Session of 1998
                   
HOUSE BILL No. 2961
         
By Joint Committee on Pensions, Investments and Benefits
         
2-13
            9             AN ACT concerning retirement and pensions; relating to the Kansas pub-
10             lic employees retirement system and systems thereunder; providing a
11             permanent cost-of-living increase; relating to employee and employer
12             contribution rates; providing for certain financing; amending K.S.A.
13             20-2603, 20-2605 and 74-4919 and K.S.A. 1997 Supp. 74-4920, 74-
14             4922, 74-4939, 74-4965 and 74-4967 and repealing the existing
15             sections.
16            
17       Be it enacted by the Legislature of the State of Kansas:
18           New Section 1. (a) The retirement benefit, pension or annuity pay-
19       ments accruing after June 30, 1998, to each retirant and each local school
20       annuitant, shall be increased by an annual cost-of-living increase in an
21       amount equal to 2/3 of the percentage increase in the consumer price
22       index for all urban consumers published by the United States department
23       of labor for the preceding calendar year, except that such percentage
24       increase shall not exceed 2.0% in any given year, multiplied by the re-
25       tirement benefit, pension or annuity payment in effect on July 1, 1998,
26       and each year thereafter, from the retirant's retirement system and shall
27       be paid by such retirement system to the retirant or to the local school
28       annuitant during such period.
29           (b) As used in this section:
30           (1) ``Retirant'' means (A) any person who is a member of a retirement
31       system, who retires, who is at least 70 years of age and who has been
32       retired for at least five years, (B) any person who is a special member of
33       a retirement system, who retires, who is at least 70 years of age and who
34       has been retired for at least five years, (C) any person who is a joint
35       annuitant or beneficiary of any member described in clause (A) or any
36       special member described in clause (B) at a time when such member
37       would have been 70 years of age and who would have been retired for at
38       least five years, and (D) any insured disability benefit recipient who is at
39       least 70 years of age and who has been disabled for at least five years.
40           (2) ``Retirement system'' means the Kansas public employees retire-
41       ment system, the Kansas police and firemen's retirement system, the state
42       school retirement system and the retirement system for judges.
43           (3) ``Local school annuitant'' means (A) any person who is an annui-

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  1       tant with 10 or more years of service, who is receiving an annuity, whose
  2       annuity is not included, in whole or in part, in payments made to such
  3       school district under K.S.A. 72-5512b and amendments thereto and who
  4       is not a member of a group I or of group II as defined in K.S.A. 72-5518
  5       and amendments thereto, and (B) any person who is receiving an annuity
  6       and who retired prior to September 1, 1981.
  7           (c) ``Insured disability benefit recipient'' means any person receiving
  8       an insured disability benefit under K.S.A. 74-4927 and amendments
  9       thereto.
10           New Sec. 2. (a) There is hereby established the state employee cost-
11       of-living retirement benefit enhancement fund in the state treasury. The
12       state employee cost-of-living retirement benefit enhancement fund shall
13       be administered by the director of the budget. All moneys in the state
14       employee cost-of-living retirement benefit enhancement fund shall be
15       used in accordance with this section to fund a portion of increased em-
16       ployer contributions for state agencies that are attributable to the benefits
17       provided under section 1 and amendments thereto.
18           (b) On or before September 15 of each year, the board of trustees of
19       the Kansas public employees retirement system shall certify to the direc-
20       tor of the budget the estimated amount required to finance the incre-
21       mental amortized cost to the Kansas public employees retirement system
22       of the benefits provided by section 1 and amendments thereto for the
23       ensuing fiscal year, except that, for the fiscal year ending June 30, 1999,
24       the board of trustees shall certify such amount to the director of the
25       budget prior to July 1, 1998. For fiscal years commencing after June 30,
26       1999, the director of the budget and the governor shall include in the
27       budget and budget document each year the amount equal to 50% of the
28       amount so certified by the board of trustees as the amount to be paid
29       from the state employee cost-of-living retirement benefit enhancement
30       fund to the Kansas public employees retirement system and to be credited
31       to the state of Kansas employer contributions offset reserve of the Kansas
32       public employees retirement fund and shall make appropriate adjust-
33       ments to the budget estimates of state agencies to provide an adjustment
34       to the rate of employer contributions applicable to payrolls during the
35       ensuing fiscal year to account for the amount to be paid from the state
36       employee cost-of-living retirement benefit enhancement fund in accord-
37       ance with this section.
38           (c) On or before July 15 of each year, the director of the budget shall
39       determine the amounts and sources of moneys in the state treasury that
40       constitute savings and reduced expenditures in the budgets of state agen-
41       cies for the preceding fiscal year that are attributable to improvements
42       or efficiencies in the operations of or enhanced quality of services pro-
43       vided by state agencies under or attributable to the Kansas quality pro-

