Session of 2000
         
HOUSE BILL No. 2808
         
By Committee on Financial Institutions
         
2-2
         
  9             AN  ACT concerning retirement and pensions; relating to the Kansas
10             public employees retirement system and the retirement system for
11             judges; benefits; beneficiaries; amending K.S.A. 1999 Supp. 20-2601,
12             20-2603, 20-2609, 20-2610 and 74-4902 and repealing the existing
13             sections.
14      
15       Be it enacted by the Legislature of the State of Kansas:
16             Section  1. K.S.A. 1999 Supp. 20-2601 is hereby amended to read as
17       follows: 20-2601. As used in K.S.A. 20-2601 et seq. and amendments
18       thereto, unless the context otherwise requires:
19             (a) "Fund" means the Kansas public employees retirement fund cre-
20       ated by K.S.A. 74-4921 and amendments thereto;
21             (b) "retirement system for judges" means the system provided for in
22       the acts contained in article 26 of chapter 20 of the Kansas Statutes An-
23       notated and any acts amendatory thereof or supplemental thereto;
24             (c) "judge" means any duly elected or appointed justice of the su-
25       preme court, judge of the court of appeals or judge of any district court
26       of Kansas, who serves in such capacity on and after the effective date of
27       this act and commencing with the first day of the first payroll period of
28       the fiscal year ending June 30, 1994, any district magistrate judge who
29       makes an election as provided in K.S.A. 20-2620 and amendments thereto
30       or who is elected or appointed on or after July 1, 1993;
31             (d) "member" means a judge who is making the required contribu-
32       tions to the fund, or any former judge who has made the required con-
33       tributions to the fund and has not received a refund of the judge's ac-
34       cumulated contributions;
35             (e) "prior service" means all the periods of time any judge has served
36       in such capacity prior to the effective date of this act except that district
37       magistrate judges who have service credit under the Kansas public em-
38       ployees retirement system must make application to the board and, sub-
39       ject to the provisions of K.S.A. 1999 Supp. 74-49,123 and amendments
40       thereto, make payment as required by the board to transfer service credit
41       from the Kansas public employees retirement system to the retirement
42       system for judges;
43             (f) "current service" means the period of service any judge serves in


2

  1       such capacity from and after the effective date of this act;
  2             (g) "military service" means service of any judge for which retirement
  3       benefit credit must be given as provided in the uniformed services em-
  4       ployment and reemployment rights act of 1994, as in effect on July 1,
  5       1998;
  6             (h) "total years of service" means the total number of years served as
  7       a judge, including prior service, military service and current service as
  8       defined by this section, computed to the nearest quarter;
  9             (i) "salary" means the statutory salary of a judge;
10             (j) "final average salary" means that determined as provided in sub-
11       section (b) of K.S.A. 20-2610 and amendments thereto;
12             (k) "beneficiary" means any natural person or persons or estate des-
13       ignated by a judge in the latest designation of beneficiary received in the
14       retirement system office to receive any benefits as provided for by this
15       act. Except as provided in subsection (n), if there is no named beneficiary
16       living at the time of the judge's death, any benefits provided for by this
17       act shall be paid to: (1) The judge's surviving spouse; (2) the judge's
18       dependent child or children; (3) the judge's dependent parent or parents;
19       (4) the judge's nondependent child or children; (5) the judge's nonde-
20       pendent parent or parents; or (6) the estate of the deceased member; in
21       the order of preference as specified in this subsection. Effective January
22       1, 2001, a judge may designate a beneficiary or beneficiaries for any death
23       benefits payable under the provisions of K.S.A. 74-4927 through 74-
24       4927h, and amendments thereto, which are different from any beneficiary
25       or beneficiaries the judge may have designated for any other benefits.
26       Designations of beneficiaries by a member who is a member of more
27       than one retirement system made on or after July 1, 1987, shall be the
28       basis of any benefits payable under all systems unless otherwise provided
29       by law;
30             (l) "annuity" means a series of equal monthly payments, payable at
31       the end of each calendar month during the life of a retired judge, of
32       which payments the first payment shall be made as of the end of the
33       calendar month in which such annuity was awarded and the last payment
34       shall be at the end of the calendar month in which such judge dies. The
35       first payment shall include all amounts accrued since the effective date
36       of the award of annuities, including a pro rata portion of the monthly
37       amount of any fraction of a month elapsing between the effective date of
38       such annuity and the end of the calendar month in which such annuity
39       began;
40             (m) "board" means the board of trustees of the Kansas public em-
41       ployees retirement system;
42             (n) "trust" means an express trust created by any trust instrument,
43       including a will, and designated by a member to receive benefits and other


