secretary's office. All actions or pro-
28  ceedings directly or indirectly against the system shall be brought
29  in Shawnee county.
30    (2)   Any person aggrieved by any order or decision of the board
31  made without a hearing, may, within 30 days after notice of the
32  order or decision of the board make written request to the board
33  for a hearing thereon. The board shall hear such party or parties
34  in accordance with the provisions of the Kansas administrative pro-
35  cedure act at its next regular meeting or at a special meeting within
36  60 days after receipt of such request. For the purpose of any hearing
37  under this section, the board may appoint one or more presiding
38  officers. Any such presiding officer shall be a member of the board
39  or, an employee of the board or any other person designated by the
40  board to serve as such presiding officer. Any such appointment shall
41  apply to a particular hearing or to a set or class of hearings as
42  specified by the board in making such appointment. The board shall
43  review an initial order resulting from a hearing under this section.
SB 154--Am.
                                     

 1  Any member of the board who serves as a presiding officer shall be
 2  reimbursed for actual and necessary expenses and shall receive
 3  compensation in an amount fixed by the board not to exceed the per
 4  diem compensation allowable for members of the board. The board
 5  is hereby authorized to enter into a contract with any other person des-
 6  ignated by the board to serve as a presiding officer who is not a member
 7  of the board to provide for reimbursement for actual and necessary ex-
 8  penses and compensation for such person serving as a presiding officer.
 9    Sec. 8.  K.S.A. 1996 Supp. 74-4905 is hereby amended to read
10  as follows: 74-4905. (a) On July 1, 1993, the board of trustees of
11  the Kansas public employees retirement system, as such board ex-
12  isted on June 30, 1993, is hereby abolished. On July 1, 1993, there
13  is hereby established a new board of trustees of the Kansas public
14  employees retirement system. Such board established on July 1,
15  1993, shall consist of nine members, as follows:
16    (1)  Six appointed members, four appointed by the governor sub-
17  ject to confirmation by the senate as provided in K.S.A. 75-4315b
18  and amendments thereto, one appointed by the president of the sen-
19  ate and one appointed by the speaker of the house of representa-
20  tives. Except as provided by K.S.A. 1996 Supp. 46-2601, no person
21  appointed to the board whose appointment is subject to confirma-
22  tion, shall exercise any power, duty or function as a member of the
23  board until confirmed by the senate. No more than two members of
24  the board whose appointment is subject to confirmation shall be
25  from the same political party;
26    (2)  two retirement system members elected by the members and
27  retirants of the system as provided in subsection (12) of K.S.A. 74-
28  4909 and amendments thereto. As provided in this subsection, only
29  active and retired members of the system shall be eligible to be
30  elected to the board and only active and retired members of the
31  system shall be eligible to elect the two retirement system members
32  pursuant to this subsection. Inactive members shall not be eligible
33  to be elected to the board nor to elect the two retirement system
34  members elected pursuant to this subsection.  If a member elected to
35  the board as provided in this subsection becomes inactive, such member
36  is disqualified from service on the board and such member's board posi-
37  tion shall be vacant and such vacancy shall be filled as provided in sub-
38  section (b)(1).  Of the two retirement system members elected pur-
39  suant to this subsection, one shall be a member of the retirement
40  system who is in school employment as provided in K.S.A. 74-4931
41  et seq. and amendments thereto and one shall be a member of the
42  retirement system other than a member who is in school employ-
43  ment. For purposes of this subsection, retirement system means the
SB 154--Am.
                                     

 1  Kansas public employees retirement system, the Kansas police and
 2  firemen's retirement system and the retirement system for judges;
 3  and
 4    (3)  the state treasurer.
 5    (b) (1)  Except as provided by this paragraph and paragraph
 6    (2), all members of the board as provided in subsection (a)(1) and
 7    (a)(2) shall serve four-year terms, except that of the members first
 8  appointed by the governor, two shall be appointed for two-year
 9  terms and the member appointed by the speaker of the house of
10  representatives shall be appointed for a two-year term. The gover-
11  nor shall designate the term for which each of the members first
12  appointed shall serve. All members appointed to fill vacancies in
13  the membership of the board and all members appointed to succeed
14  members appointed to membership on the board shall be appointed
15  in like manner as that provided for the original appointment of the
16  member succeeded. All members appointed to fill vacancies of a
17  member of the board appointed by the governor, the president of
18  the senate or the speaker of the house of representatives shall be
19  appointed to fill the unexpired term of such member. All vacancies
20  on the board by a member elected by the members and retirants of
21  the system shall be filled by the board as provided by rules and
22  regulations adopted as provided in subsection (12) of K.S.A. 74-
23  4909 and amendments thereto.
24    (2)  Except as provided in K.S.A. 1996 Supp. 46-2601, no person
25  appointed to the board by the governor shall exercise any power,
26  duty or function as a member of the board until confirmed by the
27  senate. The terms of members appointed by the governor who are
28  serving on the board on the effective date of this act shall expire on
29  January 15, of the year in which such member's term would have
30  expired under the provisions of this section prior to amendment by
31  this act. Thereafter, members shall be appointed for terms of four
32  years and until their successors are appointed and confirmed.
33    (c)  The board shall elect a chairperson of the board at the first
34  regular meeting held on or after July 1, 1993, and at each annual
35  meeting thereafter from the members of the board. The chairperson
36  shall preside over meetings of the board and perform such other
37  duties as required by the board.
38    (d)  The chairperson shall appoint another board member as
39  vice-chairperson, and the vice-chairperson shall perform the duties
40  of chairperson in the absence of the chairperson or upon the chair-
41  person's inability or refusal to act.
42    (e)  The six members appointed pursuant to subsection (a)(1)
43  shall have demonstrated experience in the financial affairs of a pub-
SB 154--Am.
                                     

 1  lic or private organization or entity which employs 100 or more
 2  employees or had at least five years' experience in the field of in-
 3  vestment management or analysis, actuarial analysis or administra-
 4  tion of an employee benefit plan.
 5    (f)  No person shall serve on the board if such person has know-
 6  ingly acquired a substantial interest in any nonpublicly traded in-
 7  vestment made with moneys of the fund. Any such person who know-
 8  ingly acquires such an interest shall vacate such member's position
 9  on the board and shall be guilty of a class A misdemeanor. For
10  purposes of this subsection, ``substantial interest'' means any of the
11  following:
12    (1)  If an individual or an individual's spouse, either individu-
13  ally or collectively, has owned within the preceding 12 months a
14  legal or equitable interest exceeding $5,000 or 5% of any business,
15  whichever is less, the individual has a substantial interest in that
16  business.
17    (2)  If an individual or an individual's spouse, either individu-
18  ally or collectively, has received during the preceding calendar year
19  compensation which is or will be required to be included as taxable
20  income on federal income tax returns of the individual and spouse
21  in an aggregate amount of $2,000 from any business or combination
22  of businesses, the individual has a substantial interest in that busi-
23  ness or combination of businesses.
24    (3)  If an individual or an individual's spouse holds the position
25  of officer, director, associate, partner or proprietor of any business,
26  the individual has a substantial interest in that business, irrespec-
27  tive of the amount of compensation received by the individual or
28  individual's spouse.
29    (4)  If an individual or an individual's spouse receives compen-
30  sation which is a portion or percentage of each separate fee or com-
31  mission paid to a business or combination of businesses, the indi-
32  vidual has a substantial interest in any client or customer who pays
33  fees or commissions to the business or combination of businesses
34  from which fees or commissions the individual or the individual's
35  spouse, either individually or collectively, received an aggregate of
36  $2,000 or more in the preceding calendar year.
37    (5)  If an individual or an individual's spouse has received a loan
38  from or received financing from any bank, savings and loan, credit
39  union or any other financial institution in an amount which exceeds
40  $2,000, the individual has a substantial interest in that financial
41  institution.
42    As used in this subsection, ``client or customer'' means a business
43  or combination of businesses.
SB 154--Am.
                                     

 1    Any person who serves on the board shall fully disclose any sub-
 2  stantial interest that such person has in any publicly traded invest-
 3  ment made with moneys of the fund.
 4    (g)  No person who serves on the board shall be employed for a
 5  period of two years commencing on the date the person no longer
 6  serves on the board and ending two years after such date with any
 7  organization in which moneys of the fund were invested, except that
 8  the employment limitation contained in this subsection shall not
 9  apply if such person's employment is with an organization whose
10  stock or other evidences of ownership are traded on the public stock
11  or bond exchanges.
12    (h)  All members of the board named, appointed or elected to the
13  board shall be subject to an investigation by the Kansas bureau of
14  investigation or other criminal justice agencies. Information to be
15  obtained during such investigation shall include criminal history
16  record information, including arrest and conviction data, criminal
17  intelligence information and information relating to criminal and
18  background investigations as necessary to determine qualifications
19  of such member. Such information shall be forwarded to the senate
20  committee specified by the president of the senate for such com-
21  mittee's consideration and other than conviction data, shall be con-
22  fidential and shall not be disclosed except to members and employ-
23  ees of the committee as necessary to determine qualifications of such
24  member. The committee, in accordance with K.S.A. 75-4319 and
25  amendments thereto shall recess for a closed or executive meeting
26  to receive and discuss information received by the committee pur-
27  suant to this subsection.
28    (i)  All of the powers, duties and functions of the board of trus-
29  tees of the Kansas public employees retirement system as such board
30  existed prior to July 1, 1993, are hereby transferred to and con-
31  ferred and imposed upon the board of trustees established pursuant
32  to this act. The board of trustees of the Kansas public employees
33  retirement system established pursuant to this act shall be the suc-
34  cessor in every way of the powers, duties and functions of the board
35  of trustees existing prior to July 1, 1993, in which the same were
36  vested prior to July 1, 1993.
37    Sec. 9.  K.S.A. 1996 Supp. 74-4908 is hereby amended to read
38  as follows: 74-4908. (1) The board shall appoint an executive sec-
39  retary and shall establish the compensation therefor. Subject to the
40  direction of the board, the executive secretary shall be the managing
41  officer of the system and as such shall have charge of the office,
42  records and supervision and direction of the employees of the sys-
43  tem. The executive secretary shall be in the unclassified service un-
SB 154--Am.
                                     

 1  der the Kansas civil service act.
 2    (2)  The executive secretary shall recommend to the board the
 3  administrative organization, the number and qualifications of em-
 4  ployees necessary to carry out the intent of this act and the direc-
 5  tions of the board. Upon approval of the board, the executive sec-
 6  retary is authorized to employ such persons in accordance with the
 7  Kansas civil service act.
 8    (3)  The board of trustees shall select and employ or retain a
 9  qualified actuary who shall serve at its pleasure as its technical
10  advisor on matters regarding operation of the system. The actuary
11  shall:
12    (a)  Make an annual valuation of the liabilities and reserves of
13  the system, and a determination of the contributions required by
14  the system to discharge its liabilities and administrative costs under
15  this act, and recommend to the board rates of employer contribu-
16  tions required to establish and maintain the system on an actuarial
17  reserve basis. Such recommended employer contributions shall not
18  be based on any other purpose outside of the needs of the system as
19  prescribed by this subsection.
20    (b)  As soon after the effective date as practicable and once every
21  three years thereafter, make a general investigation of the actuarial
22  experience under the system including mortality, retirement, em-
23  ployment turnover and interest, and recommend actuarial tables
24  for use in valuations and in calculating actuarial equivalent values
25  based on such investigation.
26    (c)  Cooperate with and provide any assistance to the actuary,
27  the legislative coordinating council and the joint committee on pen-
28  sions, investments and benefits related to the independent actuarial
29  audit and evaluation as provided in K.S.A. 1996 Supp. 74-4908a
30  and amendments thereto.
31    (d)  Perform such other duties as may be assigned by the board.
32    (4)  The attorney general of the state shall furnish such legal
33  services as may be necessary upon receipt of a request from the
34  board, except that legal services may be furnished by other counsel
35  as the board in its discretion deems necessary and prudent.
36    (5)  The board shall employ or retain qualified investment coun-
37  sel or counselors or may negotiate with a trust company to assist
38  and advise in the judicious investment of funds as herein provided.
39    (6)  The board may appoint a deputy executive secretary, an in-
40  vestment officer, an investment analyst, a real estate manager, a
41  direct placement manager, a chief fiscal officer, a member services
42  officer, an attorney, an assistant investment officer and an infor-
43  mation resource officer to advise and assist the board in the per-
SB 154--Am.
                                     

 1  formance of powers, duties and functions relating to the manage-
 2  ment and investment of the fund and in such other matters as may
 3  be directed by the board. Such appointed officers and employees
 4  shall be in the unclassified service under the Kansas civil service
 5  act. The compensation of such appointed officers and employees
 6  shall be established by the board.
 7    Sec. 10.  K.S.A. 1996 Supp. 74-4910 is hereby amended to read
 8  as follows: 74-4910. (1) An eligible employer may join the system
 9  on January 1 of any year. Application for affiliation shall be in the
10  form of a resolution approved by the governing or legislative body
11  of the eligible employer or by any other body or officer authorized
12  by law or recognized by the board to approve the action. No city
13  or township shall become a participating employer except by the
14  adoption of a resolution therefor, which shall be published once in
15  the official city or township newspaper or, if there is none, in a
16  newspaper of general circulation in the city or county. No such
17  resolution shall take effect until 60 days after its final publication.
18  If within 60 days of its final publication a petition signed by electors
19  equal in number to not less than 10% of the electors who voted at
20  the last preceding regular election in the township, in the case of
21  townships, the last regular city election in the city, in the case of
22  cities is filed in the office of the clerk of such city, or township
23  demanding that such resolution be submitted to a vote of the elec-
24  tors, the resolution shall not take effect until submitted to a refer-
25  endum and approved by a majority of the electors voting thereon.
26  A 2/3 vote of the members-elect of the governing body shall be nec-
27  essary for the affiliation of any eligible employer other than a city
28  or township. An application for affiliation with the system shall be
29  filed with the board not later than 30 days prior to the date partic-
30  ipation is to begin, except as such time limit may be extended by
31  the board. Upon the filing of a certified copy of such resolutions
32  with the board an election pursuant to this section shall be irrevo-
33  cable, and the employer shall become a participating employer on
34  January 1 of the year immediately following the filing of such elec-
35  tion with the board.
36    (2)  The state of Kansas in its capacity as an eligible employer,
37  shall become, by operation of law, a participating employer on the
38  first entry date. The Kansas turnpike authority shall not become a
39  participating employer nor shall its officers or employees be cov-
40  ered by the retirement system until such time as its governing body
41  by a 2/3 vote of the members of such governing body adopts a reso-
42  lution for affiliation and files the same in the same manner and on
43  the same conditions as in the case of an eligible employer other than
SB 154--Am.
                                     