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  1       gram, under K.S.A. 75-37,115 and amendments thereto, and other total
  2       quality management, savings incentive or efficiency programs, the state
  3       employee suggestion award program, under K.S.A. 75-37,106 through 75-
  4       37,110 and amendments thereto, reductions in full-time equivalent po-
  5       sitions under the provisions of K.S.A. 75-6801 and amendments thereto,
  6       the activities of the Kansas performance review board, under K.S.A. 75-
  7       7101 through 75-7107 and amendments thereto, and other programs,
  8       reviews and management initiatives and activities of state agencies. Upon
  9       making such determinations, the director of the budget shall certify the
10       amounts and the funds to which such amounts are credited to the director
11       of accounts and reports. Upon receiving each such certification, the di-
12       rector of accounts and reports shall transfer the amounts certified from
13       the funds specified therefor to the state employee cost-of-living retire-
14       ment benefit enhancement fund.
15           (d) At the beginning of each fiscal year in accordance with the pro-
16       visions of appropriation acts, the director of the budget provide for the
17       payment of the amount equal to 50% of the amount certified by the board
18       of trustees under subsection (b) for such fiscal year to the Kansas public
19       employees retirement system to be credited to the state of Kansas em-
20       ployer contributions offset reserve of the Kansas public employees re-
21       tirement fund.
22           (e) For the fiscal year ending June 30, 1999, the director of the
23       budget shall take into account the amount to be credited to the state
24       employee cost-of-living retirement benefit enhancement fund and shall
25       determine for each state agency the net incremental amortized amount
26       of increased employer contributions from the payroll of such state agency
27       that is required to provide for the cost of the benefits provided by section
28       1 and amendments thereto in accordance with the certification for fiscal
29       year 1999 and other information provided by the board of trustees of the
30       Kansas public employees retirement system. The director of the budget
31       shall prescribe the required rate of employer contributions to be applied
32       to state agency payrolls for fiscal year 1999 and each state agency shall
33       apply such rate of employer contributions to the payroll of the state
34       agency accordingly.
35           Sec. 3. K.S.A. 20-2603 is hereby amended to read as follows: 20-
36       2603. (a) Except as otherwise provided in this section, each judge shall
37       contribute 6% of the judge's salary for each payroll period to the fund,
38       except that commencing the first payroll period coinciding with or follow-
39       ing the effective date of this act, such contribution rate shall increase by
40       an amount equal to .375% and shall increase by an amount equal to .375%
41       each year thereafter for the subsequent three years for a maximum mem-
42       ber contribution rate of 7.5%. Commencing with the first payroll period
43       after 20 years of service by the judge and after the judge reaches 65 years

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  1       of age, and for each payroll period thereafter, such judge shall contribute
  2       2% of such judge's salary to the fund, except that commencing the first
  3       payroll period coinciding with or following the effective date of this act,
  4       such contribution rate shall increase by an amount equal to .125% and
  5       shall increase by an amount equal to .125% each year thereafter for the
  6       subsequent three years for a maximum member contribution rate of 2.5%.
  7       Commencing with the first payroll period after the judge has enough
  8       years of service to entitle such judge upon retirement to the maximum
  9       monthly retirement benefit of 70% of the final average salary of such
10       judge provided under the provisions of K.S.A. 20-2610 and amendments
11       thereto, and for each payroll period thereafter, each judge shall contribute
12       4% of such judge's salary to the fund or, commencing on and after the
13       effective date of this act, each such judge shall contribute 2% of such
14       judge's salary to the fund, except that commencing the first payroll period
15       coinciding with or following the effective date of this act, such contribu-
16       tion rate shall increase by an amount equal to .125% and shall increase
17       by an amount equal to .125% each year thereafter for the subsequent
18       three years for a maximum member contribution rate of 2.5%.
19           (b) The director of accounts and reports shall deduct the amount
20       each judge is to contribute to the fund on the payroll of each judge for
21       each payroll period showing the amount deducted and its credit to the
22       fund. Such deductions shall be remitted quarterly, or as the board may
23       otherwise provide, to the executive secretary of the Kansas public em-
24       ployees retirement system for credit to the fund to the credit of the
25       judge's individual account therein.
26           (c) Interest on each judge's accumulated contributions at the rate
27       determined under subsection (a) of K.S.A. 74-4922 and amendments
28       thereto shall be added annually to the judge's individual account in the
29       fund.
30           (d) No member who has retired under the retirement system for
31       judges shall make contributions to that system or receive any service
32       credit under that system for any service after the date of such retirement.
33           (e) (1) Each participating employer, pursuant to the provisions of
34       section 414(h)(2) of the United States internal revenue code, shall pick
35       up and pay the contributions which would otherwise be payable by mem-
36       bers as prescribed in subsection (a). The contributions so picked up shall
37       be treated as employer contributions for purposes of determining the
38       amounts of federal income taxes to withhold from the member's com-
39       pensation.
40           (2) Member contributions picked up by the employer shall be paid
41       from the same source of funds used for the payment of compensation to
42       a member. A deduction shall be made from each member's compensation
43       equal to the amount of the member's contributions picked up by the