3

  1       amounts payable under K.S.A. 20-2607, 20-2610a and 20-2612, and
  2       amendments thereto, instead of a beneficiary. A designation of a trust
  3       shall be filed with the board. If there is a designated trust at the time of
  4       the member's death, all benefits and other amounts payable under K.S.A.
  5       20-2607, 20-2610a and 20-2612, and amendments thereto, shall be paid
  6       to the trust instead of the member's beneficiary. If no will is admitted to
  7       probate within six months after the death of the member or no trustee
  8       qualifies within such six months or if the designated trust fails, for any
  9       reason whatsoever, any benefits and other amounts payable under K.S.A.
10       20-2607, 20-2610a and 20-2612, and amendments thereto, shall be paid
11       to the member's beneficiary and any payments so made shall be a full
12       discharge and release to the retirement system for judges from any fur-
13       ther claims;
14             (o) "accumulated contributions" means the sum of all contributions
15       by a member to the retirement system for judges which are credited to
16       the member's account, with interest allowed thereon after June 30, 1982;
17             (p) "federal internal revenue code" means the federal internal reve-
18       nue code of 1954 or 1986, as in effect on July 1, 1998, and as applicable
19       to a governmental plan; and
20             (q) except as otherwise provided in K.S.A. 20-2601 et seq. and amend-
21       ments thereto, words and phrases used in K.S.A. 20-2601 et seq. and
22       amendments thereto shall have the same meanings ascribed to them as
23       are defined in K.S.A. 74-4902 and amendments thereto.
24             Sec.  2. K.S.A. 1999 Supp. 20-2603 is hereby amended to read as
25       follows: 20-2603. (a) Except as otherwise provided in this section, each
26       judge shall contribute 6% of the judge's salary for each payroll period to
27       the fund. Commencing with the first payroll period after 20 years of
28       service by the judge and after the judge reaches 65 years of age, and for
29       each payroll period thereafter, such judge shall contribute 2% of such
30       judge's salary to the fund. Commencing with the first payroll period after
31       the judge has enough years of service to entitle such judge upon retire-
32       ment to the maximum monthly retirement benefit of 70% 80% of the
33       final average salary of such judge provided under the provisions of K.S.A.
34       20-2610 and amendments thereto, and for each payroll period thereafter,
35       each judge shall contribute 4% of such judge's salary to the fund or,
36       commencing on and after the effective date of this act, each such judge
37       shall contribute 2% of such judge's salary to the fund.
38             (b) The director of accounts and reports shall deduct the amount
39       each judge is to contribute to the fund on the payroll of each judge for
40       each payroll period showing the amount deducted and its credit to the
41       fund. Such deductions shall be remitted quarterly, or as the board may
42       otherwise provide, to the executive secretary of the Kansas public em-
43       ployees retirement system for credit to the fund to the credit of the