 1  a city or township.
 2    (3)  If a participating employer is paying or has paid the salary
 3  or other compensation of the judge, clerk or any other employee,
 4  whether elective or appointive, such judge, clerk or other employee
 5  of such court or courts, whether elective or appointive, shall be
 6  deemed an employee of the participating employer. Such employee
 7  shall be governed by the provisions governing other eligible em-
 8  ployees of such participating employer. Any participating employer
 9  which has not heretofore included such employees as eligible em-
10  ployees under the retirement system shall on the first day of the
11  month coinciding with or following the effective date of this act
12  include such employees if otherwise eligible as eligible employees
13  under the retirement system. Such employees, whether elective or
14  appointive, if employed on the employer's entry date may elect to
15  pay forthwith the employee contributions from the employer's entry
16  date and thereby be governed by the provisions governing other
17  employees employed by the participating employer on entry date
18  except that no such employee shall be considered to be new em-
19  ployees on the first day of the month coinciding with or following
20  the effective date of this act and commence making employee con-
21  tributions in compliance with other provisions governing the re-
22  tirement system and the participating employer shall make the em-
23  ployer contributions in accordance with the alternative elected by
24  the employee and other provisions governing the retirement system.
25    (4)  Any employer whose employees are covered by social se-
26  curity and who otherwise do not meet the provisions of subsection
27  (13) of K.S.A. 74-4902 and amendments thereto may elect to affiliate
28  under this section upon meeting the definition of a governmental
29  entity or instrumentality as determined by the system. If, subse-
30  quent to such determination, the United States internal revenue
31  service determines that such employer does not meet the definition
32  of a governmental entity or instrumentality, such affiliation shall
33  be null and void and all employee accrued rights associated with
34  such affiliation shall be null and void and the system shall refund
35  such amounts presently credited to each employee's account and an
36  equivalent amount to the employer for each employee. The provi-
37  sions of this subsection shall apply to current and future partici-
38  pating employers.
39    (5)  For affiliations on and after January 1, 1998, any eligible em-
40  ployer, prior to the filing of an application for affiliation under this system,
41  shall request the board of trustees to submit a proposal for such affiliation
42  including an estimate of the employer's contribution rate necessary to
43  comply with the actuarial standard of this system. Such eligible employer
SB 154--Am.
                                     

 1  shall furnish all necessary data from which such proposal is prepared,
 2  and shall pay all costs involved.
 3    Sec. 11.  K.S.A. 1996 Supp. 74-4911f is hereby amended to read
 4  as follows: 74-4911f. (a) Subject to procedures or limitations pre-
 5  scribed by the governor, any state officer may elect to not become
 6  a member of the system.
 7    (b) (1)  Any such state officer described in subsection (a) who
 8  is a member of the Kansas public employees retirement system, on
 9  or after the effective date of this act, may elect to not be a member
10  by filing an election with the office of the retirement system. Each
11  state officer filing such election may withdraw the state officer's
12  accumulated contributions then on deposit with the system in the
13  same manner as prescribed in K.S.A. 74-4917 and amendments
14  thereto for employees upon termination.
15    (2)  Any state officer who has filed an election and received a
16  refund of contributions shall be entitled to again become a member
17  of the system upon the filing of proper notice in such form as pre-
18  scribed by the system and upon the making of a single lump-sum
19  payment in an the amount equal to all withdrawn contributions, plus
20  interest at a rate specified by the system determined by the actuary using
21  the member's attained age and the actuarial assumptions and tables cur-
22  rently in use by the system. Any person may make any such purchase as
23  described in this section at an additional rate of contribution, in addition
24  to the employee's contribution as provided in K.S.A. 74-4919 and amend-
25  ments thereto, based upon the member's attained age at the time of pur-
26  chase and using actuarial assumptions and tables in use by the retirement
27  system at such time of purchase, for such periods of service, in lieu of a
28  lump-sum amount as provided in this section. Such additional rate of
29  contribution shall commence at the beginning of the quarter following
30  such election and shall remain in effect until all quarters of such service
31  have been purchased. In no case shall the additional credit so granted be
32  greater than the total participating service forfeited on the earlier with-
33  drawal of contributions. Such contribution rates shall not remain in effect
34  longer than the period for which additional participating service credit
35  may be granted.
36    (c)  Subject to limitations prescribed by the secretary of admin-
37  istration, the state agency employing any employee who has filed
38  an election as provided under subsection (a) or (b) and who has
39  entered into an employee participation agreement, as provided in
40  K.S.A. 75-5524 and amendments thereto for deferred compensation
41  pursuant to the Kansas public employees deferred compensation
42  plan shall contribute to such plan on such employee's behalf an
43  amount equal to 8% of the employee's salary, as such salary has
SB 154--Am.
                                     

 1  been approved pursuant to K.S.A. 75-2935b and amendments
 2  thereto or as otherwise prescribed by law.
 3    (d)  As used in this section and K.S.A. 74-4927k and amendments
 4  thereto, ``state officer'' means the secretary of administration, sec-
 5  retary on aging, secretary of commerce and housing, secretary of
 6  corrections, secretary of health and environment, secretary of hu-
 7  man resources, secretary of revenue, secretary of social and reha-
 8  bilitation services, secretary of transportation, secretary of wildlife
 9  and parks, superintendent of the Kansas highway patrol, secretary
10  of agriculture, state grain inspector, executive director of the Kan-
11  sas lottery, executive director of the Kansas racing commission,
12  president of the Kansas development finance authority, state fire
13  marshal, state librarian, securities commissioner, adjutant general,
14  members of the state board of tax appeals, members of the Kansas
15  parole board, members of the state corporation commission, any
16  unclassified employee on the staff of officers of both houses of the
17  legislature, any unclassified employee appointed to the governor's
18  or lieutenant governor's staff and any person employed by the leg-
19  islative branch of the state of Kansas, other than any such person
20  receiving service credited under the Kansas public employees re-
21  tirement system or any other retirement system of the state of Kan-
22  sas therefor, who elected to be covered by the provisions of this
23  section as provided in subsection (e) of K.S.A. 46-1302 and amend-
24  ments thereto or who is first employed on or after July 1, 1996, by
25  the legislative branch of the state of Kansas.
26    (e)  The provisions of this section shall not apply to any state
27  officer who has elected to remain eligible for assistance by the state
28  board of regents as provided in subsection (a) of K.S.A. 74-4925 and
29  amendments thereto.
30    Sec. 3. 12.  K.S.A. 1996 Supp. 74-4913 is hereby amended to read as
31  follows: 74-4913. (1) Prior service shall be credited as follows:
32    (a)  A member shall receive full credit for continuous employment
33  prior to the entry date with such member's employer on the entry date.
34  If the employee was also employed on March 15, 1961, by the employer
35  who is the employee's employer on the employee's entry date of the year
36  immediately preceding the entry date of that employer, then all such pre-
37  vious employment, whether or not continuous, shall be credited; other-
38  wise no credit shall be granted for employment prior to a break in con-
39  tinuous employment. Any member or retirant who has been credited with
40  prior service as hereinbefore provided and who was employed by any
41  participating employer on March 15, 1961 of the year immediately pre-
42  ceding the entry date of that employer, may apply to the board on such
43  forms as it may prescribe for prior service credit with a participating
SB 154--Am.
                                     

 1  employer other than the member's entry date employer. Upon receipt of
 2  written verification of such employment from the participating employer,
 3  the board may shall grant such additional prior service credit and with
 4  respect to a retirant, shall adjust the amount of the retirement benefit
 5  accordingly commencing with the next monthly benefit payment due fol-
 6  lowing receipt of the written verification, except that such retirant shall
 7  not be entitled to any retroactive adjustment in the amount of such re-
 8  tirement benefit as a result of the board granting such additional prior
 9  service credit. In the case of any person other than a retirant receiving a
10  retirement benefit, such person may make application for an adjustment
11  in the benefit amount in the same manner as a member or retirant, and
12  in such case the adjustment in the benefit amount shall be determined
13  by the board upon the advice of the actuary, and shall commence with
14  the next monthly benefit payment due following receipt of the written
15  verification;
16    (b)  leaves of absence and military service shall not be counted as
17  breaks in continuous employment; however, military service which is im-
18  mediately preceded and followed by employment with a participating
19  employer shall be credited, except that after July 1, 1974, not more than
20  five years' credit for military service shall be granted hereunder, but
21  leaves of absence shall not be credited;
22    (c)  any member who was employed in the Kansas state employment
23  service, now a section of the Kansas division of employment security,
24  during any of the time the Kansas state employment service was loaned
25  by the state to the federal government (January 1, 1942, for the duration
26  of the emergency period of world war II, which service was returned to
27  the state by the federal government effective November 16, 1946) shall
28  be entitled to prior service credit for the time so employed during the
29  period stated for any service rendered under the jurisdiction of the United
30  States employment service for the federal government in like manner as
31  if the employment service had remained under the jurisdiction of the
32  state of Kansas;
33    (d)  any member who is not otherwise eligible for service credit as
34  provided for in subsection (1)(a) may be granted credit for the service
35  upon the attainment of 38 quarters of participating service;
36    (e)  any member who was employed by the university of Wichita prior
37  to July 1, 1964, shall be entitled to prior service credit for such time of
38  employment under the Kansas public employees retirement system,
39  when such employment is not the basis for other pension rights.
40    (2)  Participating service shall be credited as follows:  (a) A member
41  shall receive credit for participating service with a participating employer
42  in accordance with the rules and regulations established by the board of
43  trustees, except that no more than one calendar quarter of participating
SB 154--Am.
                                     

 1  service shall be credited for any employment within any one calendar
 2  quarter;
 3    (b)  leaves of absence and military service shall not count as a break
 4  in continuous employment provided the member leaves such member's
 5  accumulated contribution on deposit with the fund; however, the period
 6  of military service shall be credited, except that after July 1, 1974, not
 7  more than five years' credit for military service shall be granted here-
 8  under, but leaves of absence shall not be credited. Employees who enter
 9  the military service from their employment after the employer's entry
10  date and who have not completed one year of service at the time of their
11  entry into the military service, shall not become members of the retire-
12  ment system until they return to the employment of that participating
13  employer. In the case of such employee whose combined public employ-
14  ment and military service does not equal one year at the time of such
15  employee's return to employment, the date of membership shall be the
16  first day of the payroll period coinciding with or following the completion
17  of one combined public employment and military year of service. Such
18  service shall be granted in accordance with this section;
19    (c)  a period of retirement under the system or a period of total dis-
20  ability, immediately followed by employment with a participating em-
21  ployer, shall not count as a break in continuous employment, except that
22  such periods while not employed shall not be credited as participating
23  service;
24    (d)  termination of employment, followed by employment with a par-
25  ticipating employer within five years after such termination, does not
26  constitute a break in continuous employment if such person has not with-
27  drawn such person's accumulated contribution. Such period while not
28  employed shall not be credited as participating service.
29    (3)  In determining the number of years of credited prior service or
30  participating service a fractional year of six months or more shall be con-
31  sidered as one year and a fractional year of less than six months shall be
32  disregarded.
33    Sec. 13.  K.S.A. 1996 Supp. 74-4914 is hereby amended to read
34  as follows: 74-4914. (1) The normal retirement date for a member
35  of the system shall be the first day of the month coinciding with or
36  following the attainment of age 65 or, commencing July 1, 1986, age
37  65 or age 60 with the completion of 35 years of credited service or
38  at any age with the completion of 40 years of credited service, or
39  commencing July 1, 1993, any alternative normal retirement date
40  already prescribed by law or age 62 with the completion of 10 years
41  of credited service or the first day of the month coinciding with or
42  following the date that the total of the number of years of credited
43  service and the number of years of attained age of the member is
SB 154--Am.
                                     

 1  equal to or more than 85. In no event shall a normal retirement date
 2  for a member be before six months after the entry date of the par-
 3  ticipating employer by whom such member is employed. A member
 4  may retire on the normal retirement date or on the first day of any
 5  month thereafter upon the filing with the office of the retirement
 6  system of an application in such form and manner as the board shall
 7  prescribe. Nothing herein shall prevent any person, member or re-
 8  tirant from being employed, appointed or elected as an employee,
 9  appointee, officer or member of the legislature. Elected officers may
10  retire from the system on any date on or after the attainment of the
11  normal retirement date, but no retirement benefits payable under
12  this act shall be paid until the member has terminated such mem-
13  ber's office.
14    (2)  No retirant shall make contributions to the system or receive
15  service credit for any service after the date of retirement.
16    (3)  Any member who is an employee of an affiliating employer
17  pursuant to K.S.A. 74-4954b and amendments thereto and has not
18  withdrawn such member's accumulated contributions from the
19  Kansas police and firemen's retirement system may retire before
20  such member's normal retirement date on the first day of any month
21  coinciding with or following the attainment of age 55.
22    (4)  Any member may retire before such member's normal re-
23  tirement date on the first day of any month coinciding with or fol-
24  lowing the attainment of age 55 with the completion of 10 years of
25  credited service, but in no event before six months after the entry
26  date, upon the filing with the office of the retirement system of an
27  application for retirement in such form and manner as the board
28  shall prescribe.
29    (5)  If a retirant who retired on or after July 1, 1988, is employed
30  or appointed in or to any position or office for which compensation
31  for service is paid, during calendar years 1988 through 1990, in an
32  amount equal to $6,000 or more in any one such calendar year; during
33  calendar year 1991, in an amount equal to $9,720 or more; during cal-
34  endar year 1992, in an amount equal to $10,200 or more; during calendar
35  year 1993, in an amount equal to $10,560 or more; during calendar year
36  1994, in an amount equal to $11,160 or more; or during calendar year
37  1995 and all calendar years thereafter, in an amount equal to $11,280
38  $14,000 or more in any one such calendar year, by any participating
39  employer for which such retirant was employed or appointed during
40  the final two years of such retirant's participation, such retirant
41  shall not receive any retirement benefit for any month for which
42  such retirant serves in such position or office. The participating em-
43  ployer shall report to the system within 30 days of when the compensation
SB 154--Am.
                                     

 1  paid to the retirant is equal to or exceeds any limitation provided by this
 2  section. Any retirant employed by a participating employer shall not
 3  make contributions nor receive additional credit under such system
 4  for such service except as provided by this section. Upon request of
 5  the executive secretary of the system, the secretary of revenue shall
 6  provide such information as may be needed by the executive sec-
 7  retary to carry out the provisions of this act. The provisions of this
 8  subsection shall not apply to retirants employed as substitute teach-
 9  ers or officers, employees, appointees or members of the legislature
10  or any other elected officials.
11    (6)  For purposes of this section, any employee of a local gov-
12  ernmental unit which has its own pension plan who becomes an
13  employee of a participating employer as a result of a merger or
14  consolidation of services provided by local governmental units,
15  which occurred on January 1, 1994, may count service with such
16  local governmental unit in determining whether such employee has
17  met the years of credited service requirements contained in this
18  section.
19    Sec. 4. 14.  K.S.A. 1996 Supp. 74-4914e is hereby amended to read
20  as follows: 74-4914e. (1) As used in this section:
21    (a)  ``Correctional employee'' means any member of the system who
22  is a security officer or other employee of the department of corrections
23  and who is in a position for which the duties and responsibilities involve
24  regular contact with inmates as certified by the secretary of corrections;
25    (b)  ``disability'' means the total inability to perform permanently the
26  duties of the position of a correctional employee in which the correctional
27  employee was employed at the time of disability;
28    (c)  ``service-connected'' means any physical or mental disability re-
29  sulting from external force, violence or disease occasioned by an act of
30  duty as a correctional employee and includes, for any correctional em-
31  ployee after five years of credited service, any death or disability resulting
32  from a heart disease or disease of the lung or respiratory tract, except that
33  in the event that the correctional employee ceases to be a contributing
34  member except by reason of a service-connected disability for a period
35  of six months or more and then again becomes a contributing member
36  the provision relating to death or disability resulting from a heart disease
37  or disease of the lung or respiratory tract shall not apply until such cor-
38  rectional employee has again become a contributing member for a period
39  of not less than two years or unless clear and precise evidence is presented
40  that the heart disease or disease of the lung or respiratory tract was in
41  fact occasioned by an act of duty as a correctional employee; and
42    (d)  ``final average salary'' means the average highest annual compen-
43  sation paid to a correctional employee for any three of the last five years
SB 154--Am.
                                     