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  1       employer, provided that such deduction shall not reduce the member's
  2       compensation for purposes of computing benefits under the retirement
  3       system for judges.
  4           (3) Member contributions picked up by the employer shall be re-
  5       mitted quarterly, or as the board may otherwise provide, to the executive
  6       secretary for credit to the Kansas public employees retirement fund. Such
  7       contributions shall be credited to a separate account within the member's
  8       individual account so that amounts contributed by the member may be
  9       distinguished from the member contributions picked up by the employer.
10       Interest shall be added annually to members' individual accounts.
11           Sec. 4. K.S.A. 20-2605 is hereby amended to read as follows: 20-
12       2605. (a) The board shall select and employ or retain a qualified actuary
13       who shall serve at its pleasure as its technical advisor on matters regarding
14       operation of the retirement system for judges. The actuary shall:
15           (1) As soon after the effective date as practicable and once every three
16       years thereafter, make a general investigation of the actuarial experience
17       under the retirement system for judges including mortality, retirement,
18       employment turnover and interest, and recommend actuarial tables for
19       use in valuations and in calculating actuarial equivalent values based on
20       such investigation; make a valuation of the liabilities and reserves of the
21       retirement system for judges, and a determination of the contributions
22       required by the retirement system for judges to discharge its liabilities
23       and recommend to the board rates of employer contributions required
24       to establish and maintain the retirement system for judges on an actuarial
25       reserve basis.
26           (2) Perform such other duties as may be assigned by the board.
27           (b) Upon the basis of the actuarial valuation and appraisal and upon
28       the recommendation of the actuary, the board shall certify, on or before
29       July 15 of each year, to the division of budget an actuarially determined
30       estimate of the rate of contribution which will be required, together with
31       all judges' contributions and other assets of the retirement system for
32       judges to pay all liabilities which shall exist or accrue under the retirement
33       system for judges, including amortization of the unfunded accrued lia-
34       bility over a period of 40 years commencing on July 1, 1993. The rate of
35       contribution for the state determined under this section shall not include
36       the costs of administration of the system. The rate of contribution for the
37       state determined under this section shall in no event be less than the
38       judge's member contribution rate as provided in K.S.A. 20-2603 and
39       amendments thereto.
40           (c) The division of the budget and the governor shall include in the
41       budget and in the budget request for appropriations for personal services
42       the sum required to satisfy the state's obligation under the retirement
43       system for judges as certified by the board and shall present the same to

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  1       the legislature for allowance and appropriation.
  2           Sec. 5. K.S.A. 74-4919 is hereby amended to read as follows: 74-
  3       4919. (1) Each participating employer, beginning with the first payroll for
  4       services performed after the entry date, shall deduct from the compen-
  5       sation of each member 4% of such member's compensation as employee
  6       contributions, except that for the first payroll period coinciding with or
  7       following the effective date of this act, such contribution rate shall increase
  8       by an amount equal to .25% and shall increase by an amount equal to
  9       .25% each year thereafter for the subsequent three years for a maximum
10       member contribution rate of 5%. Such deductions shall be remitted quar-
11       terly, or as the board may otherwise provide, to the executive secretary
12       for deposit in the Kansas public employees retirement fund. Such de-
13       ductions shall be credited to the members' individual accounts and in-
14       terest shall be added annually to such accounts.
15           (2) (a) Each participating employer, pursuant to the provisions of sec-
16       tion 414(h)(2) of the United States internal revenue code, shall pick up
17       and pay the contributions which would otherwise be payable by members
18       as prescribed in subsection (1) commencing with the third quarter of
19       1984. The contributions so picked up shall be treated as employer con-
20       tributions for purposes of determining the amounts of federal income
21       taxes to withhold from the member's compensation.
22           (b) Member contributions picked up by the employer shall be paid
23       from the same source of funds used for the payment of compensation to
24       a member. A deduction shall be made from each member's compensation
25       equal to the amount of the member's contributions picked up by the
26       employer, provided that such deduction shall not reduce the member's
27       compensation for purposes of computing benefits under the system.
28           (c) Member contributions picked up by the employer shall be remit-
29       ted quarterly, or as the board may otherwise provide, to the executive
30       secretary for credit to the Kansas public employees retirement fund. Such
31       contributions shall be credited to a separate account within the member's
32       individual account so that amounts contributed by the member com-
33       mencing with the third quarter of 1984 may be distinguished from the
34       member contributions picked up by the employer. Interest shall be added
35       annually to members' individual accounts.
36           Sec. 6. K.S.A. 1997 Supp. 74-4920 is hereby amended to read as
37       follows: 74-4920. (1) Upon the basis of each annual actuarial valuation
38       and appraisal as provided for in subsection (3)(a) of K.S.A. 74-4908 and
39       amendments thereto, the board shall certify, on or before July 15 of each
40       year, to the division of the budget in the case of the state and to the agent
41       for each other participating employer an actuarially determined estimate
42       of the rate of contribution which will be required, together with all ac-
43       cumulated contributions and other assets of the system, to be paid by