4

  1       judge's individual account therein.
  2             (c) Interest on each judge's accumulated contributions at the rate
  3       determined under subsection (a) of K.S.A. 74-4922 and amendments
  4       thereto shall be added annually to the judge's individual account in the
  5       fund.
  6             (d) No member who has retired under the retirement system for
  7       judges shall make contributions to that system or receive any service
  8       credit under that system for any service after the date of such retirement.
  9             (e)  (1) Subject to the provisions of K.S.A. 1999 Supp. 74-49,123 and
10       amendments thereto, each participating employer, pursuant to the pro-
11       visions of section 414(h)(2) of the federal internal revenue code, shall
12       pick up and pay the contributions which would otherwise be payable by
13       members as prescribed in subsection (a). The contributions so picked up
14       shall be treated as employer contributions for purposes of determining
15       the amounts of federal income taxes to withhold from the member's
16       compensation.
17             (2) Member contributions picked up by the employer shall be paid
18       from the same source of funds used for the payment of compensation to
19       a member. A deduction shall be made from each member's compensation
20       equal to the amount of the member's contributions picked up by the
21       employer, provided that such deduction shall not reduce the member's
22       compensation for purposes of computing benefits under the retirement
23       system for judges.
24             (3) Member contributions picked up by the employer shall be re-
25       mitted quarterly, or as the board may otherwise provide, to the executive
26       secretary for credit to the Kansas public employees retirement fund. Such
27       contributions shall be credited to a separate account within the member's
28       individual account so that amounts contributed by the member may be
29       distinguished from the member contributions picked up by the employer.
30       Interest shall be added annually to members' individual accounts.
31             Sec.  3. K.S.A. 1999 Supp. 20-2609 is hereby amended to read as
32       follows: 20-2609. (a) Any judge who has become permanently physically
33       or mentally disabled and who is not entitled to retire under K.S.A. 20-
34       2608 and amendments thereto may, upon being found so disabled by the
35       supreme court, retire under this section, and upon such retirement such
36       judge shall be entitled to receive an annuity, each monthly payment of
37       which shall be in an amount equal to 3.5% of the final average salary of
38       the judge, determined as provided in subsection (b) of K.S.A. 20-2610
39       and amendments thereto, multiplied by the number of total years of serv-
40       ice, but for any judge who becomes disabled as provided in this section
41       on or after July 1, 1998, such monthly benefits shall be at least 50% but
42       shall not exceed 70% 80% of the final average salary of the judge, deter-
43       mined as provided in subsection (b) of K.S.A. 20-2610 and amendments


5

  1       thereto.
  2             (b) Any judge, or the conservator of any judge, desiring to retire un-
  3       der the provisions of this section shall file an application for such retire-
  4       ment with the clerk of the supreme court, which application shall be in
  5       such form and contain such information as the supreme court shall re-
  6       quire. The court may require such judge to be examined by a physician
  7       appointed by the court and may require such other evidence and proof
  8       of disability as it deems necessary to reach a determination as to whether
  9       such judge is so permanently disabled. If the supreme court shall deter-
10       mine that any such judge is so permanently disabled it shall promptly
11       notify the board and thereupon such judge shall be placed on retirement
12       by the board and monthly receive the retirement annuity as provided in
13       this section.
14             (c) Any judge receiving an annuity under the provisions of this section
15       shall be considered an active judge for the purposes of K.S.A. 20-2608
16       and amendments thereto and shall, upon reaching age 65 or upon making
17       application for retirement, have such judge's retirement under this sec-
18       tion terminated and such judge shall be placed on retirement under the
19       provisions of K.S.A. 20-2608 and amendments thereto.
20             (d) In the event that a judge eligible for a disability annuity authorized
21       by this section shall be disabled for a period of five years or more im-
22       mediately preceding retirement, such judge's final average salary shall be
23       adjusted upon retirement by the actuarial salary assumption rates in ex-
24       istence during such period of disability. Effective July 1, 1993, such
25       judge's final average salary shall be adjusted upon retirement by 5% for
26       each year of disability after July 1, 1993, but before July 1, 1998. Effective
27       July 1, 1998, such judge's final average salary shall be adjusted upon re-
28       tirement by an amount equal to the lesser of: (1) The percentage increase
29       in the consumer price index for all urban consumers as published by the
30       bureau of labor statistics of the United States department of labor minus
31       1%; or (2) four percent per annum, measured from the month the disa-
32       bility occurs to the month that is two months prior to the month of re-
33       tirement, for each year of disability after July 1, 1998.
34             (e) The provisions of law in effect on the retirement date of a judge
35       under the retirement system for judges shall govern the retirement ben-
36       efit payable to the judge, any joint annuitant and any beneficiary.
37             Sec.  4. K.S.A. 1999 Supp. 20-2610 is hereby amended to read as
38       follows: 20-2610. (a) (1) A judge who retires under K.S.A. 20-2608, and
39       amendments thereto, shall be entitled to receive an annual annuity pay-
40       able in monthly amounts subject to subsection (b), each such annual an-
41       nuity of which shall be in an amount equal to the total of 5% of the final
42       average salary of the judge, determined as provided in subsection (b),
43       multiplied by the number of the judge's years of service up to 10 years,