 1  of participating service immediately preceding the date of disability, or if
 2  participating service is less than three years, then the average annual
 3  compensation paid to the correctional employee during the full period of
 4  participating service or if a correctional employee has less than one cal-
 5  endar year of participating service the correctional employee's final av-
 6  erage salary shall be computed by multiplying the correctional employee's
 7  highest monthly salary received in that year by 12.
 8    (2)  If any active contributing correctional employee becomes totally
 9  and permanently disabled due to service-connected causes as defined in
10  subsection (1), such correctional employee shall be retired and the fol-
11  lowing benefits shall become payable and shall continue until the correc-
12  tional employee's death or until the correctional employee recovers from
13  the disability if a report of the event in a form acceptable to the board is
14  filed in the office of the executive secretary of the board within 220 days
15  after the date of the event or act of duty causing such disability and an
16  application for such benefit, in such form and manner as the board shall
17  prescribe, is filed by the correctional employee or the correctional em-
18  ployee's authorized representative in the office of the executive secretary
19  of the board within two years of the date of disability:
20    (a)  The correctional employee shall receive a retirement benefit
21  equal to 50% of the correctional employee's final average salary. Such
22  benefit shall accrue from the day upon which the correctional employee
23  ceases to draw compensation.
24    (b)  Each of the correctional employee's unmarried children under
25  the age of 18 years or each of the correctional employee's children under
26  the age of 23 years who are full-time students as provided in K.S.A. 74-
27  49,117 and amendments thereto shall receive an annual benefit equal to
28  10% of the correctional employee's final average salary. Such benefit shall
29  accrue from the day upon which the correctional employee ceases to draw
30  compensation and shall end on the first day of the month in which each
31  such child or children attains the age of 18 years, die or marry, whichever
32  occurs earlier or in which each such child or children attains the age of
33  23 years, if such child or children are full-time students as provided in
34  K.S.A. 74-49,117 and amendments thereto.
35    (c)  In no case shall the total benefits payable under paragraphs (a)
36  and (b) of this subsection (2) be in excess of 75% of the correctional
37  employee's final average salary.
38    (d)  In the event a correctional employee who is retired under para-
39  graph (a) of this subsection (2), dies within two years after the date of
40  such retirement, then benefits may be payable under subsection (2) of
41  K.S.A. 74-4916 and amendments thereto.
42    (e)  In the event a correctional employee who is retired under para-
43  graph (a) of this subsection (2), dies more than two years after the date
SB 154--Am.
                                     

 1  of such retirement, and the proximate cause of such death is the service-
 2  connected cause from which the disability resulted, then benefits may be
 3  payable under subsection (2) of K.S.A. 74-4916 and amendments thereto.
 4    (f)  In the event a correctional employee who is retired under subsec-
 5  tion (2) dies after the date of retirement and no benefits are payable under
 6  paragraphs (d) and (e) the following benefits shall be payable:
 7    (i)  To the correctional employee's spouse, if lawfully wedded to the
 8  correctional employee at the time of the correctional employee's death, a
 9  lump-sum benefit equal to 50% of the correctional employee's final av-
10  erage salary at the time of the correctional employee's retirement.
11    (ii)  To the correctional employee's spouse, if lawfully wedded to the
12  correctional employee at the time of the correctional employee's death, an
13  annual benefit equal to 50% of the correctional employee's retirement
14  benefit payable in monthly installments, to accrue from the first day of
15  the month following the correctional employee's date of death and ending
16  on the first day of the month in which the spouse dies. If there is no
17  surviving spouse, or if after the death of the spouse there remain one or
18  more children under the age of 18 years or one or more children under
19  the age of 23 years who is a full-time student as provided in K.S.A. 74-
20  49,117, and amendments thereto, the annual spouse's benefit shall be pay-
21  able in equal shares to such children and each child's share shall end on
22  the first day of the month in which such child attains the age of 18 years
23  or dies, whichever occurs earlier or in which such child attains the age of
24  23 years, if such child is a full-time student as provided in K.S.A. 74-
25  49,117, and amendments thereto.
26    The provisions of this subsection shall apply in all cases of such cor-
27  rectional employees who die after October 1, 1996.
28    (3)  If any correctional employee who is an active contributing mem-
29  ber prior to such correctional employee's normal retirement becomes
30  totally and permanently disabled for a period of 180 days from causes not
31  service-connected, and not as the result of a willfully negligent or inten-
32  tional act of the correctional employee, such correctional employee shall
33  be retired and the following benefit shall become payable and shall con-
34  tinue until the correctional employee's death or until the correctional
35  employee recovers from such disability whichever occurs first if a report
36  of the disability in a form acceptable to the board is filed in the office of
37  the executive secretary of the board within 220 days after the date of the
38  commencement of such disability and if an application for such benefit
39  in such form and manner as the board shall prescribe is filed in the office
40  of the executive secretary of the board within two years of the date of
41  disability:
42    A retirement benefit equal to 2% of the correctional employee's final
43  average salary multiplied by the number of years of credited service, ex-
SB 154--Am.
                                     

 1  cept that such retirement benefit shall be at least equal to 25% of the
 2  member's final average salary but not to exceed the amount of the re-
 3  tirement benefit provided in paragraph (a) of subsection (2). Such benefit
 4  shall not become payable until satisfactory evidence is presented to the
 5  board that the correctional employee is and has been for a period of 180
 6  days totally and permanently disabled, but benefits shall accrue from the
 7  day upon which the correctional employee ceases to draw compensation.
 8    (4)  Any correctional employee who is employed for compensation by
 9  an employer other than the department of corrections and whose disa-
10  bility is incurred in the course of such other employment shall not be
11  eligible for any of the benefits provided in subsection (3).
12    (5)  If a correctional employee becomes totally and permanently dis-
13  abled and no benefits are payable under subsections (2) or (3), the sum
14  of the correctional employee's accumulated contributions shall be paid to
15  the correctional employee.
16    (6)  Any correctional employee receiving benefits under this section
17  shall submit to medical examination, not oftener than annually, by one or
18  more physicians or any other practitioners of the healing arts holding a
19  valid license issued by Kansas state board of healing arts, as the board of
20  trustees may direct. If upon such medical examination the examiners re-
21  port to the board that the retirant is physically able and capable of resum-
22  ing employment with the participating employer from whose employment
23  the correctional employee retired, the disability benefits shall terminate.
24  A retirant who has been receiving benefits under the provisions of this
25  section and who returns to employment of a participating employer shall
26  immediately commence accruing service credit which shall be added to
27  that which has been accrued by virtue of previous service.
28    (7)  Any retirant who has been receiving benefits under the provisions
29  of this section for a period of five years shall be deemed finally retired
30  and shall not be subject to further medical examinations, except that if
31  the board of trustees shall have reasonable grounds to question whether
32  the retirant remains totally and permanently disabled, a further medical
33  examination or examinations may be required.
34    (8)  Refusal or neglect to submit to examination as provided in sub-
35  section (6) shall be sufficient cause for suspending or discontinuing ben-
36  efit payments under this section and if such refusal or neglect shall con-
37  tinue for a period of one year, the correctional employee's rights in and
38  to all benefits under the system may be revoked by the board.
39    (9)  Any retirement benefits payable under the provisions of this sec-
40  tion shall be in lieu of all other benefits under the system.
41    (10)  Each correctional employee shall report to such member's par-
42  ticipating employer any event or act of duty causing disability within 200
43  days after such event or act of duty. The department of corrections shall
SB 154--Am.
                                     

 1  file in the office of the executive secretary of the board, in a form ac-
 2  ceptable to the board, a report of the event or act of duty causing disability
 3  within 220 days after the event or act of duty.
 4    (11)  Benefits payable under this section shall be reduced by the orig-
 5  inal amount of any disability benefits received under the federal social
 6  security act or the workers compensation act. For any correctional em-
 7  ployee already retired on the effective date of this act, no reduction of
 8  the original social security benefits shall be applicable to benefits paid
 9  prior to the effective date of this act. In no case shall a correctional em-
10  ployee who is entitled to receive benefits under this section receive less
11  than $100 per month.
12    (12)  The provisions of this section shall apply to disabilities occurring
13  after June 30, 1982, and prior to July 1, 1995. At the direction of the
14  board of trustees, the actuary shall conduct an experience evaluation of
15  benefits payable under this section and the board shall provide copies of
16  such study to the governor and members of the legislature.
17    (13)  The provisions of K.S.A. 74-4927 and amendments thereto re-
18  lating to insured disability benefits shall not be applicable to correctional
19  employees subject to the provisions of this section.
20    (14)  In the event a correctional employee who is retired under sub-
21  section (3) dies after the date of retirement and no benefits are payable
22  under that subsection, the following benefits shall be payable;
23    (i)  To the correctional employee's spouse, if lawfully wedded to the
24  correctional employee at the time of the correctional employee's death, a
25  lump-sum benefit equal to 50% of the correctional employee's final av-
26  erage salary at the time of the correctional employee's retirement.
27    (ii)  To the correctional employee's spouse, if lawfully wedded to the
28  correctional employee at the time of the correctional employee's death, an
29  annual benefit equal to 50% of the correctional employee's retirement
30  benefit payable in monthly installments, to accrue from the first day of
31  the month following the correctional employee's date of death and ending
32  on the first day of the month in which the spouse dies. If there is no
33  surviving spouse, or if after the death of the spouse there remain one or
34  more children under the age of 18 years or one or more children under
35  the age of 23 years who is a full-time student as provided in K.S.A. 74-
36  49,117, and amendments thereto, the annual spouse's benefit shall be pay-
37  able in equal shares to such children and each child's share shall end on
38  the first day of the month in which such child attains the age of 18 years
39  or dies, whichever occurs earlier or in which such child attains the age of
40  23 years, if such child is a full-time student as provided in K.S.A. 74-
41  49,117, and amendments thereto.
42    The provisions of this subsection shall apply in all cases of such cor-
43  rectional employees who die after October 1, 1996.
SB 154--Am.
                                     

 1    Sec. 5. 15.  K.S.A. 1996 Supp. 74-4919a is hereby amended to read
 2  as follows: 74-4919a. (1) An employee of a participating employer who
 3  becomes a member as provided in K.S.A. 74-4911 and amendments
 4  thereto, after completion of one year of continuous employment as
 5  therein provided may purchase participating service credit for such year
 6  of employment by making application therefor. Such application and pay-
 7  ment may be made at any time after the employee becomes a member
 8  and continues to be employed by a participating employer. Any member
 9  of the system who has not retired may purchase such service credit by
10  paying the then present value of the retirement benefits based on such
11  service by means of a single lump sum payment in the amount determined
12  by the actuary using the member's attained age and the actuarial as-
13  sumptions and tables currently in use by this retirement system. If an
14  employee was employed before the participating employer's entry date
15  and did not become a member until the first day of the month or the first
16  day of the first payroll period, whichever is applicable, coinciding with or
17  following the completion of one year continuous employment, the mem-
18  ber may purchase participating service credit for the period from the
19  participating employer's entry date until such member became a member
20  by paying to the system the then present value of the retirement benefits
21  based on such service by means of a single lump sum payment in the
22  amount determined by the actuary using the member's attained age and
23  the actuarial assumptions and tables currently in use by this retirement
24  system.
25    Notwithstanding any other provision of this subsection, if an employee
26  purchases such participating service credit within 12 months of such em-
27  ployee's membership in the system, such employee may purchase such
28  participating service credit by making application therefor and paying to
29  the system a lump sum amount equivalent to 4% of the compensation paid
30  to such member for personal services during such period. If an employee
31  was employed for a partial year after the participating employer's entry
32  date and did not become a member at that time, but became a member
33  at a later date, the member may purchase participating service credit for
34  such partial year of employment by paying the then present value of the
35  retirement benefits based on such service by means of a single lump sum
36  payment in the amount determined by the actuary using the member's
37  attained age and the actuarial assumptions and tables currently in use by
38  this retirement system.
39    (2)  Any employee of the state of Kansas who was receiving or was
40  eligible for assistance by the state board of regents in the purchase of a
41  retirement annuity under K.S.A. 74-4925 and amendments thereto, and
42  who became ineligible for such assistance prior to the effective date of
43  this act because such employee's position was reclassified to a position in
SB 154--Am.
                                     

 1  the classified service under the Kansas civil service act, or who became
 2  ineligible for such assistance because such person accepted and trans-
 3  ferred to a position in the classified service under the Kansas civil service
 4  act, and who becomes a member of the system on the first day of the
 5  payroll period coinciding with or following the effective date of this act
 6  in accordance with subsection (5) of K.S.A. 74-4911 and amendments
 7  thereto, may purchase participating service credit for the period of em-
 8  ployment from the effective date of such reclassification or transfer to
 9  the date of such employee's membership in the system. Such employee
10  may purchase such participating service credit by making application
11  therefor and paying to the system a lump-sum amount equivalent to 4%
12  of the compensation paid to such member for personal services during
13  such period by the state of Kansas or as provided in subsection (3). Such
14  application and payment may be made at any time after the employee
15  becomes a member and continues to be employed by a participating em-
16  ployer.
17    (3)  Except as otherwise provided in this subsection, any member of
18  the retirement system may purchase participating service credit for em-
19  ployment service as described in this section, if first commenced prior to
20  January 1, 1996, by electing to effect such purchase by means of having
21  employee contributions as provided in K.S.A. 74-4919 and amendments
22  thereto deducted from such member's compensation at a percentage rate
23  equal to two times or three times the employee's rate of contribution as
24  provided in K.S.A. 74-4919 and amendments thereto for such periods of
25  service, in lieu of a lump-sum amount as provided in this section. Such
26  deductions shall commence at the beginning of the quarter following such
27  election and shall remain in effect until all quarters of such service have
28  been purchased. Any person may make any such purchase as described
29  in this section, if first commenced in calendar year 1996 or thereafter, at
30  an additional rate of contribution, in addition to the employee's rate of
31  contribution as provided in K.S.A. 74-4919 and amendments thereto,
32  based upon the member's attained age at the time of purchase and using
33  actuarial assumptions and tables in use by the retirement system at such
34  time of purchase, for such periods of service, in lieu of a lump-sum
35  amount as provided in this section. Such additional rate of contribution
36  shall commence at the beginning of the quarter following such election
37  and shall remain in effect until all quarters of such service have been
38  purchased. Notwithstanding any other provision of this subsection, any
39  member of the retirement system, within 12 months of such member's
40  membership date in the system, may purchase participating service credit
41  for employment service as described in this section, by electing to effect
42  such purchase by means of having employee contributions as provided in
43  K.S.A. 74-4919, and amendments thereto, deducted from such member's
SB 154--Am.
                                     