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  1       each such participating employer to pay all liabilities which shall exist or
  2       accrue under the system, including amortization of the actuarial accrued
  3       liability over a period of 40 years commencing on July 1, 1993, and the
  4       actuarial accrued liability for members of the faculty and other persons
  5       who are employed by the state board of regents or by educational insti-
  6       tutions under its management assisted by the state board of regents in
  7       the purchase of retirement annuities as provided in K.S.A. 74-4925 and
  8       amendments thereto, as provided in this section. The actuarial accrued
  9       liability for all participating employers other than the state board of re-
10       gents relating to members of the faculty and other persons described in
11       this section, shall be amortized by annual payments that increase 4% for
12       each year remaining in the amortization period. For all participating em-
13       ployers other than the state board of regents relating to members of the
14       faculty and other persons described in this section, the projected unit
15       credit actuarial cost method shall be used in annual actuarial valuations,
16       commencing with the 1993 valuation, to determine the employer contri-
17       bution rates that shall be certified by the board. The actuarial accrued
18       liability for members of the faculty and other persons described in this
19       subsection assisted by the state board of regents in the purchase of re-
20       tirement annuities as provided in K.S.A. 74-4925 and amendments
21       thereto shall be amortized by annual level payments over a period of 10
22       years commencing July 1, 1993. Such certified rate of contribution shall
23       be based on the standards set forth in subsection (3)(a) of K.S.A. 74-4908
24       and amendments thereto and shall not be based on any other purpose
25       outside of the needs of the system.
26           (2) The division of the budget and the governor shall include in the
27       budget and in the budget request for appropriations for personal services
28       the sum required to satisfy the state's obligation under this act as certified
29       by the board and shall present the same to the legislature for allowance
30       and appropriation.
31           (3) Each other participating employer shall appropriate and pay to
32       the system a sum sufficient to satisfy the obligation under this act as
33       certified by the board.
34           (4) Each participating employer is hereby authorized to pay the em-
35       ployer's contribution from the same fund that the compensation for which
36       such contribution is made is paid from or from any other funds available
37       to it for such purpose. Each political subdivision, other than an instru-
38       mentality of the state, which is by law authorized to levy taxes for other
39       purposes, may levy annually at the time of its levy of taxes, a tax which
40       may be in addition to all other taxes authorized by law for the purpose of
41       making its contributions under this act and, in the case of cities and coun-
42       ties, to pay a portion of the principal and interest on bonds issued under
43       the authority of K.S.A. 12-1774 and amendments thereto by cities located

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  1       in the county, which tax, together with any other fund available, shall be
  2       sufficient to enable it to make such contribution. In lieu of levying the
  3       tax authorized in this subsection, any taxing subdivision may pay such
  4       costs from any employee benefits contribution fund established pursuant
  5       to K.S.A. 12-16,102 and amendments thereto. Each participating em-
  6       ployer which is not by law authorized to levy taxes as described above,
  7       but which prepares a budget for its expenses for the ensuing year and
  8       presents the same to a governing body which is authorized by law to levy
  9       taxes as described above, may include in its budget an amount sufficient
10       to make its contributions under this act which may be in addition to all
11       other taxes authorized by law. Such governing body to which the budget
12       is submitted for approval, may levy a tax sufficient to allow the partici-
13       pating employer to make its contributions under this act, which tax, to-
14       gether with any other fund available, shall be sufficient to enable the
15       participating employer to make the contributions required by this act.
16           (5) The rate of contribution certified to a participating employer as
17       provided in this section shall apply during the fiscal year of the partici-
18       pating employer which begins in the second calendar year following the
19       year of the actuarial valuation.   For the fiscal year commencing in calendar
20       year 1993, the employer rate of contribution for the state of Kansas and
21       for participating employers under K.S.A. 74-4931 and amendments
22       thereto shall be 3.1% of the amount of compensation upon which mem-
23       bers contribute during the period. For the fiscal year commencing in
24       calendar year 1994, the employer rate of contribution for the state of
25       Kansas and for participating employers under K.S.A. 74-4931 and amend-
26       ments thereto shall be 3.2% of the amount of compensation upon which
27       members contribute during the period. For the fiscal year commencing
28       in calendar year 1994, the employer rate of contribution for participating
29       employers other than the state of Kansas shall be 2.2% of the amount of
30       compensation upon which members contribute during the period. Except
31       as specifically provided in this section, for the fiscal year commencing in
32       calendar year 1995, the rate of contribution certified to a participating
33       employer shall in no event exceed such participating employer's contri-
34       bution rate for the immediately preceding fiscal year by more than 0.1%
35       of the amount of compensation upon which members contribute during
36       the period. Except as specifically provided in this section, for fiscal years
37       commencing in calendar year 1996 and in each subsequent calendar year,
38       the rate of contribution certified to the state of Kansas shall in no event
39       exceed the state's contribution rate for the immediately preceding fiscal
40       year by more than 0.2% of the amount of compensation upon which
41       members contribute during the period. Except as specifically provided in
42       this section, for fiscal years commencing in calendar year 1997 and in
43       each subsequent calendar year, the rate of contribution certified to par-