6

  1       and 3.5% of the final average salary of the judge, determined as provided
  2       in subsection (b), multiplied by the number of the judge's years of service
  3       in excess of 10 years, but such annual annuity shall not exceed 70% 80%
  4       of the final average salary of such judge, determined as provided in sub-
  5       section (b). A judge who retires under K.S.A. 20-2608 and amendments
  6       thereto, and who became a member of the system after June 30, 1987,
  7       shall be entitled to receive an annual annuity payable in monthly amounts
  8       subject to subsection (b), each such annual amount of which shall be in
  9       an amount equal to the total of 3.5% of the final average salary of the
10       judge, determined as provided in subsection (b), multiplied by the num-
11       ber of the judge's years of service, but such annual annuity shall not
12       exceed 70% 80% of the final average salary of the judge, determined as
13       provided in subsection (b).
14             (2) For purposes of this subsection, the date of membership for a
15       district magistrate judge who became a member of the system as provided
16       by K.S.A. 20-2620 and amendments thereto and who purchased service
17       as provided in subsection (c) of K.S.A. 20-2620 and amendments thereto
18       shall be the day such district magistrate judge became a district magistrate
19       judge and if such district magistrate judge's membership date as deter-
20       mined in this subsection is earlier than July 1, 1987, such district magis-
21       trate judge shall be entitled to the 5% of final average salary calculation
22       for up to 10 years of service as provided in this subsection. Any additional
23       cost associated with the provisions of this subsection shall be paid by such
24       district magistrate judge by means of a single lump-sum payment or equal
25       annual payments for not to exceed five years. The lump-sum or annual
26       payments shall be determined by the system's actuary by using the mem-
27       ber's final average salary at the time of application, actuarial assumptions
28       and tables currently in use by the system and the member's attained age.
29       No participating employer shall pay all or any part of any cost associated
30       with the provisions of this subsection.
31             (b) For any judge who retires under K.S.A. 20-2608 or 20-2609, and
32       amendments thereto, on or after July 1, 1975, the annuity shall be based
33       on the final average salary of such judge as provided in this subsection.
34       The final average salary of a judge who becomes permanently physically
35       or mentally disabled and who is retired under K.S.A. 20-2608 or 20-2609,
36       and amendments thereto, shall be determined as if such judge had retired
37       on the date such judge became permanently physically or mentally disa-
38       bled. The final average salary of a former judge whose service is termi-
39       nated without retiring and who later retires under K.S.A. 20-2608, and
40       amendments thereto, shall be determined as if such former judge had
41       retired at the time such service was terminated.
42             In the case of judges who retire on or after July 1, 1993, the final
43       average salary shall mean the average highest annual salary paid to the