 1  compensation at a percentage rate equal to two times or three times the
 2  employee's rate of contribution as provided in K.S.A. 74-4910, and
 3  amendments thereto, for such periods of service, in lieu of a lump sum
 4  amount as provided in this section. Such deductions shall commence at
 5  the beginning of the quarter following such election and shall remain in
 6  effect until all quarters of such service have been purchased. Such pur-
 7  chase must be completed within 24 months of such membership date in
 8  the system.
 9    Sec. 6. 16.  K.S.A. 1996 Supp. 74-4919c is hereby amended to read
10  as follows: 74-4919c. Except as otherwise provided in this section, any
11  such member having previously lost credit for periods of participating
12  service, because of termination of employment and withdrawal of con-
13  tributions, if first commenced prior to January 1, 1996, may elect in writ-
14  ing to such member's participating employer and the retirement system
15  to have member contributions deducted from such member's compen-
16  sation at a percentage rate equal to two times or three times the employ-
17  ee's rate of contribution as provided in K.S.A. 74-4919 and amendments
18  thereto for such periods of service. Such election may be made at any
19  time prior to retirement and the attainment of age 70 and shall commence
20  on the first day of the payroll period for which compensation shall be
21  paid in the employer's quarterly reporting period coinciding with or fol-
22  lowing such election. Any member making such an election shall receive
23  credit for one additional quarter of participating service credit for each
24  quarter during which the contribution rate at a percentage rate equal to
25  two times the employee's rate of contribution as provided in K.S.A. 74-
26  4919 and amendments thereto for such periods of service, is in effect and
27  two additional quarters of participating service credit for each quarter
28  during which the contribution rate at a percentage rate equal to three
29  times the employee's rate of contribution as provided in K.S.A. 74-4919
30  and amendments thereto, is in effect. Any person may make any such
31  purchase as described in this section, if first commenced in calendar year
32  1996 or thereafter, at an additional rate of contribution, in addition to the
33  employee's rate of contribution as provided in K.S.A. 74-4919 and amend-
34  ments thereto, based upon the member's attained age at the time of
35  purchase and using actuarial assumptions and tables in use by the retire-
36  ment system at such time of purchase, for such periods of service, in lieu
37  of a lump-sum amount as provided in this section. Such additional rate
38  of contribution shall commence at the beginning of the quarter following
39  such election and shall remain in effect until all quarters of such service
40  have been purchased. In no case shall the additional credit so granted be
41  greater than the total participating service credit forfeited on the earlier
42  termination of employment and withdrawal of contributions. Such con-
43  tribution rates shall not remain in effect longer than the period for which
SB 154--Am.
                                     

 1  additional participating service credit may be granted.
 2    Sec. 7. 17.  K.S.A. 1996 Supp. 74-4919h is hereby amended to read
 3  as follows: 74-4919h. (1) In addition to any military service credited under
 4  the provisions of K.S.A. 74-4913 or 74-4936 and amendments thereto, or
 5  in the event that an active contributing member does not qualify for credit
 6  for military service as defined in subsection (22) of K.S.A. 74-4902 and
 7  amendments thereto, such member may purchase participating credit for
 8  periods of active service in the armed forces of the United States or in
 9  the commissioned corps of the United States public health service and for
10  periods of service required to fulfill the requirements of section 651 of
11  title 10, United States code, which are not otherwise creditable, which
12  when added to any creditable military service do not exceed six years.
13  Except as provided in subsection (4)(a) for such purchase of participating
14  credit for such periods of such military service which is the basis for
15  military pension rights, such member shall be entitled to purchase one
16  quarter of participating service credit for each year of service required to
17  fulfill the requirements of section 651 of title 10, United States code.
18  Except as otherwise provided in this section, such purchase shall be ef-
19  fected by the member submitting proof of such service acceptable to the
20  board and, if first commenced prior to January 1, 1996, electing in writing
21  to have employee contributions as provided in K.S.A. 74-4919 and
22  amendments thereto deducted from such member's compensation at a
23  percentage rate equal to two times or three times the employee's rate of
24  contribution as provided in K.S.A. 74-4919 and amendments thereto for
25  such periods of service. Such deductions shall commence at the beginning
26  of the quarter following such election and shall remain in effect until all
27  of the full quarters of such service have been purchased. Any person may
28  make any such purchase as described in this section, if first commenced
29  in calendar year 1996 or thereafter, at an additional rate of contribution,
30  in addition to the employee's rate of contribution as provided in K.S.A.
31  74-4919 and amendments thereto, based upon the member's attained age
32  at the time of purchase and using actuarial assumptions and tables in use
33  by the retirement system at such time of purchase, for such periods of
34  service, in lieu of a lump-sum amount as provided in this section. Such
35  additional rate of contribution shall commence at the beginning of the
36  quarter following such election and shall remain in effect until all quarters
37  of such service have been purchased.
38    (2) (a)  Such purchase of participating service credit must be com-
39  pleted prior to such member's retirement.
40    (b) For members purchasing such participating service credit on or
41  after July 1, 1993, whose purchase is completed within five years before
42  such member's retirement, such member shall pay the actuarially deter-
43  mined amount by means of a single lump-sum payment or equal annual
SB 154--Am.
                                     

 1  payments which shall be completed prior to retirement. The lump-sum
 2  payment or annual payments shall be determined by the system's actuary
 3  by using the member's current annual salary at the time, actuarial as-
 4  sumptions and tables currently in use by the system and the member's
 5  attained age. No participating employer shall pay all or any part of the
 6  cost of service credit purchased by a member under this subsection. Any
 7  member who purchases such participating service credit and who does
 8  not make the lump-sum payment or annual payments as required by this
 9  subsection shall have any previously credited service under this section
10  voided and such member shall be refunded such member's payments
11  previously made for such purchase plus interest.  The provisions of this
12  subsection shall not apply to any member who is employed by an insti-
13  tution that is closed or abolished or otherwise ceases operations or that
14  is scheduled for such closure, abolition or cessation of operations and has
15  a budget reduction imposed that is associated with such closure, abolition
16  or cessation of operations, and who is laid off from employment with such
17  institution for the reason of such closure, abolition or cessation. As used
18  in this subsection, ``institution'' means Topeka state hospital or Winfield
19  state hospital and training center; and ``laid off'' means, in the case of a
20  state officer or employee in the classified service under the Kansas civil
21  service act, being laid off under K.S.A. 75-2948 and amendments thereto
22  and, in the case of a state officer or employee in the unclassified service
23  under the Kansas civil service act, being terminated from employment
24  with the state agency by the appointing authority, except that ``laid off''
25  shall not include any separation from employment pursuant to budget
26  reduction or expenditure authority reduction and reduction of F.T.E.
27  positions under K.S.A. 1996 Supp. 75-6801 and amendments thereto.
28    (3)  In the event such member has elected to purchase participating
29  service credit as provided in K.S.A. 74-4919a to 74-4919e, inclusive, and
30  any amendments thereto, the increased employee contributions and pur-
31  chase of participating service credit provided herein shall not commence
32  until after the purchase of participating service credit under K.S.A. 74-
33  4919a to 74-4919e, inclusive, and any amendments thereto, has been
34  completed. If a member terminates employment before completing the
35  purchase of all participating service credit as such member may be enti-
36  tled to, such member shall only receive such credit for those full quarters
37  as the percentage rate equal to two times or three times the employee's
38  rate of contribution as provided in K.S.A. 74-4919 and amendments
39  thereto or those full quarters as the additional rate of contribution, in
40  addition to the employee's rate of contribution as provided in K.S.A. 74-
41  4919 and amendments thereto has been deducted from such member's
42  compensation.
43    (4) (a)  Any member of the system who has not yet retired may pur-
SB 154--Am.
                                     

 1  chase participating service credit for military service as described in this
 2  section which is the basis for military pension rights at an additional rate
 3  of contribution in addition to the employee's rate of contribution as pro-
 4  vided in K.S.A. 74-4919 and amendments thereto, based upon the mem-
 5  ber's attained age at the time of purchase and using actuarial assumptions
 6  and tables in use by the retirement system at the time of such purchase.
 7  Such additional rate of contribution shall commence at the beginning of
 8  the quarter following such election and shall remain in effect until all
 9  quarters of such service have been purchased. Any such member may
10  purchase participating service credit for military service as described in
11  this section by electing to effect such purchase by means of a single lump-
12  sum payment in lieu of employee contributions as provided in this section.
13  The lump-sum payment shall be an amount determined by the actuary
14  using the member's then current annual rate of compensation, or if not
15  actively employed, the member's annual rate of compensation when last
16  participating, the actuarial assumptions and tables currently in use by the
17  retirement system and the member's attained age. No participating em-
18  ployer shall pay all or any part of the cost of any additional participating
19  service credit to be purchased by means of a lump-sum payment by a
20  member under this section.
21    (b)  Any member of the retirement system who has not retired may
22  purchase participating service credit for military service as described in
23  this section which is not the basis for military pension rights by electing
24  to effect such purchase by means of a single lump-sum payment in lieu
25  of employee contributions as provided in this section. The lump-sum
26  payment shall be an amount determined by the actuary using the mem-
27  ber's then current annual rate of compensation, or if not actively em-
28  ployed, the member's annual rate of compensation when last participat-
29  ing, the actuarial assumptions and tables currently in use by the
30  retirement system and the member's attained age. No participating em-
31  ployer shall pay all or any part of the cost of any additional participating
32  service credit to be purchased by means of a lump-sum payment by a
33  member under this section.
34    Sec. 18.  K.S.A. 1996 Supp. 74-4920 is hereby amended to read
35  as follows: 74-4920. (1) (a)  Upon the basis of each annual actuarial
36  valuation and appraisal as provided for in subsection (3)(a) of
37  K.S.A. 74-4908 and amendments thereto, the board shall certify, on
38  or before July 15 of each year, to the division of the budget in the
39  case of the state and to the agent for each other participating em-
40  ployer an actuarially determined estimate of the rate of contribu-
41  tion which will be required, together with all accumulated contri-
42  butions and other assets of the system, to be paid by each such
43  participating employer to pay all liabilities which shall exist or ac-
SB 154--Am.
                                     

 1  crue under the system, including amortization of the actuarial ac-
 2  crued liability over a period of 40 years commencing on July 1,
 3  1993, and the actuarial accrued liability for members of the faculty
 4  and other persons who are employed by the state board of regents
 5  or by educational institutions under its management assisted by the
 6  state board of regents in the purchase of retirement annuities as
 7  provided in K.S.A. 74-4925 and amendments thereto, as provided
 8  in this section. The actuarial accrued liability for all participating
 9  employers other than the state board of regents relating to members
10  of the faculty and other persons described in this section, shall be
11  amortized by annual payments that increase 4% for each year re-
12  maining in the amortization period. For all participating employers
13  other than the state board of regents relating to members of the
14  faculty and other persons described in this section, the projected
15  unit credit actuarial cost method shall be used in annual actuarial
16  valuations, commencing with the 1993 valuation, to determine the
17  employer contribution rates that shall be certified by the board.
18  The actuarial accrued liability for members of the faculty and other
19  persons described in this subsection assisted by the state board of
20  regents in the purchase of retirement annuities as provided in K.S.A.
21  74-4925 and amendments thereto shall be amortized by annual
22  level payments over a period of 10 years commencing July 1, 1993.
23  Such certified rate of contribution shall be based on the standards
24  set forth in subsection (3)(a) of K.S.A. 74-4908 and amendments
25  thereto and shall not be based on any other purpose outside of the
26  needs of the system.
27    (b) (i)  For employers affiliating on and after January 1, 1998, upon
28  the basis of an annual actuarial valuation and appraisal of the system
29  conducted in the manner provided for in K.S.A. 74-4908 and amendments
30  thereto, the board shall certify, on or before July 15 of each year to each
31  such employer an actuarially determined estimate of the rate of contri-
32  bution which shall be required to be paid by each such employer to pay
33  all of the liabilities which shall accrue under the system from and after
34  the entry date as determined by the board, upon recommendation of the
35  actuary. Such rate shall be termed the employer's participating service
36  contribution and shall be uniform for all participating employers. Such
37  additional liability shall be amortized over a period of 35 years com-
38  mencing on July 1, 1998, by annual payments that increase 4% for each
39  year remaining in the amortization period. For all participating employers
40  described in this section, the projected unit credit actuarial cost method
41  shall be used in annual actuarial valuations to determine the employer
42  contribution rates that shall be certified by the board.
43    (ii)  The board shall determine for each such employer separately an
SB 154--Am.
                                     

 1  amount sufficient to amortize over a period of not to exceed 35 years
 2  commencing July 1, l998, all liabilities for prior service costs which shall
 3  have accrued at the time of entry into the system. On the basis of such
 4  determination the board shall annually certify to each such employer sep-
 5  arately an actuarially determined estimate of the rate of contribution
 6  which shall be required to be paid by that employer to pay all of the
 7  liabilities for such prior service costs. Such rate shall be termed the em-
 8  ployer's prior service contribution.
 9    (2)  The division of the budget and the governor shall include in
10  the budget and in the budget request for appropriations for per-
11  sonal services the sum required to satisfy the state's obligation un-
12  der this act as certified by the board and shall present the same to
13  the legislature for allowance and appropriation.
14    (3)  Each other participating employer shall appropriate and
15  pay to the system a sum sufficient to satisfy the obligation under
16  this act as certified by the board.
17    (4)  Each participating employer is hereby authorized to pay the
18  employer's contribution from the same fund that the compensation
19  for which such contribution is made is paid from or from any other
20  funds available to it for such purpose. Each political subdivision,
21  other than an instrumentality of the state, which is by law author-
22  ized to levy taxes for other purposes, may levy annually at the time
23  of its levy of taxes, a tax which may be in addition to all other taxes
24  authorized by law for the purpose of making its contributions under
25  this act and, in the case of cities and counties, to pay a portion of
26  the principal and interest on bonds issued under the authority of
27  K.S.A. 12-1774 and amendments thereto by cities located in the
28  county, which tax, together with any other fund available, shall be
29  sufficient to enable it to make such contribution. In lieu of levying
30  the tax authorized in this subsection, any taxing subdivision may
31  pay such costs from any employee benefits contribution fund estab-
32  lished pursuant to K.S.A. 12-16,102 and amendments thereto. Each
33  participating employer which is not by law authorized to levy taxes
34  as described above, but which prepares a budget for its expenses
35  for the ensuing year and presents the same to a governing body
36  which is authorized by law to levy taxes as described above, may
37  include in its budget an amount sufficient to make its contributions
38  under this act which may be in addition to all other taxes authorized
39  by law. Such governing body to which the budget is submitted for
40  approval, may levy a tax sufficient to allow the participating em-
41  ployer to make its contributions under this act, which tax, together
42  with any other fund available, shall be sufficient to enable the par-
43  ticipating employer to make the contributions required by this act.
SB 154--Am.
                                     