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  1       ticipating employers other than the state of Kansas shall in no event ex-
  2       ceed such participating employer's contribution rate for the immediately
  3       preceding fiscal year by more than 0.15% of the amount of compensation
  4       upon which members contribute during the period. For the fiscal year
  5       commencing in calendar year 1998, the employer rate of contribution for
  6       the state of Kansas and for participating employers under K.S.A. 74-4931
  7       and amendments thereto and for the fiscal year commencing in calendar
  8       year 1999, the employer rate of contribution for participating employers
  9       other than the state of Kansas shall be 4.25% of the amount of compen-
10       sation upon which members contribute during the period and such rate
11       of contribution shall increase by an amount equal to .25% each year for
12       the ensuing three fiscal years, except that the increase in the rate of con-
13       tribution attributable to this provision shall be 1.0%. There shall be an
14       employer rate of contribution certified to   (tri-stars)e state of Kansas and partic-
15       ipating employers under K.S.A. 74-4931 and amendments thereto. There
16       shall be a separate employer rate of contribution certified to all other
17       participating employers other than the state of Kansas. The rate of con-
18       tribution for employers determined under this section shall in no event be
19       less than the employee contribution rate as provided in K.S.A. 74-4919
20       and amendments thereto.
21           (6) The actuarial cost of any legislation enacted in the 1994 session
22       of the Kansas legislature will be included in the June 30, 1994, actuarial
23       valuation in determining contribution rates for participating employers.
24           (7) The actuarial cost of any postretirement benefit adjustment en-
25       acted in the 1998 session of the Kansas legislature shall be amortized over
26       15 years.
27           (8) The actuarial cost of any legislation enacted in the 1998 session
28       of the Kansas legislature and any session thereafter will be included in
29       the next June 30, actuarial valuation in determining contribution rates for
30       participating employers and shall be in addition to any increase in the
31       employer rate of contribution in subsection (5) as provided by this act.
32           (9) The board with the advice of the actuary may fix the contribution
33       rates for participating employers joining the system after one year from
34       the first entry date or for employers who exercise the option contained
35       in K.S.A. 74-4912 and amendments thereto at rates different from the
36       rate fixed for employers joining within one year of the first entry date.
37             (8) (10) Employer contributions shall in no way be limited by any
38       other act which now or in the future establishes or limits the compen-
39       sation of any member.
40             (9) (11) Each participating employer shall remit quarterly, or as the
41       board may otherwise provide, all employee deductions and required em-
42       ployer contributions to the executive secretary for credit to the Kansas
43       public employees retirement fund within 20 days after the end of the

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  1       period covered by the remittance or within 25 days after forms or written
  2       instructions from the system were mailed by the system to such employer,
  3       whichever is later. Remittances of such deductions and contributions re-
  4       ceived after such date are delinquent. Delinquent payments due under
  5       this subsection shall be subject to interest at the rate established for in-
  6       terest on judgments under subsection (a) of K.S.A. 16-204 and amend-
  7       ments thereto. At the request of the board, delinquent payments which
  8       are due or interest owed on such payments, or both, may be deducted
  9       from any other moneys payable to such employer by any department or
10       agency of the state.
11           Sec. 7. K.S.A. 1997 Supp. 74-4922 is hereby amended to read as
12       follows: 74-4922. The executive secretary shall maintain such records as
13       are necessary to determine the following reserves of the fund.
14           (a) Member's accumulated contribution reserve. This reserve shall be
15       maintained for each member and for each member having a vested ben-
16       efit. Each such reserve account shall be credited with the employee's
17       contributions upon receipt thereof and shall be credited on June 30 each
18       year with interest: (1) At the actuarial assumption rate adopted by the
19       board on the balance in the employee's account as of the preceding De-
20       cember 31 for those who first became members prior to July 1, 1993; and
21       (2) 4% for those who first became members on and after July 1, 1993.
22       For the purposes of crediting interest upon accumulated contributions,
23       the term member shall include the beneficiary of a member during the
24       twelve-month period following the death of a member and the beneficiary
25       of a member pursuant to subsection (6) of K.S.A. 74-4918 and amend-
26       ments thereto during any period commencing on the date of death of
27       such member and ending on the date that the member would have at-
28       tained retirement age. Refunds of employee's accumulated contributions
29       prior to retirement shall be made from this reserve. Upon commence-
30       ment of payments of the retirement benefit, the amount in this reserve
31       account for the retiring member or members, shall be transferred to the
32       retirement benefit payment reserve.
33           (b) Retirement benefit accumulation reserve. This reserve shall be
34       credited with the portion of employer contributions for retirement ben-
35       efits (both for prior service and for participating service) and with income
36       of the fund not otherwise directed by law to a different reserve. The board
37       shall credit interest to all other reserves and reserve accounts as provided
38       by law at rates determined by the board. Interest so credited shall be
39       transferred from the retirement benefit accumulation reserve. Separate
40       reserve accounts shall not be maintained for each participating employer
41       joining the system on the first entry date. The board shall determine
42       whether or not separate reserve accounts shall be maintained for each
43       participating employer joining the system after the first entry date.