 1    (5)  The rate of contribution certified to a participating em-
 2  ployer as provided in this section shall apply during the fiscal year
 3  of the participating employer which begins in the second calendar
 4  year following the year of the actuarial valuation. For the fiscal
 5  year commencing in calendar year 1993, the employer rate of con-
 6  tribution for the state of Kansas and for participating employers
 7  under K.S.A. 74-4931 and amendments thereto shall be 3.1% of the
 8  amount of compensation upon which members contribute during
 9  the period. For the fiscal year commencing in calendar year 1994,
10  the employer rate of contribution for the state of Kansas and for
11  participating employers under K.S.A. 74-4931 and amendments
12  thereto shall be 3.2% of the amount of compensation upon which
13  members contribute during the period. For the fiscal year com-
14  mencing in calendar year 1994, the employer rate of contribution
15  for participating employers other than the state of Kansas shall be
16  2.2% of the amount of compensation upon which members contrib-
17  ute during the period. Except as specifically provided in this section,
18  for the fiscal year commencing in calendar year 1995, the rate of
19  contribution certified to a participating employer shall in no event
20  exceed such participating employer's contribution rate for the im-
21  mediately preceding fiscal year by more than 0.1% of the amount
22  of compensation upon which members contribute during the period.
23  Except as specifically provided in this section, for fiscal years com-
24  mencing in calendar year 1996 and in each subsequent calendar
25  year, the rate of contribution certified to the state of Kansas shall
26  in no event exceed the state's contribution rate for the immediately
27  preceding fiscal year by more than 0.2% of the amount of compen-
28  sation upon which members contribute during the period. Except
29  as specifically provided in this section, for fiscal years commencing
30  in calendar year 1997 and in each subsequent calendar year, the
31  rate of contribution certified to participating employers other than
32  the state of Kansas shall in no event exceed such participating em-
33  ployer's contribution rate for the immediately preceding fiscal year
34  by more than 0.15% of the amount of compensation upon which
35  members contribute during the period. There shall be an employer
36  rate of contribution certified to the state of Kansas and participat-
37  ing employers under K.S.A. 74-4931 and amendments thereto.
38  There shall be a separate employer rate of contribution certified to
39  all other participating employers other than the state of Kansas.
40    (6)  The actuarial cost of any legislation enacted in the 1994
41  session of the Kansas legislature will be included in the June 30,
42  1994, actuarial valuation in determining contribution rates for par-
43  ticipating employers.
SB 154--Am.
                                     

 1    (7)  The board with the advice of the actuary may fix the con-
 2  tribution rates for participating employers joining the system after
 3  one year from the first entry date or for employers who exercise the
 4  option contained in K.S.A. 74-4912 and amendments thereto at rates
 5  different from the rate fixed for employers joining within one year
 6  of the first entry date.
 7    (8)  For employers affiliating on and after January 1, 1998, the rates
 8  of contribution certified to the participating employer as provided in this
 9  section shall apply during the fiscal year immediately following such cer-
10  tification, but the rate of contribution during the first year following the
11  employer's entry date shall be equal to 7% of the amount of compensation
12  on which members contribute during the year. Any amount of such first
13  year's contribution which may be in excess of the necessary current service
14  contribution shall be credited by the board to the respective employer's
15  prior service liability.
16    (8)(9)  Employer contributions shall in no way be limited by any
17  other act which now or in the future establishes or limits the com-
18  pensation of any member.
19    (9)(10)  Each participating employer shall remit quarterly, or as
20  the board may otherwise provide, all employee deductions and re-
21  quired employer contributions to the executive secretary for credit
22  to the Kansas public employees retirement fund within 20 days after
23  the end of the period covered by the remittance or within 25 days
24  after forms or written instructions from the system were mailed by
25  the system to such employer, whichever is later. Remittances of such
26  deductions and contributions received after such date are delin-
27  quent. Delinquent payments due under this subsection shall be sub-
28  ject to interest at the rate established for interest on judgments un-
29  der subsection (a) of K.S.A. 16-204 and amendments thereto. At the
30  request of the board, delinquent payments which are due or interest
31  owed on such payments, or both, may be deducted from any other
32  moneys payable to such employer by any department or agency of
33  the state.
34    Sec. 19.  K.S.A. 1996 Supp. 74-4921 is hereby amended to read
35  as follows: 74-4921. (1) There is hereby created in the state treasury
36  the Kansas public employees retirement fund. All employee and em-
37  ployer contributions shall be deposited in the state treasury to be
38  credited to the Kansas public employees retirement fund. The fund
39  is a trust fund and shall be used solely for the exclusive purpose of
40  providing benefits to members and member beneficiaries and de-
41  fraying reasonable expenses of administering the fund. Investment
42  income of the fund shall be added or credited to the fund as provided
43  by law. All benefits payable under the system, refund of contribu-
SB 154--Am.
                                     

 1  tions and overpayments, purchases or investments under the law
 2  and expenses in connection with the system unless otherwise pro-
 3  vided by law shall be paid from the fund. The director of accounts
 4  and reports is authorized to draw warrants on the state treasurer
 5  and against such fund upon the filing in the director's office of
 6  proper vouchers executed by the chairperson or the executive sec-
 7  retary of the board. As an alternative, payments from the fund may
 8  be made by credits to the accounts of recipients of payments in
 9  banks, savings and loan associations and credit unions. A payment
10  shall be so made only upon the written authorization and direction
11  of the recipient of payment and upon receipt of such authorization
12  such payments shall be made in accordance therewith. Orders for
13  payment of such claims may be contained on (a) a letter, memoran-
14  dum, telegram, computer printout or similar writing, or (b) any
15  form of communication, other than voice, which is registered upon
16  magnetic tape, disc or any other medium designed to capture and
17  contain in durable form conventional signals used for the electronic
18  communication of messages.
19    (2)  The board shall have the responsibility for the management
20  of the fund and shall discharge the board's duties with respect to
21  the fund solely in the interests of the members and beneficiaries of
22  the system for the exclusive purpose of providing benefits to mem-
23  bers and such member's beneficiaries and defraying reasonable ex-
24  penses of administering the fund and shall invest and reinvest mon-
25  eys in the fund and acquire, retain, manage, including the exercise
26  of any voting rights and disposal of investments of the fund within
27  the limitations and according to the powers, duties and purposes as
28  prescribed by this section.
29    (3)  Moneys in the fund shall be invested and reinvested to
30  achieve the investment objective which is preservation of the fund
31  to provide benefits to members and member beneficiaries, as pro-
32  vided by law and accordingly providing that the moneys are as pro-
33  ductive as possible, subject to the standards set forth in this act. No
34  moneys in the fund shall be invested or reinvested if the sole or
35  primary investment objective is for economic development or social
36  purposes or objectives.
37    (4)  In investing and reinvesting moneys in the fund and in ac-
38  quiring, retaining, managing and disposing of investments of the
39  fund, the board shall exercise the judgment, care, skill, prudence
40  and diligence under the circumstances then prevailing, which per-
41  sons of prudence, discretion and intelligence acting in a like capac-
42  ity and familiar with such matters would use in the conduct of an
43  enterprise of like character and with like aims by diversifying the
SB 154--Am.
                                     

 1  investments of the fund so as to minimize the risk of large losses,
 2  unless under the circumstances it is clearly prudent not to do so,
 3  and not in regard to speculation but in regard to the permanent
 4  disposition of similar funds, considering the probable income as
 5  well as the probable safety of their capital.
 6    (5)  Notwithstanding subsection (4): (a) Total investments in
 7  common stock may be made in the amount of up to 60% of the total
 8  book value of the fund;
 9    (b)  the board may invest or reinvest moneys of the fund in al-
10  ternative investments if the following conditions are satisfied:
11    (i)  The total of such alternative investments does not exceed
12  more than 5% of the total investment assets of the fund. If the total
13  of such alternative investments exceeds more than 5% of the total
14  investment assets of the fund on the effective date of this act, the
15  board shall not invest or reinvest any moneys of the fund in alter-
16  native investments until the total of such alternative investments is
17  less the 5% of the total investment assets of the fund subject to the
18  5% limitation contained in this subsection. Nothing in this subsec-
19  tion requires the board to liquidate or sell the system's holdings in
20  any alternative investment held by the system on the effective date
21  of this act, unless such liquidation or sale would be in the best in-
22  terest of the members and beneficiaries of the system and be prudent
23  under the standards contained in this section. The 5% limitation
24  contained in this section shall not have been violated if the total of
25  such alternative investments exceeds 5% of the total investment as-
26  sets of the fund as a result of market forces acting to increase the
27  value of such alternative investments relative to the rest of the sys-
28  tem's investments; however, the board shall not invest or reinvest
29  any moneys of the fund in alternative investments until the total of
30  such alternative investments is less than 5% of the total investment
31  assets of the fund subject to the 5% limitation contained in this
32  subsection;
33    (ii)  if in addition to the system, there are at least two other so-
34  phisticated investors, as defined by section 301 of the securities and
35  exchange act of 1933;
36    (iii)  the system's share in any individual alternative investment
37  is limited to an investment representing not more than 20% of any
38  such individual alternative investment;
39    (iv)  the system has received a favorable and appropriate rec-
40  ommendation from a qualified, independent expert in investment
41  management or analysis in that particular type of alternative in-
42  vestment;
43    (v)  the alternative investment is consistent with the system's in-
SB 154--Am.
                                     

 1  vestment policies and objectives as provided in subsection (6);
 2    (vi)  the individual alternative investment does not exceed more
 3  than 2.5% of the total alternative investments made under this sub-
 4  section. If the alternative investment is made pursuant to partici-
 5  pation by the system in a multi-investor pool, the 2.5% limitation
 6  contained in this subsection is applied to the underlying individual
 7  assets of such pool and not to investment in the pool itself. The total
 8  of such alternative investments made pursuant to participation by
 9  the system in any one individual multi-investor pool shall not exceed
10  more than 20% of the total of alternative investments made by the
11  system pursuant to this subsection. Nothing in this subsection re-
12  quires the board to liquidate or sell the system's holdings in any
13  alternative investments made pursuant to participation by the sys-
14  tem in any one individual multi-investor pool held by the system on
15  the effective date of this act, unless such liquidation or sale would
16  be in the best interest of the members and beneficiaries of the system
17  and be prudent under the standards contained in this section. The
18  20% limitation contained in this subsection shall not have been vi-
19  olated if the total of such investment in any one individual multi-
20  investor pool exceeds 20% of the total alternative investments of the
21  fund as a result of market forces acting to increase the value of such
22  a multi-investor pool relative to the rest of the system's alternative
23  investments; however, the board shall not invest or reinvest any
24  moneys of the fund in any such individual multi-investor pool until
25  the value of such individual multi-investor pool is less than 20% of
26  the total alternative investments of the fund;
27    (vii)  the board has received and considered the investment man-
28  ager's due diligence findings submitted to the board as required by
29  subsection (6)(c); and
30    (viii)  prior to the time the alternative investment is made, the
31  system has in place procedures and systems to ensure that the in-
32  vestment is properly monitored and investment performance is ac-
33  curately measured.
34    For purposes of this act, ``alternative investment'' means non-
35  traditional investments outside the established nationally recog-
36  nized public stock exchanges and government securities market. Al-
37  ternative investments shall include, but not be limited to, private
38  placements, venture capital, partnerships, limited partnerships and
39  leveraged buyout partnerships;
40    (c)  except as otherwise provided, the board may invest or re-
41  invest moneys of the fund in real estate investments if the following
42  conditions are satisfied:
43    (i)  If, in addition to the system, there are at least two other sophis-
SB 154--Am.
                                     

 1  ticated investors, as defined by section 301 of the securities and exchange
 2  act of 1933;
 3    (ii)  the system's share in any individual real estate investment is lim-
 4  ited to an investment representing not more than 20% of any such indi-
 5  vidual real estate investment;
 6    (iii)  The system has received a favorable and appropriate rec-
 7  ommendation from a qualified, independent expert in investment
 8  management or analysis in that particular type of real estate in-
 9  vestment;
10    (iv) (ii)  the real estate investment is consistent with the system's
11  investment policies and objectives as provided in subsection (6); and
12    (v)  the total of such real estate investments made pursuant to partic-
13  ipation by the system in any one individual multi-investor pool shall not
14  exceed more than 20% of the total of real estate investments made by
15  the system pursuant to this subsection. Nothing in this subsection re-
16  quires the board to liquidate or sell the system's holdings in any real estate
17  investments made pursuant to participation by the system in any one
18  individual multi-investor pool held by the system on the effective date of
19  this act, unless such liquidation or sale would be in the best interest of
20  the members and beneficiaries of the system and be prudent under the
21  standards contained in this section. The 20% limitation contained in this
22  subsection shall not have been violated if the total of such investment in
23  any one individual multi-investor pool exceeds 20% of the total real estate
24  investments of the fund as a result of market forces acting to increase the
25  value of such a multi-investor pool relative to the rest of the system's real
26  estate investments; however, the board shall not invest or reinvest any
27  moneys of the fund in any such individual multi-investor pool until the
28  value of such individual multi-investor pool is less than 20% of the total
29  real estate investments of the fund;
30    (vi) (iii)  the board has received and considered the investment
31  manager's due diligence findings submitted to the board as required
32  by subsection (6)(c);
33    (vii)  prior to the time the real estate investment is made, the system
34  has in place procedures and systems to ensure that the investment is
35  properly monitored and investment performance is accurately measured;
36  and
37    (viii)  the provisions of this subsection shall not apply to any real estate
38  investment held by the system on July 1, 1992; and
39    (d)  the board shall not invest or reinvest moneys of the fund in
40  any banking institution, savings and loan association or credit un-
41  ion which positions the system as a shareholder or owner of such
42  banking institution, savings and loan association or credit union.
43    (6)  Subject to the objective set forth in subsection (3) and the
SB 154--Am.
                                     

 1  standards set forth in subsections (4) and (5) the board shall for-
 2  mulate policies and objectives for the investment and reinvestment
 3  of moneys in the fund and the acquisition, retention, management
 4  and disposition of investments of the fund. Such policies and objec-
 5  tives shall include:
 6    (a)  Specific asset allocation standards and objectives;
 7    (b)  establishment of criteria for evaluating the risk versus the
 8  potential return on a particular investment;
 9    (c)  a requirement that all investment managers submit such
10  manager's due diligence findings on each investment to the board
11  or investment advisory committee for approval or rejection prior to
12  making any alternative investment;
13    (d)  a requirement that all investment managers shall immedi-
14  ately report all instances of default on investments to the board and
15  provide the board with recommendations and options, including,
16  but not limited to, curing the default or withdrawal from the in-
17  vestment; and
18    (e)  establishment of criteria that would be used as a guideline
19  for determining when no additional add-on investments or rein-
20  vestments would be made and when the investment would be liq-
21  uidated.
22    The board shall review such policies and objectives, make
23  changes considered necessary or desirable and readopt such poli-
24  cies and objectives on an annual basis.
25    (7)  The board may enter into contracts with one or more per-
26  sons whom the board determines to be qualified, whereby the per-
27  sons undertake to perform the functions specified in subsection (2)
28  to the extent provided in the contract. Performance of functions
29  under contract so entered into shall be paid pursuant to rates fixed
30  by the board subject to provisions of appropriation acts and shall
31  be based on specific contractual fee arrangements. The system shall
32  not pay or reimburse any expenses of persons contracted with pur-
33  suant to this subsection, except that after approval of the board, the
34  system may pay approved investment related expenses subject to
35  provisions of appropriation acts. The board shall require that a
36  person contracted with to obtain commercial insurance which pro-
37  vides for errors and omissions coverage for such person in an
38  amount to be specified by the board, provided that such coverage
39  shall be at least the greater of $500,000 or 1% of the funds entrusted
40  to such person up to a maximum of $10,000,000. The board shall
41  require a person contracted with to give a fidelity bond in a penal
42  sum as may be fixed by law or, if not so fixed, as may be fixed by
43  the board, with corporate surety authorized to do business in this
SB 154--Am.
                                     