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  1           (c) Retirement benefit payment reserve. (i) This reserve will be cred-
  2       ited with the amount transferred from the member's accumulated con-
  3       tributions reserve and from the retirement benefit accumulation reserve
  4       and with interest allocated to this reserve at the rate determined each
  5       year by the board. This reserve shall be charged with payments of retire-
  6       ment benefits including payments upon death of the excess of member's
  7       accumulated contributions over retirement benefit payments paid to date
  8       of death. Annually, upon receipt of the actuarial valuation as of the end
  9       of the previous fiscal year the board shall cause certain adjustments to be
10       made which shall be made prior to the end of the fiscal year immediately
11       following the fiscal year for which the actuarial valuation is applicable.
12           (ii) The amount of these adjustments shall be the difference between
13       the amount required by the current actuarial valuation and the amount
14       required by the previous year's actuarial valuation plus amounts trans-
15       ferred to this reserve less amounts paid out of this reserve during the
16       fiscal year to be adjusted. Such adjustments required to maintain this
17       reserve on an actuarial reserve basis as of June 30 of the previous fiscal
18       year shall be accomplished by transfers to or from, as applicable, the
19       retirement benefit accumulation reserve.
20           (d) Expense reserve. This reserve shall be credited with interest al-
21       located to this reserve at the rate determined each year by the board. It
22       shall be charged with payments of all expenses incurred in connection
23       with the administration of the system.
24           (e) Group insurance reserve. This reserve shall be credited with the
25       employer contributions required to pay the cost for the plan of death and
26       long-term disability benefits under K.S.A. 74-4927, and amendments
27       thereto, with any dividend or retrospective rate credit allowed by any
28       insurance company or companies contracted with by the board for such
29       plan, and with interest allocated to this reserve at the rate determined
30       each year by the board. This reserve shall be charged with the amount of
31       the payments required to provide such plan of death and long-term dis-
32       ability benefits.
33           (f) School employers contributions assistance reserve. This reserve
34       shall be credited with all moneys transferred or paid to the system from
35       the state general fund pursuant to appropriation act of the legislature in
36       accordance with K.S.A. 74-4939 and amendments thereto for the purpose
37       of assisting participating employers that are participating employers as
38       specified in subsection (1), (2) or (3) of K.S.A. 74-4931 an amendments
39       thereto as of July 1, 1998, pay employer contributions to the system pur-
40       suant to K.S.A. 74-4920 and amendments thereto. This reserve shall be
41       charged with the proportional amounts allotted to each such participating
42       employer each period that employer contributions are required to be re-
43       mitted under K.S.A. 74-4920 and amendments thereto as determined by

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  1       the board of trustees under K.S.A. 74-4939 and amendments.
  2           (g) State of Kansas employer contributions offset reserve. This reserve
  3       shall be credited with all moneys transferred or paid to the system from
  4       the state employee cost-of-living retirement benefit enhancement fund
  5       pursuant in accordance with section 2 and amendments thereto for the
  6       purpose of paying a portion of the state of Kansas employer contributions
  7       to the system pursuant to K.S.A. 74-4920 and amendments thereto. This
  8       reserve shall be charged with the proportional amount of the employer
  9       contributions of the state of Kansas for each period that state of Kansas
10       employer contributions are required to be remitted under K.S.A. 74-4920
11       and amendments thereto as determined by the board of trustees under
12       section 2 and amendments thereto.
13           Sec. 8. K.S.A. 1997 Supp. 74-4939 is hereby amended to read as
14       follows: 74-4939. (1) Except as otherwise provided in this section, the
15       provisions of K.S.A. 74-4919 and 74-4920, and amendments thereto, shall
16       apply to employee and employer contributions and obligations.
17           (2) The employer contribution rate for participating employers who
18       are eligible employers as specified in subsections (1), (2) and (3) of K.S.A.
19       74-4931 and amendments thereto shall be as certified by the board. Each
20       such participating   employers, employer, who is a participating employer
21       as of July 1, 1998, shall certify to the state board of education before
22       September 15 of each year the anticipated total compensation to be paid
23       during the next fiscal year to employees who are or are to become mem-
24       bers. The state board of education shall transmit the information neces-
25       sary to the division of the budget and the governor who shall include in
26       the budget and budget document each year thereafter provisions for the
27       transfer of an aggregate amount from the state general fund of sufficient
28       sums to   satisfy the provide assistance for each such participating em-
29       ployer's obligation under this act, except that in no year shall such aggre-
30       gate amount be more than amount provided by appropriation act of the
31       legislature for the fiscal year ending June 30, 1999. In accordance with
32       the provisions of appropriation acts, the director of accounts and reports
33       shall make a transfer therefor to the system   quarterly, at the same time
34       such employee contributions are remitted by such participating employ-
35       ers on July 1 of each year, or as soon thereafter as moneys are available.
36       Such transfer from the state general fund of sufficient sums to   satisfy
37       assist the participating employer's obligation shall not include any ad-
38       justments for individual employee's service in prior periods. The em-
39       ployer's obligation for such adjustments shall be paid by the participating
40       employer. Transfers required by this subsection shall be provided for
41       annually by act of the legislature.
42           (3) Participating employers who are eligible employers as specified
43       in subsection (4) of K.S.A. 74-4931 and amendments thereto shall pay to