 1  state. Such persons contracted with the board pursuant to this sub-
 2  section and any persons contracted with such persons to perform
 3  the functions specified in subsection (2) shall be deemed to be
 4  agents of the board and the system in the performance of contrac-
 5  tual obligations.
 6    (8) (a)  In the acquisition or disposition of securities, the board
 7  may rely on the written legal opinion of a reputable bond attorney
 8  or attorneys, the written opinion of the attorney of the investment
 9  counselor or managers, or the written opinion of the attorney gen-
10  eral certifying the legality of the securities.
11    (b)  The board shall employ or retain qualified investment coun-
12  sel or counselors or may negotiate with a trust company to assist
13  and advise in the judicious investment of funds as herein provided.
14    (9) (a)  Except as provided in subsection (7) and this subsection,
15  the custody of money and securities of the fund shall remain in the
16  custody of the state treasurer, except that the board may arrange
17  for the custody of such money and securities as it considers advis-
18  able with one or more member banks or trust companies of the
19  federal reserve system or with one or more banks in the state of
20  Kansas, or both, to be held in safekeeping by the banks or trust
21  companies for the collection of the principal and interest or other
22  income or of the proceeds of sale. The services provided by the
23  banks or trust companies shall be paid pursuant to rates fixed by
24  the board subject to provisions of appropriation acts.
25    (b)  The state treasurer and the board shall collect the principal
26  and interest or other income of investments or the proceeds of sale
27  of securities in the custody of the state treasurer and pay same when
28  so collected into the fund.
29    (c)  The principal and interest or other income or the proceeds
30  of sale of securities as provided in clause (a) of this subsection (9)
31  shall be reported to the state treasurer and the board and credited
32  to the fund.
33    (10)  The board shall with the advice of the director of accounts
34  and reports establish the requirements and procedure for reporting
35  any and all activity relating to investment functions provided for in
36  this act in order to prepare a record monthly of the investment
37  income and changes made during the preceding month. The record
38  will reflect a detailed summary of investment, reinvestment, pur-
39  chase, sale and exchange transactions and such other information
40  as the board may consider advisable to reflect a true accounting of
41  the investment activity of the fund.
42    (11)  The board shall provide for an examination of the invest-
43  ment program annually. The examination shall include an evalua-
SB 154--Am.
                                     

 1  tion of current investment policies and practices and of specific in-
 2  vestments of the fund in relation to the objective set forth in
 3  subsection (3), the standard set forth in subsection (4) and other
 4  criteria as may be appropriate, and recommendations relating to
 5  the fund investment policies and practices and to specific invest-
 6  ments of the fund as are considered necessary or desirable. The
 7  board shall include in its annual report to the governor as provided
 8  in K.S.A. 74-4907, and amendments thereto, a report or a summary
 9  thereof covering the investments of the fund.
10    (12) (a)  The legislative post auditor shall conduct an annual
11  financial-compliance audit of the system, performance audits of the
12  system as prescribed by this section and under the Kansas govern-
13  mental operations law, and such other audits as are directed by the
14  legislative post audit committee under the Kansas legislative post
15  audit act. The annual financial-compliance audit shall include, but
16  not be limited to, a review of alternative investments of the system
17  with any estimates of permanent impairments to the value of such
18  alternative investments reported by the system pursuant to K.S.A.
19  74-4907, and amendments thereto.
20    (b)  Except as otherwise provided by this subsection, the legis-
21  lative post auditor shall conduct annual performance audits, as di-
22  rected by the legislative post audit committee, which shall include,
23  but not be limited to, one or more of the following subjects: An
24  evaluation of the performance of investment managers, an evalua-
25  tion of the rates of return of investments reported by the system, an
26  evaluation of the total compensation received for the planned year
27  by investment managers by individual investment classification,
28  and a comparison of the system's investment practices and perform-
29  ance with the investment practices and performance of other state
30  pension programs by asset type, including all asset types described
31  as alternative investments in subsection (5)(b). Commencing with
32  the performance audit for the fiscal year ending June 30, 1994, the
33  legislative post audit committee shall specify which of the subjects
34  listed in this subsection shall be included in each performance audit
35  conducted pursuant to this subsection, in addition to such other
36  subjects as may be directed to be included in the performance audit
37  by the legislative post audit committee. Commencing with the per-
38  formance audit for the fiscal year ending June 30, 1994, each of the
39  subjects listed in this subsection shall be included at least once
40  every two fiscal years in a performance audit conducted pursuant
41  to this subsection, excluding any fiscal year during which the system
42  and the board are subject to review and evaluation by the legisla-
43  ture under the Kansas governmental operations accountability law.
SB 154--Am.
                                     

 1  Except as otherwise directed by the legislative post audit committee,
 2  no performance audit shall be conducted pursuant to this subsec-
 3  tion during any fiscal year when the system and the board are sub-
 4  ject to a performance audit and to review and evaluation under the
 5  Kansas governmental operations accountability law.
 6    (c)  The auditor to conduct any audit required pursuant to this
 7  subsection shall be specified in accordance with K.S.A. 46-1122,
 8  and amendments thereto. If the legislative post audit committee
 9  specifies under such statute that a firm, as defined by K.S.A. 46-
10  1112, and amendments thereto, is to perform all or part of the audit
11  work of such audit, such firm shall be selected and shall perform
12  such audit work as provided in K.S.A. 46-1123, and amendments
13  thereto, and K.S.A. 46-1125 through 46-1127, and amendments
14  thereto. The audits required pursuant to this subsection shall be
15  conducted in accordance with generally accepted governmental au-
16  diting standards. The audits required pursuant to this subsection
17  shall be conducted as soon after the close of the fiscal year as prac-
18  ticable, but shall be completed no later than six months after the
19  close of the fiscal year. The post auditor shall annually compute the
20  reasonably anticipated cost of providing the financial-compliance
21  audit pursuant to this section, subject to review and approval by
22  the contract audit committee established by K.S.A. 46-1120, and
23  amendments thereto. Upon such approval, the system shall reim-
24  burse the division of post audit for the amount approved by the
25  contract audit committee. The furnishing of the financial-compli-
26  ance audit pursuant to this section shall be a transaction between
27  the legislative post auditor and the system and shall be settled in
28  accordance with the provisions of K.S.A. 75-5516, and amendments
29  thereto.
30    (d)  Any internal assessment or examination of alternative in-
31  vestments of the system performed by any person or entity em-
32  ployed or retained by the board which evaluates or monitors the
33  performance of alternative investments shall be reported to the leg-
34  islative post auditor so that such report may be reviewed in accor-
35  dance with the annual audits provided in subsection (12)(a).
36    Sec. 20.  K.S.A. 1996 Supp. 74-4927 is hereby amended to read
37  as follows: 74-4927. (1) The board may establish a plan of death
38  and long-term disability benefits to be paid to the members of the
39  retirement system as provided by this section. The long-term disa-
40  bility benefit shall not be payable until the member has been pre-
41  vented from carrying out each and every duty pertaining to the
42  member's employment as a result of sickness or injury for a period
43  of 180 days and. The annual benefit shall not exceed an amount
SB 154--Am.
                                     

 1  equal to 66 2/3% of the member's annual rate of compensation on the
 2  date such disability commenced and shall be payable in equal
 3  monthly installments. In the event that a member's compensation is
 4  not fixed at an annual rate but on an hourly, weekly, biweekly,
 5  monthly or any other basis than annual, the board shall prescribe
 6  by rule and regulation a formula for establishing a reasonable rate
 7  of annual compensation to be used in determining the amount of
 8  the death or long-term disability benefit for such member. Such
 9  plan shall provide that:
10    (A)  For deaths occurring prior to January 1, 1987, the right to
11  receive such death benefit shall cease upon the member's attainment
12  of age 70 or date of retirement whichever first occurs. The right to
13  receive such long-term disability benefit shall cease (i) for a member
14  who becomes eligible for such benefit before attaining age 60, upon
15  the date that such member attains age 65 or the date of such mem-
16  ber's retirement, whichever first occurs, (ii) for a member who be-
17  comes eligible for such benefit at or after attaining age 60, the date
18  that such member has received such benefit for a period of five
19  years, upon the date that such member attains age 70, or upon the
20  date of such member's retirement, whichever first occurs, (iii) for
21  all disabilities incurred on or after January 1, 1987, for a member
22  who becomes eligible for such benefit at or after attaining age 70,
23  the date that such member has received such benefit for a period of
24  12 months or upon the date of such member's retirement, whichever
25  first occurs, and (iv) for all disabilities incurred on or after January
26  1, 1987, for a member who becomes eligible for such benefit at or
27  after attaining age 75, the date that such member has received such
28  benefit for a period of six months or upon the date of such member's
29  retirement, whichever first occurs.
30    (B)  Long-term disability benefit payments shall be in lieu of any
31  accidental total disability benefit that a member may be eligible to
32  receive under subsection (3) of K.S.A. 74-4916 and amendments
33  thereto. The member must make an initial application for social security
34  disability benefits and, if denied such benefits, the member must pursue
35  and exhaust all administrative remedies of the social security administra-
36  tion which include, but are not limited to, reconsideration and hearings.
37  Such plan may provide that any amount which a member receives
38  as a social security benefit or a disability benefit or compensation
39  from any source by reason of any employment including, but not
40  limited, to, workers compensation benefits may be deducted from
41  the amount of insured long-term disability benefit payments under
42  such plan, except that not more than 50% of such workers compensation
43  benefits shall be deducted therefrom. During the period in which such
SB 154--Am.
                                     

 1  member is pursuing such administrative remedies prior to a final decision
 2  of the social security administration, social security disability benefits may
 3  be estimated and may be deducted from the amount of long-term disability
 4  benefit payments under such plan. Such insured long-term disability
 5  payments shall accrue from the later of the 181st day of total dis-
 6  ability or the first day upon which the member ceases to draw com-
 7  pensation from the employer. If the social security benefit, workers
 8  compensation benefit, other income or wages or other disability
 9  benefit by reason of employment, or any part thereof, is paid in a
10  lump sum, the amount of the reduction shall be calculated on a
11  monthly basis over the period of time for which the lump sum is
12  given. In no case shall a member who is entitled to receive insured
13  long-term disability benefits receive less than $50 per month. As used
14  in this section, ``workers compensation benefits'' means the total
15  award of disability benefit payments under the workers compen-
16  sation act notwithstanding any payment of attorney fees from such
17  benefits as provided in the workers compensation act.
18    (C)  The plan may include other provisions relating to qualifi-
19  cations for benefits; schedules and graduation of benefits; limita-
20  tions of eligibility for benefits by reason of termination of employ-
21  ment or membership; conversion privileges; limitations of eligibility
22  for benefits by reason of leaves of absence, military service or other
23  interruptions in service; limitations on the condition of long-term
24  disability benefit payment by reason of improved health; require-
25  ments for medical examinations or reports; or any other reasonable
26  provisions as established by rule and regulation of uniform appli-
27  cation adopted by the board.
28    (D)  On and after April 30, 1981, the board may provide under
29  the plan for the continuation of long-term disability benefit pay-
30  ments to any former member who forfeits the entitlement to contin-
31  ued service credit under the retirement system or continued assis-
32  tance in the purchase of retirement annuities under K.S.A. 74-4925
33  and amendments thereto and to continued long-term disability ben-
34  efit payments and continued death benefit coverage, by reason of
35  the member's withdrawal of contributions from the retirement sys-
36  tem or the repurchase of retirement annuities which were pur-
37  chased with assistance received under K.S.A. 74-4925 and amend-
38  ments thereto. Such long-term disability benefit payments may be
39  continued until such individual dies, attains age 65 or is no longer
40  disabled, whichever occurs first.
41    (E)  Any visually impaired person who is in training at and em-
42  ployed by a sheltered workshop for the blind operated by the sec-
43  retary of social and rehabilitation services and who would other-
SB 154--Am.
                                     

 1  wise be eligible for the insured long-term disability benefit as
 2  described in this section shall not be eligible to receive such benefit
 3  due to visual impairment as such impairment shall be determined
 4  to be a preexisting condition.
 5    (2) (A)  In the event that a member becomes eligible for a long-
 6  term disability benefit under the plan authorized by this section
 7  such member shall be given participating service credit for the en-
 8  tire period of such disability. Such member's final average salary
 9  shall be computed in accordance with subsection (17) of K.S.A. 74-
10  4902 and amendments thereto except that the years of participating
11  service used in such computation shall be the years of salaried par-
12  ticipating service.
13    (B)  In the event that a member eligible for a long-term disability
14  benefit under the plan authorized by this section shall be disabled
15  for a period of five years or more immediately preceding retirement,
16  such member's final average salary shall be adjusted upon retire-
17  ment by the actuarial salary assumption rates in existence during
18  such period of disability. Effective July 1, 1993, such member's final
19  average salary shall be adjusted upon retirement by 5% for each
20  year of disability after July 1, 1993, but before July 1, 1997.  Effective
21  July 1, 1997, such member's final average salary shall be adjusted upon
22  retirement by an amount equal to the lesser of: (i) The percentage increase
23  in the consumer price index for all urban consumers as published by the
24  bureau of labor statistics of the United States department of labor minus
25  one percent; or (ii) four percent per annum, measured from the month
26  the disability occurs to the month that is two months prior to the month
27  of retirement, for each year of disability after July 1, 1997.
28    (C)  In the event that a member eligible for a long-term disability
29  benefit under the plan authorized by this section shall be disabled
30  for a period of five years or more immediately preceding death, such
31  member's current annual rate shall be adjusted by the actuarial
32  salary assumption rates in existence during such period of disabil-
33  ity. Effective July 1, 1993, such member's current annual rate shall
34  be adjusted upon death by 5% for each year of disability after July
35  1, 1993, but before July 1, 1997.  Effective July 1, 1997, such member's
36  current annual rate shall be adjusted upon death by an amount equal to
37  the lesser of: (i) The percentage increase in the consumer price index for
38  all urban consumers published by the bureau of labor statistics of the
39  United States department of labor minus one percent; or (ii) four percent
40  per annum, measured from the month the disability occurs to the month
41  that is two months prior to the month of death, for each year of disability
42  after July 1, 1997.
43    (3) (A)  To carry out the legislative intent to provide, within the
SB 154--Am.
                                     

 1  funds made available therefor, the broadest possible coverage for
 2  members who are in active employment or involuntarily absent
 3  from such active employment, the plan of death and long-term dis-
 4  ability benefits shall be subject to adjustment from time to time by
 5  the board within the limitations of this section. The plan may in-
 6  clude terms and provisions which are consistent with the terms and
 7  provisions of group life and long-term disability policies usually
 8  issued to those employers who employ a large number of employees.
 9  The board shall have the authority to establish and adjust from time
10  to time the procedures for financing and administering the plan of
11  death and long-term disability benefits authorized by this section.
12  Either the insured death benefit or the insured disability benefit or
13  both such benefits may be financed directly by the system or by one
14  or more insurance companies authorized and licensed to transact
15  group life and group accident and health insurance in this state.
16    (B)  The board may contract with one or more insurance com-
17  panies, which are authorized and licensed to transact group life and
18  group accident and health insurance in Kansas, to underwrite or to
19  administer or to both underwrite and administer either the insured
20  long-term death benefit or the insured disability benefit or both such
21  benefits. Each such contract with an insurance company under this
22  subsection shall be entered into on the basis of competitive bids
23  solicited and administered by the board. Such competitive bids
24  shall be based on specifications prepared by the board.
25    (i)  In the event the board purchases one or more policies of
26  group insurance from such company or companies to provide either
27  the insured death benefit or the insured long-term disability benefit
28  or both such benefits, the board shall have the authority to subse-
29  quently cancel one or more of such policies and, notwithstanding
30  any other provision of law, to release each company which issued
31  any such canceled policy from any liability for future benefits un-
32  der any such policy and to have the reserves established by such
33  company under any such canceled policy returned to the system for
34  deposit in the group insurance reserve of the fund.
35    (ii)  In addition, the board shall have the authority to cancel any
36  policy or policies of group life and long-term disability insurance
37  in existence on the effective date of this act and, notwithstanding
38  any other provision of law, to release each company which issued
39  any such canceled policy from any liability for future benefits un-
40  der any such policy and to have the reserves established by such
41  company under any such canceled policy returned to the system for
42  deposit in the group insurance reserve of the fund. Notwithstanding
43  any other provision of law, no premium tax shall be due or payable
SB 154--Am.
                                     