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  1       the system employer contributions at a rate of contribution as certified
  2       by the board.
  3           (4)   Upon the effective date of this act, the transfers for the employer's
  4       obligation pursuant to subsection (2) for the quarter commencing on Jan-
  5       uary 1, 1987, shall be made on July 1, 1987, together with interest thereon
  6       at the rate of 6.72% per annum from the date the payment would have
  7       been made as provided in this section immediately prior to this amend-
  8       ment until the date paid. Each participating employer that is a partici-
  9       pating employer as specified in subsections (1), (2) or (3) of K.S.A. 74-
10       4931 and amendments thereto as of July 1, 1998, shall be credited each
11       period that employer contributions are required to be remitted under
12       K.S.A. 74-4920 and amendments thereto with a pro rata amount of the
13       moneys credited to the school employers contributions assistance reserve
14       of the fund for such fiscal year pursuant to this section. The amount
15       allotted to each such participating employer for each such period shall be
16       determined by the board of trustees, in accordance with this act, for the
17       purposes of assisting to such participating employer pay employer con-
18       tributions to the system pursuant to K.S.A. 74-4920 and amendments
19       thereto. In determining the amounts to be so allotted to such participating
20       employers for a fiscal year, the board of trustees shall allocate annually
21       the amount credited in the school employers contributions assistance re-
22       serve of the fund among such participating employers based on infor-
23       mation provided to the system for the preceding fiscal year and shall
24       adjust and reconcile each such allotment based on information received
25       for the fiscal year.
26           Sec. 9. K.S.A. 1997 Supp. 74-4965 is hereby amended to read as
27       follows: 74-4965. (1) Except as otherwise provided in this section, each
28       participating employer shall, beginning with the first payroll period for
29       services performed after the entry date, deduct from the compensation
30       of each member 7% of such member's compensation as employee con-
31       tributions, except that in the case of a member whose employment is
32       covered by social security and the member is a member of the class cer-
33       tified in the case of Brazelton v. Kansas public employees retirement
34       system, 227 K. 443, 607 P.2d 510 (1980), the deduction from such mem-
35       ber's compensation shall be reduced by the amount of such member's
36       contributions to social security. Commencing the first payroll period co-
37       inciding with or following the effective date of this act, such contribution
38       rate shall increase by an amount equal to .4375% and shall increase by
39       an amount equal to .4375% each year thereafter for the subsequent three
40       years for a maximum member contribution rate of 8.75%.
41           (2) For any member other than a member who is a member of the
42       class certified in the case of Brazelton v. Kansas public employees retire-
43       ment system, 227 K. 443, 607 P.2d 510 (1980), no employee contributions

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  1       shall be reduced because of contributions to social security.
  2           (3) All such deductions shall be remitted quarterly, or as the board
  3       may otherwise provide, to the executive secretary for credit to the Kansas
  4       public employees retirement fund and shall be credited to the members'
  5       individual accounts. Interest on each member's accumulated contribu-
  6       tions at the rate determined under subsection (a) of K.S.A. 74-4922 and
  7       amendments thereto shall be added annually to the member's individual
  8       account.
  9           (4) For all payroll periods commencing on or after the effective date
10       of this act, each participating employer shall deduct from the compen-
11       sation of each member who has received 32 years of credited service, 2%
12       of such member's compensation as employee contributions. Commencing
13       with the first payroll period coinciding with or following the effective date
14       of this act, such contribution rate shall increase by an amount equal to
15       .125% and shall increase by an amount equal to .125% each year there-
16       after for the subsequent three years for a maximum member's contribution
17       rate of 2.5%.
18           (5) (a) Each participating employer, pursuant to the provisions of
19       section 414(h)(2) of the United States internal revenue code, shall pick
20       up and pay the contributions which would otherwise be payable by mem-
21       bers as prescribed in subsection (1) commencing with the third quarter
22       of 1984. The contributions so picked up shall be treated as employer
23       contributions for purposes of determining the amounts of federal income
24       taxes to withhold from the member's compensation.
25           (b) Member contributions picked up by the employer shall be paid
26       from the same source of funds used for the payment of compensation to
27       a member. A deduction shall be made from each member's compensation
28       equal to the amount of the member's contributions picked up by the
29       employer, provided that such deduction shall not reduce the member's
30       compensation for purposes of computing benefits under the system.
31           (c) Member contributions picked up by the employer shall be remit-
32       ted quarterly, or as the board may otherwise provide, to the executive
33       secretary for credit to the Kansas public employees retirement fund. Such
34       contributions shall be credited to a separate account within the member's
35       individual account so that amounts contributed by the member com-
36       mencing with the third quarter of 1984 may be distinguished from the
37       member contributions picked up by the employer. Interest shall be added
38       annually to members' individual accounts.
39           Sec. 10. K.S.A. 1997 Supp. 74-4967 is hereby amended to read as
40       follows: 74-4967. (1) Upon the basis of an annual actuarial valuation and
41       appraisal of the system conducted in the manner provided for in K.S.A.
42       74-4908 and amendments thereto, the board shall certify, on or before
43       July 15 of each year to each participating employer an actuarially deter-