 1  by any such company or companies on any such policy or policies
 2  purchased by the board nor shall any brokerage fees or commis-
 3  sions be paid thereon.
 4    (4) (A)  The cost of the plan of death and long-term disability
 5  benefits shall be paid from a special reserve hereby created in the
 6  fund, to be known as the group insurance reserve. Each participat-
 7  ing employer shall appropriate and pay to the system in such man-
 8  ner as the board shall prescribe in addition to the employee and
 9  employer retirement contributions an amount equal to .6% of the
10  amount of compensation on which the members' contributions to
11  the Kansas public employees retirement system are based for de-
12  posit in the group insurance reserve of the Kansas public employees
13  retirement fund.
14    (B)  The director of the budget and the governor shall include
15  in the budget and in the budget request for appropriations for per-
16  sonal services a sum to pay the state's contribution to the group
17  insurance reserve as provided by this section and shall present the
18  same to the legislature for allowances and appropriation.
19    (C)  The provisions of subsection (4) of K.S.A. 74-4920 and
20  amendments thereto shall apply for the purpose of providing the
21  funds to make the contributions to be deposited to the group insur-
22  ance reserve.
23    (D)  Any dividend or retrospective rate credit allowed by an in-
24  surance company or companies shall be credited to the group in-
25  surance reserve and the board may take such amounts into consid-
26  eration in determining the amounts of the benefits under the plan
27  authorized by this section.
28    (5)  The death benefit provided under the plan of death and long-
29  term disability benefits authorized by this section shall be known
30  and referred to as insured death benefit. The long-term disability
31  benefit provided under the plan of death and long-term disability
32  benefits authorized by this section shall be known and referred to
33  as insured long-term disability benefit.
34    (6)  The board is hereby authorized to establish an optional
35  death benefit plan. Except as provided in subsection (7), such op-
36  tional death benefit plan shall be made available to all employees
37  who are covered or may hereafter become covered by the plan of
38  death and long-term disability benefits authorized by this section.
39  The cost of the optional death benefit plan shall be paid by the
40  applicant either by means of a system of payroll deductions or di-
41  rect payment to the board. The board shall have the authority and
42  discretion to establish such terms, conditions, specifications and
43  coverages as it may deem to be in the best interest of the state of
SB 154--Am.
                                     

 1  Kansas and its employees which should include term death benefits
 2  for the person's period of active state employment regardless of age,
 3  but in no case, on and after January 1, 1989, shall the maximum
 4  allowable coverage be less than $200,000. The cost of the optional
 5  death benefit plan shall not be established on such a basis as to
 6  unreasonably discriminate against any particular age group. The
 7  board shall have full administrative responsibility, discretion and
 8  authority to establish and continue such optional death benefit plan
 9  and the director of accounts and reports of the department of ad-
10  ministration shall when requested by the board and from funds ap-
11  propriated or available for such purpose establish a system to make
12  periodic deductions from state payrolls to cover the cost of the op-
13  tional death benefit plan coverage under the provisions of this sub-
14  section (6) and shall remit all deductions together with appropriate
15  accounting reports to the system. All funds received by the board,
16  whether in the form of direct payments, payroll deductions or oth-
17  erwise, shall be accounted for separately from all other funds of the
18  retirement system and shall be paid into a special reserve hereby
19  created in the fund, to be known as the optional death benefit plan
20  reserve, from which reserve the board is authorized to make the
21  appropriate payments and to pay the ongoing costs of administra-
22  tion of such optional death benefit plan as may be incurred in car-
23  rying out the provisions of this subsection (6).
24    (7)  Any employer other than the state of Kansas which is cur-
25  rently a participating employer of the Kansas public employees re-
26  tirement system or is in the process of affiliating with the Kansas
27  public employees retirement system may also elect to affiliate for
28  the purposes of subsection (6). All such employers shall make ap-
29  plication for affiliation with such system, to be effective on January
30  1 next following application. Such optional death benefit plan shall
31  not be available for employees of employers specified under this
32  subsection until after July 1, 1988.
33    Sec. 21.  K.S.A. 1996 Supp. 74-4952 is hereby amended to read
34  as follows: 74-4952. As used in K.S.A. 74-4951 et seq. and amend-
35  ments thereto:
36    (1)  ``Accumulated contributions'' means the sum of all contri-
37  butions by a member to the system which shall be credited to the
38  member's account with interest allowed thereon after June 30, 1982.
39    (2)  ``Disability'' means the total inability to perform perma-
40  nently the duties of the position of a policeman or fireman.  Disability
41  will not include a disability which is the result of a sickness or injury
42  which occurred within 12 months of the member's membership date in
43  the system if the member received any diagnosis of or treatment or service
SB 154--Am.
                                     

 1  for such sickness or injury during the three-month period immediately
 2  preceding the member's membership in the system. Diagnosis will include
 3  but not be limited to the findings of any sickness or injury contained in
 4  the certification provided in subsection (4).
 5    (3)  ``Eligible employer'' means any city, county, township or
 6  other political subdivision of the state employing one or more em-
 7  ployees as firemen or policemen.
 8    (4)  ``Employee'' means any policeman or fireman employed by
 9  a participating employer whose employment for police or fireman
10  purposes is not seasonal or temporary and requires at least 1,000
11  hours of work per year and who has been certified to be mentally and
12  physically capable of performing the duties of a policeman or fireman by
13  one or more physicians or any other practitioners of the healing arts
14  holding a valid license issued by the Kansas state board of healing arts.
15  Such certification will be made available to the board as the board may
16  require. Such certification shall be completed after a conditional offer of
17  employment has been given to the person if the person otherwise is so
18  qualified. If such employee is not so certified, such person shall not be an
19  employee for purposes under this act and shall not be a member of the
20  system.
21    (5)  ``Entry date'' means the date as of which an eligible em-
22  ployer joins the system; the first entry date pursuant to this act is
23  January 1, 1967.
24    (6)  ``Final average salary'' means:
25    (a)  For members who are first hired as an employee, as defined
26  in subsection (4), before July 1, 1993, the average highest annual
27  compensation paid to a member for any three of the last five years
28  of participating service immediately preceding retirement or ter-
29  mination of employment, or if participating service is less than three
30  years, then the average annual compensation paid to the member
31  during the full period of participating service, or if a member has
32  less than one calendar year of participating service, then the mem-
33  ber's final average salary shall be computed by multiplying the
34  member's highest monthly salary received in that year by 12;
35    (b)  for members who are first hired as an employee, as defined
36  in subsection (4), on and after July 1, 1993, the average highest
37  annual salary, as defined in subsection (34) of K.S.A. 74-4902 and
38  amendments thereto, paid to a member for any three of the last five
39  years of participating service immediately preceding retirement or
40  termination of employment, or if participating service is less than
41  three years, then the average annual salary, as defined in subsection
42  (34) of K.S.A. 74-4902 and amendments thereto, paid to the member
43  during the full period of participating service, or if a member has
SB 154--Am.
                                     

 1  less than one calendar year of participating service, then the mem-
 2  ber's final average salary shall be computed by multiplying the
 3  member's highest monthly salary received in that year by 12;
 4    (c)  for purposes of subparagraphs (a) and (b) of this subsection,
 5  the date that such member is first hired as an employee for members
 6  who are employees of employers that elected to participate in the
 7  system on or after January 1, 1994, shall be the date that such em-
 8  ployee's employer elected to participate in the system; and
 9    (d)  for any application to purchase or repurchase service credit
10  for a certain period of service as provided by law received by the
11  system after May 17, 1994, for any member who will have contri-
12  butions deducted from such member's compensation at a percentage
13  rate equal to two or three times the employee's rate of contribution
14  or who will have contributions deducted from such member's com-
15  pensation at an additional rate of contribution, in addition to the
16  employee's rate of contribution as provided in K.S.A. 74-4919 and
17  amendments thereto or will begin paying to the system a lump-sum
18  amount for such member's purchase or repurchase, and such de-
19  ductions or lump-sum payment commences after the commencement
20  of the first payroll period in the third quarter, ``final average sal-
21  ary'' shall not include any amount of compensation or salary which
22  is based on such member's purchase or repurchase. Any application
23  to purchase or repurchase multiple periods of service shall be
24  treated as multiple applications.
25    (7)  ``Retirement benefit'' means a monthly income or the actu-
26  arial equivalent thereof paid in such manner as specified by the
27  member as provided under the system or as otherwise allowed to
28  be paid at the discretion of the board, with benefits accruing from
29  the first day of the month coinciding with or following retirement
30  and ending on the last day of the month in which death occurs. Upon
31  proper identification such surviving spouse may negotiate the war-
32  rant issued in the name of the retirant.
33    (8)  ``Normal retirement date'' means the date on or after which
34  a member may retire with eligibility for retirement benefits for age
35  and service as provided in subsections (1) and (3) of K.S.A. 74-4957
36  and amendments thereto;
37    (9)  ``Retirement system'' or ``system'' means the Kansas police
38  and firemen's retirement system as established by this act and as it
39  may be hereafter amended.
40    (10)  ``Service-connected'' means with regard to a death or any
41  physical or mental disability, any such death or disability resulting
42  from external force, violence or disease occasioned by an act of duty
43  as a policeman or fireman and, for any member after five years of
SB 154--Am.
                                     

 1  credited service, includes any death or disability resulting from a
 2  heart disease or disease of the lung or respiratory tract or cancer
 3  as provided in this subsection, except that in the event that the mem-
 4  ber ceases to be a contributing member except by reason of a serv-
 5  ice-connected disability for a period of six months or more and then
 6  again becomes a contributing member, the provision relating to
 7  death or disability resulting from a heart disease, disease of the lung
 8  or respiratory tract or cancer as provided in this subsection shall
 9  not apply until such member has again become a contributing mem-
10  ber for a period of not less than two years or unless clear and precise
11  evidence is presented that the heart disease, disease of the lung or
12  respiratory tract or cancer as provided in this subsection was in
13  fact occasioned by an act of duty as a policeman or fireman. The
14  provisions of this section relating to the presumption that the death
15  or disability resulting from cancer is service-connected shall only
16  apply if the condition that caused the death or disability is a type
17  of cancer which may, in general, result from exposure to heat, ra-
18  diation or a known carcinogen.
19    (11)  ``Fireman'' or ``firemen'' means an employee assigned to the
20  fire department and engaged in the fighting and extinguishment of
21  fires and the protection of life and property therefrom or in support
22  thereof and who is specifically designated, appointed, commis-
23  sioned or styled as such by the governing body or city manager of
24  the participating employer and certified to the retirement system as
25  such.
26    (12)  ``Police,'' ``policeman'' or ``policemen'' means an employee
27  assigned to the police department and engaged in the enforcement
28  of law and maintenance of order within the state and its political
29  subdivisions, including sheriffs and sheriffs' deputies, or in support
30  thereof and who is specifically designated, appointed, commis-
31  sioned or styled as such by the governing body or city manager of
32  the participating employer and certified to the retirement system as
33  such.
34    (13)  Except as otherwise defined in this act, words and phrases
35  used in K.S.A. 74-4951 et seq. and amendments thereto, shall have
36  the same meanings ascribed to them as are defined in K.S.A. 74-
37  4902 and amendments thereto.
38    Sec. 22.  K.S.A. 1996 Supp. 74-4957 is hereby amended to read
39  as follows: 74-4957. (1) The normal retirement date for a member
40  of the system who is appointed or employed prior to July 1, 1989,
41  and who does not make an election pursuant to K.S.A. 74-4955a and
42  amendments thereto shall be the first day of the month coinciding
43  with or following the attainment of age 55 and the completion of 20
SB 154--Am.
                                     

 1  years of credited service. Any member may retire on such member's
 2  normal retirement date or on the first day of any month thereafter.
 3    (2)  Early retirement. Any member who is appointed or employed
 4  prior to July 1, 1989, and who does not make an election pursuant
 5  to K.S.A. 74-4955a and amendments thereto may retire before such
 6  member's normal retirement date on the first day of any month
 7  coinciding with or following the attainment of age 50 and the com-
 8  pletion of 20 years of credited service.
 9    (3)  Notwithstanding the provisions of subsections (1) and (2) of
10  this section and K.S.A. 74-4955a, 74-4957a, 74-4958a, 74-4960a,
11  74-4963a and 74-4964a and amendments thereto, the normal re-
12  tirement date for any member who was, up to the entry date of such
13  member's employer, covered by a pension system under the provi-
14  sions of K.S.A. 13-14a01 to 13-14a14, inclusive, or 14-10a01 to 14-
15  10a15, inclusive, and amendments thereto, shall be the first day of
16  the month coinciding with or following the attainment of age 50 and
17  the completion of 25 years of credited service.
18    (4)  In no event shall a member be eligible to retire until such
19  member has been a contributing member of the system for 12
20  months of participating service, and shall have given such member's
21  employer prior notice of retirement.
22    (5)  If a retirant who retired on or after July 1, 1994, is em-
23  ployed, elected or appointed in or to any position or office for which
24  compensation for service is paid, during calendar year 1994, in an
25  amount equal to $11,160 or more; or during calendar year 1995 and all
26  calendar years thereafter, in an amount equal to $11,280 $14,000 or
27  more in any one such calendar year, by the same state agency or
28  the same police or fire department of any county, city, township or
29  special district or the same sheriff's office of a county during the
30  final two years of such retirant's participation, such retirant shall
31  not receive any retirement benefit for any month for which such
32  retirant serves in such position or office. The participating employer
33  shall report to the system within 30 days of when the compensation paid
34  to the retirant is equal to or exceeds any limitation provided by this sec-
35  tion. Any retirant employed by a participating employer in the Kan-
36  sas police and firemen's retirement system shall not make contri-
37  butions nor receive additional credit under such system for such
38  service except as provided by this section. Upon request of the ex-
39  ecutive secretary of the system, the secretary of revenue shall pro-
40  vide such information as may be needed by the executive secretary
41  to carry out the provisions of this act.
42    Sec. 23.  K.S.A. 1996 Supp. 74-4957a is hereby amended to read
43  as follows: 74-4957a. (1) The normal retirement date for a member
SB 154--Am.
                                     