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  1       mined estimate of the rate of contribution which shall be required to be
  2       paid by each such participating employer to pay all of the liabilities which
  3       shall accrue under the system from and after the entry date as determined
  4       by the board, upon recommendation of the actuary. Such rate shall be
  5       uniform for all participating employers, and shall be comprised of a rate
  6       for benefits accruing after June 30, 1993, and a rate for amortization of
  7       the additional liability for benefits provided by this act which is attribut-
  8       able to service rendered before July 1, 1993. Such additional liability shall
  9       be amortized over a period of 40 years commencing on July 1, 1993, by
10       annual payments that increase 4% for each year remaining in the amor-
11       tization period. The employer's rate of contribution determined under
12       this section shall not include the costs of administration of the system.
13       The rate of contribution for employers determined under this section shall
14       in no event be less than the member contribution rate as provided in
15       K.S.A. 74-4965 and amendments thereto.
16           (2) The board shall determine for each employer separately an
17       amount sufficient to amortize over a period of not to exceed 40 years all
18       liabilities for past service costs which shall have accrued at the time of
19       entry into the system. On the basis of such determination the board shall
20       annually certify to each participating employer separately an actuarially
21       determined estimate of the rate of contribution which shall be required
22       to be paid by that participating employer to pay all of the liabilities for
23       such past service costs. Such rate shall be termed the employer's prior
24       service contribution. The board may enter into agreements with any par-
25       ticipating employer which has employees or retirants under the special
26       pension systems established under K.S.A. 13-14a01 to 13-14a14, inclu-
27       sive, and amendments thereto or K.S.A. 14-10a01 to 14-10a15, inclusive,
28       and amendments thereto, for the purpose of scheduling the payment of
29       such past service costs in an orderly manner which will tend to stabilize
30       the annual total financial burden on such employers in meeting their
31       present and future obligations under this system and such special systems,
32       but in no event shall the annual prior service contribution be less than
33       the interest cost on the total of such past service liability.
34           (3) Each participating employer shall appropriate and pay to the sys-
35       tem a sum sufficient to satisfy the obligations under this act as certified
36       by the board.
37           (4) Each participating employer is hereby authorized to pay the em-
38       ployer's contribution from the same fund that the compensation for which
39       such contribution is made is paid from or from any other funds available
40       to it for such purpose. Each employer may levy annually at the time of
41       its levy of taxes, a tax which may be in addition to all other taxes authorized
42       by law for the purpose of making its contributions under this act, and, in
43       the case of cities and counties, to pay a portion of the principal and in-

HB 2961

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  1       terest on bonds issued by cities under the authority of K.S.A. 12-1774,
  2       and amendments thereto, for the financing of redevelopment projects
  3       upon property located in such county which tax, together with any other
  4       fund available, shall be sufficient to enable it to make such contribution.
  5       In lieu of levying the tax authorized in this subsection, any taxing subdi-
  6       vision may pay such costs from any employee benefits contribution fund
  7       established pursuant to K.S.A. 12-16,102 and amendments thereto.
  8           (5) Employer contributions shall in no way be limited by any other
  9       act which now or in the future establishes or limits the compensation of
10       any member.
11           (6) The rate of contribution certified to each participating employer
12       as provided in this section shall apply during the fiscal year of such par-
13       ticipating employer which begins in the second calendar year following
14       the year of the actuarial valuation, but the rate of contribution during the
15       first year following the employer's entry date shall be equal to 16% of the
16       amount of compensation on which members contribute during the year.
17           (7) Each participating employer shall remit quarterly, or as the board
18       may otherwise provide, all employee deductions and required employer
19       contributions to the executive secretary for credit to the Kansas public
20       employees retirement fund within 20 days after the end of the period
21       covered by the remittance or within 25 days after forms or written in-
22       structions from the system were mailed by the system to such employer,
23       whichever is later. Remittances of such deductions and contributions re-
24       ceived after such date are delinquent. Delinquent payments due under
25       this subsection (7) shall be subject to interest at the rate established for
26       interest on judgments under subsection (a) of K.S.A. 16-204 and amend-
27       ments thereto. At the request of the board, delinquent payments which
28       are due or interest owed on such payments, or both, may be deducted
29       from any other moneys payable to such employer by any department or
30       agency of the state.
31           Sec. 11. K.S.A. 20-2603, 20-2605 and 74-4919 and K.S.A. 1997 Supp.
32       74-4920, 74-4922, 74-4939, 74-4965 and 74-4967 are hereby repealed.
33           Sec. 12. This act shall take effect and be in force from and after its
34       publication in the statute book.
35      
36