 1  of the system who is appointed or employed on or after July 1, 1989,
 2  or who makes an election pursuant to K.S.A. 74-4955a and amend-
 3  ments thereto to be covered by the provisions of this act shall be
 4  the first day of the month coinciding with or following the attain-
 5  ment of age 55 and the completion of 20 years of credited service,
 6  age 50 and the completion of 25 years of credited service or age 60
 7  with the completion of 15 years of credited service. Any such mem-
 8  ber may retire on such member's normal retirement date or on the
 9  first day of any month thereafter.
10    (2)  Any member may retire before such member's normal re-
11  tirement date on the first day of any month coinciding with or fol-
12  lowing the attainment of age 50 and the completion of 20 years of
13  credited service.
14    (3)  In no event shall a member be eligible to retire until such
15  member has been a contributing member of the system for 12
16  months of participating service, and shall have given such member's
17  employer prior notice of retirement.
18    (4)  If a retirant who retired on or after July 1, 1996, is em-
19  ployed, elected or appointed in or to any position or office for which
20  compensation for service is paid, during calendar year 1995 and all
21  calendar years thereafter, in an amount equal to $11,280 $14,000 or
22  more in any one such calendar year, by the same state agency or
23  the same police or fire department of any county, city, township or
24  special district or the same sheriff's office of a county during the
25  final two years of such retirant's participation, such retirant shall
26  not receive any retirement benefit for any month for which such
27  retirant serves in such position or office. The participating employer
28  shall report to the system within 30 days of when the compensation paid
29  to the retirant is equal to or exceeds any limitation provided by this sec-
30  tion. Any retirant employed by a participating employer in the Kan-
31  sas police and firemen's retirement system shall not make contri-
32  butions nor receive additional credit under such system for such
33  service except as provided by this section. Upon request of the ex-
34  ecutive secretary of the system, the secretary of revenue shall pro-
35  vide such information as may be needed by the executive secretary
36  to carry out the provisions of this act.
37    (5)  The provisions of this section shall be effective on and after
38  July 1, 1989, and shall apply only to members who were appointed
39  or employed prior to July 1, 1989, and who made an election pur-
40  suant to K.S.A. 74-4955a and amendments thereto; and persons ap-
41  pointed or employed on or after July 1, 1989.
42    Sec. 24.  K.S.A. 1996 Supp. 74-4966 is hereby amended to read
43  as follows: 74-4966. (a) In the case of any member whose employ-
SB 154--Am.
                                     

 1  ment shall be covered by social security and who is a member of
 2  the class certified in the case of Brazelton v. Kansas public employ-
 3  ees retirement system, 227 K. 443, 607 P.2d 510 (1980), any benefits
 4  payable under the provisions of K.S.A. 74-4958, 74-4959 and 74-
 5  4960 shall be reduced by an amount equal to 1/2 of the original social
 6  security benefits accruing from employment with the participating
 7  employer at the time the member retired. For any member already
 8  retired on the effective date of this act, no reduction of the original
 9  social security benefits shall be applicable to benefits paid prior to
10  the effective date of this act. The member must make an initial appli-
11  cation for social security benefits from employment with the participating
12  employer and, if denied such benefits, the member must pursue and ex-
13  haust all administrative remedies of the social security administration
14  which include, but are not limited to, reconsideration and hearings. Until
15  such initial application for benefits has been approved by the social se-
16  curity administration, social security benefits may be estimated and may
17  be deducted from the amount of any benefits payable as provided in this
18  subsection.
19    (b)  For any member other than a member who is a member of
20  the class certified in the case of Brazelton v. Kansas public employ-
21  ees retirement system, 227 K. 443, 607 P.2d 510 (1980), no benefits
22  shall be reduced because of social security benefits. Any benefits
23  which first become payable on or after January 1, 1976, by reason
24  of employment with a participating employer participating in the
25  Kansas police and firemen's retirement system, which employment
26  was also covered by social security, shall be reduced by an amount
27  equal to the value of the difference between contributions actually
28  made by the member and contributions which would have been
29  made had there been no reduction for contributions to social se-
30  curity. The amount of reduction shall be made by the board upon
31  the advice of the actuary at the time benefits become payable and
32  shall continue until benefits are no longer payable. Should a mem-
33  ber, whose employment prior to January 1, 1976, with a partici-
34  pating employer participating in the Kansas police and firemen's
35  retirement system, such employment also being covered by social
36  security, repay in a lump sum prior to January 1, 1977, or on date
37  of retirement, whichever is earlier, an amount equal to the differ-
38  ence between contributions actually made by the member and con-
39  tributions which would have been made had there been no reduc-
40  tion for contributions to social security, there shall be no reduction
41  as heretofore provided. If the payment is made after January 1,
42  1977, but prior to retirement, the member will pay the actual
43  amount plus interest which shall accrue from January 1, 1976, at a
SB 154--Am.
                                     

 1  rate specified by the board of trustees.
 2    Sec. 25.  K.S.A. 1996 Supp. 74-4990 is hereby amended to read
 3  as follows: 74-4990. (1) An arrearage obligation shall arise when it
 4  is ascertained that required contributions have not been made to
 5  the Kansas public employees retirement system at the required time.
 6  Such arrearage obligation shall be met by the employer by prepar-
 7  ing a report on the appropriate form to correct all previous quarterly
 8  reports affected by the arrearage obligation. Such report shall be
 9  submitted by the employer with the first quarterly report after such
10  an arrearage obligation is discovered or as the board of trustees of
11  the system may otherwise prescribe. The proper remittance to cover
12  employer and employee contributions in arrearage shall accompany
13  such report or as the board of trustees of the system may otherwise
14  prescribe for all arrearages other than for the year of service as provided
15  in K.S.A. 74-4911 and amendments thereto. In addition, the employer will
16  pay to the system, interest at the current actuarial interest rate assumption
17  adopted by the board. If the employee retires within 24 months of the
18  employer first reporting this arrearage, the employer will pay to the sys-
19  tem a lump sum amount equal to the difference of the actuarial present
20  value of the retirement benefit and the accumulated value of any contri-
21  butions represented by the arrearage. No employee shall pay all or any
22  part of the arrearage. The amounts due for an arrearage obligation
23  shall be based upon the compensation paid to the member and at
24  the rates in effect at the time the contributions were originally due
25  to be paid to the system. The employer shall not be required to pay the
26  employee contributions or interest on arrearages of six month or less.
27    (2)  An arrearage obligation shall arise when it is ascertained that the
28  employee and employer should have made contributions to the Kansas
29  public employees retirement system for all or part of the year of service
30  as provided in K.S.A. 74-4911 and amendments thereto. Such arrearage
31  obligation shall be met by the employer by preparing a report on the
32  appropriate form to correct all previous reports affected by the arrearage
33  obligation. Such report shall be submitted by the employer with the first
34  report after such an arrearage obligation is discovered or as the board of
35  trustees of the system may otherwise prescribe. The proper remittance to
36  cover employer contributions in arrearage shall accompany such report
37  or as the board of trustees of the system may otherwise prescribe. The
38  amounts due for an arrearage obligation shall be based upon compensa-
39  tion paid to the member and at the rates in effect at the time contributions
40  were originally due to be paid to the system.
41    (2)(3)  In the event the proper remittance to cover employee con-
42  tributions in arrearage does not accompany such report, service
43  credits for that period of employment involving the arrearage ob-
SB 154--Am.
                                     

 1  ligation may be purchased by the member as participating service
 2  at any time prior to retirement by making application therefor and
 3  paying to the system a single lump-sum amount determined by the
 4  system's actuary using (a) the member's then current annual rate
 5  of compensation, or if not actively employed, the member's annual
 6  rate of compensation when last participating and (b) the actuarial
 7  assumptions and tables currently in use by the system.
 8    (3)(4)  Except as otherwise provided in this section, any member
 9  may purchase participating service credits for that period of em-
10  ployment involving the arrearage obligation as described in this
11  section, if first commenced prior to January 1, 1996, by electing to
12  effect such purchase by means of having employee contributions as
13  provided in K.S.A. 74-4919 and amendments thereto deducted from
14  such member's compensation at a percentage rate equal to two times
15  or three times the employee's rate of contribution as provided in
16  K.S.A. 74-4919 and amendments thereto for such periods of service,
17  in lieu of a lump-sum amount as provided in this section. Such de-
18  ductions shall commence at the beginning of the quarter following
19  such election and shall remain in effect until all quarters of such
20  service have been purchased. Any person may make any such pur-
21  chase as described in this section, if first commenced in calendar
22  year 1996 or thereafter, at an additional rate of contribution, in
23  addition to the employee's rate of contribution as provided in K.S.A.
24  74-4919 and amendments thereto, based upon the member's at-
25  tained age at the time of purchase and using actuarial assumptions
26  and tables in use by the retirement system at such time of purchase,
27  for such periods of service, in lieu of a lump-sum amount as pro-
28  vided in this section. Such additional rate of contribution shall com-
29  mence at the beginning of the quarter following such election and
30  shall remain in effect until all quarters of such service have been
31  purchased.
32    (4)(5)  Notwithstanding the provisions of this section, no em-
33  ployee contributions shall be due and owing for stipulated compen-
34  sation amounts paid to any employee or former employee of a city
35  of the first class whose dispute with such city was settled by stipu-
36  lation of settlement either in Case No. 90-2328-0 in the United
37  States District Court for the District of Kansas or in Case No. 91-
38  1182 in the Supreme Court of the United States. Any such employee
39  or former employee may elect to remit such employee contributions
40  to the system. No employee or former employee whose contributions
41  are deemed not to be due or owing or who did not elect to remit
42  such employee contributions to the system as provided in this sec-
43  tion according to this provision shall have any claim against the
SB 154--Am.
                                     

 1  Kansas public employees retirement system for any retirement, dis-
 2  ability, death or survivors benefit or any return of accumulated
 3  contributions based on such contributions or on the compensation
 4  amounts that would have been reflected by such contributions.
 5    New Sec. 8. 26.  (1)  Any payment made to a named beneficiary as
 6  provided in this section, shall be a full discharge and release to the system
 7  from any further claims. Any payment made to a beneficiary as provided
 8  in clauses (A), (B), (C), (D), (E) or (F) of subsection (7) of K.S.A. 74-
 9  4902 or in clauses (1), (2), (3), (4), (5) or (6) of subsection (k) of K.S.A.
10  20-2601, and amendments thereto, as determined by the board, shall be
11  a full discharge and release to the system from any further claims. When-
12  ever any payment is payable to more than one beneficiary such payment
13  shall be made to such beneficiaries jointly.
14    (2)  Any benefits payable to a beneficiary or beneficiaries who are
15  incompetent shall be made in the name of the beneficiary or beneficiaries
16  and delivered to the lawfully appointed conservator of such beneficiaries
17  who was nominated by will or as otherwise provided by law, except that
18  in those cases where the benefit involves an amount not to exceed $500,
19  the board is hereby authorized in its discretion without the appointment
20  of a conservator or in the giving of a bond to pay such amount as is due
21  to the incompetent person or persons themselves.
22    (3)  Any lump-sum benefits payable to a beneficiary or beneficiaries
23  who are minor children and which amount totals $10,000 or more shall
24  be made in the name of the beneficiary or beneficiaries and delivered to
25  the lawfully appointed conservator of such beneficiaries who was nomi-
26  nated by will or as otherwise provided by law except that in those cases
27  where the benefit involves an amount not to exceed $500, the board is
28  hereby authorized in its discretion without the appointment of a conser-
29  vator or the giving of a bond to pay such amount as is due to the minor
30  or minors themselves. If no conservator is lawfully appointed, the system
31  will credit interest at 4% on all benefits due and payable and shall pay all
32  benefits plus interest to the beneficiary or beneficiaries who are minor
33  children when they attain age 18 years. Any benefits payable to a bene-
34  ficiary or beneficiaries who are minor children and which amount which
35  totals more than $500 but less than $10,000, may be made in the name
36  of the beneficiary or beneficiaries and paid under the uniform transfers
37  to minors act as provided in K.S.A. 38-1701 et seq. and amendments
38  thereto.
39    (4)  Any monthly benefits payable to a beneficiary or beneficiaries who
40  are minor children shall be made in the name of the beneficiary or ben-
41  eficiaries and delivered to the lawfully appointed conservator of such ben-
42  eficiaries who was nominated by will or as otherwise provided by law. If
43  no conservator is lawfully appointed, the system will credit interest at 4%
SB 154--Am.
                                     

 1  on all benefits due and payable and shall pay all benefits plus interest to
 2  the beneficiary or beneficiaries who are minor children when they attain
 3  age 18 years.
 4    (5)  As used in this section, ``system'' means the Kansas public em-
 5  ployees retirement system, the Kansas police and firemen's retirement
 6  system and the retirement system for judges.
 7    New Sec. 27.  (1) Notwithstanding the provisions of subsection
 8    (9) of K.S.A. 74-4902 and amendments thereto, any payment for
 9  accumulated sick leave, vacation or annual leave, severance pay or
10  any other payments to the member determined by the board to not
11  be payments for personal services performed for a participating em-
12  ployer which, when upon retirement, increases the member's final
13  average salary by more than 15%, shall require the participating
14  employer to pay the system a lump sum amount equal to the sys-
15  tem's actuarial liability for benefits attributable to and payable on
16  account of such excess over the 15%.
17    (2)  As used in this section, ``system'' means the Kansas public
18  employees retirement system, the Kansas police and firemen's re-
19  tirement system and the retirement system for judges.
20    New Sec. 28.  Any employee of a participating employer who is
21  a member of the Kansas public employees retirement system, who
22  was previously employed in Kansas in nonfederal governmental em-
23  ployment with an employer who has not affiliated with the system
24  under K.S.A. 74-4910 and amendments thereto, and which service
25  otherwise meets the requirements of an employee as prescribed in
26  subsection (14) of K.S.A. 74-4902 or subsection (4) of K.S.A. 74-
27  4932 and amendments thereto, may elect to purchase participating
28  service for such in-state nonfederal governmental employment. The
29  benefit for each such year of employment shall be equal to 1% of
30  the final average salary of any such member.  Such member may
31  purchase such participating service by making application therefor
32  prior to the date of retirement at an additional rate of contribution
33  in addition to the employee's rate of contribution as provided in
34  K.S.A. 74-4919 and amendments thereto, based upon the member's
35  attained age at the time of purchase and using actuarial assump-
36  tions and tables in use by the retirement system at the time of such
37  purchase. Such additional rate of contribution shall commence at
38  the beginning of the quarter following such election and shall re-
39  main in effect until all quarters of such service have been pur-
40  chased. Any such member may purchase such participating service
41  as described in this section by electing to effect such purchase by
42  means of a single lump sum payment in lieu of employee contribu-
43  tions as provided in this section in an amount equal to the then
SB 154--Am.
                                     

 1  present value of the benefits being purchased as determined by the
 2  actuary using the member's attained age, annual compensation at
 3  the time of purchase and the actuarial assumptions and tables then
 4  in use by this system. The lump sum payment shall be made im-
 5  mediately upon being notified of the amount due. No purchase of
 6  service or any part thereof will be nullified by the subsequent af-
 7  filiation of an employer with the system.
 8    Sec. 9. 29.  K.S.A. 20-2609, 20-2610, 20-2620 and 72-5501 and
 9  K.S.A. 1996 Supp. 20-2601, 74-4902, 74-4904, 74-4905, 74-4908, 74-
10  4910, 74-4911f, 74-4913, 74-4914, 74-4914e, 74-4919a, 74-4919c and,
11  74-4919h, 74-4920, 74-4921, 74-4927, 74-4952, 74-4957, 74-4957a,
12  74-4966 and 74-4990 are hereby repealed.
13    Sec. 10. 30.  This act shall take effect and be in force from and after
14  its publication in the statute book.