7

  1       judge for any three years of the last 10 years of service as a judge im-
  2       mediately preceding retirement or termination of employment, or if serv-
  3       ice as a judge is less than three years, then the final average salary shall
  4       be the average annual salary paid to the judge during the full period of
  5       service as a judge, or if service as a judge is less than one year, then the
  6       final average salary shall be computed by multiplying the amount of
  7       monthly salary such judge was receiving at the time of retirement by 12.
  8             (c) The provisions of law in effect on the retirement date of a judge
  9       under the retirement system for judges shall govern the retirement ben-
10       efit payable to the judge, any joint annuitant and any beneficiary.
11             (d) A judge who retires under K.S.A. 20-2608, and amendments
12       thereto, and who, after such retirement, again is appointed or elected as
13       a judge, shall have the judge's retirement annuity suspended as provided
14       in this subsection. Such judge shall become an active member and make
15       employee contributions to the system and receive service credit for any
16       service after the date of commencement of service in such position. Upon
17       again retiring, any credited service such member subsequently accrues
18       shall be added to all previous service and the retirement annuity shall be
19       recalculated in accordance with the provisions of this section.
20             Sec.  5. K.S.A. 1999 Supp. 74-4902 is hereby amended to read as
21       follows: 74-4902. As used in articles 49 and 49a of chapter 74 of the Kansas
22       Statutes Annotated and amendments thereto, unless otherwise provided
23       or the context otherwise requires:
24             (1) "Accumulated contributions" means the sum of all contributions
25       by a member to the system which are credited to the member's account,
26       with interest allowed thereon;
27             (2) "acts" means the provisions of articles 49 and 49a of the Kansas
28       Statutes Annotated and amendments thereto;
29             (3) "actuarial equivalent" means an annuity or benefit of equal value
30       to the accumulated contributions, annuity or benefit, when computed
31       upon the basis of the actuarial tables in use by the system. Whenever the
32       amount of any benefit is to be determined on the basis of actuarial as-
33       sumptions, the assumptions shall be specified in a way that precludes
34       employer discretion;
35             (4) "actuarial tables" means the actuarial tables approved and in use
36       by the board at any given time;
37             (5) "actuary" means the actuary or firm of actuaries employed or
38       retained by the board at any given time;
39             (6) "agent" means the individual designated by each participating em-
40       ployer through whom system transactions and communication are
41       directed;
42             (7) "beneficiary" means any natural person or persons or estate
43       named by a member to receive any benefits as provided for by this act.


8

  1       Designations of beneficiaries by a member who is a member of more
  2       than one retirement system made on or after July 1, 1987, shall be the
  3       basis of any benefits payable under all systems unless otherwise provided
  4       by law. Except as otherwise provided by subsection (33) of this section,
  5       if there is no named beneficiary living at time of member's death, any
  6       benefits provided for by this act shall be paid to: (A) The member's sur-
  7       viving spouse; (B) the member's dependent child or children; (C) the
  8       member's dependent parent or parents; (D) the member's nondependent
  9       child or children; (E) the member's nondependent parent or parents; (F)
10       the estate of the deceased member; in the order of preference as specified
11       in this subsection. Effective January 1, 2001, a member may designate a
12       beneficiary or beneficiaries for any death benefits payable under the pro-
13       visions of K.S.A. 74-4927 through 74-4927h, and amendments thereto,
14       which are different from any beneficiary or beneficiaries the member may
15       have designated for any other benefits.
16             (8) "board of trustees," "board" or "trustees" means the managing
17       body of the system which is known as the Kansas public employees re-
18       tirement system board of trustees;
19             (9) "compensation" means, except as otherwise provided, all salary,
20       wages and other remuneration payable to a member for personal services
21       performed for a participating employer, including maintenance or any
22       allowance in lieu thereof provided a member as part of compensation,
23       but not including reimbursement for travel or moving expenses or on and
24       after July 1, 1994, payment pursuant to an early retirement incentive
25       program made prior to the retirement of the member. Beginning with
26       the employer's fiscal year which begins in calendar year 1991 or for em-
27       ployers other than the state of Kansas, beginning with the fiscal year
28       which begins in calendar year 1992, when the compensation of a member
29       who remains in substantially the same position during any two consecutive
30       years of participating service used in calculating final average salary is
31       increased by an amount which exceeds 15%, then the amount of such
32       increase which exceeds 15% shall not be included in compensation, ex-
33       cept that (A) any amount of compensation for accumulated sick leave or
34       vacation or annual leave paid to the member, (B) any increase in com-
35       pensation for any member due to a reclassification or reallocation of such
36       member's position or a reassignment of such member's job classification
37       to a higher range or level and (C) any increase in compensation as pro-
38       vided in any contract entered into prior to January 1, 1991, and still in
39       force on the effective date of this act, pursuant to an early retirement
40       incentive program as provided in K.S.A. 72-5395 et seq. and amendments
41       thereto, shall be included in the amount of compensation of such member
42       used in determining such member's final average salary and shall not be
43       subject to the 15% limitation provided in this subsection. Any contribu-


9

  1       tions by such member on the amount of such increase which exceeds
  2       15% which is not included in compensation shall be returned to the mem-
  3       ber. Unless otherwise provided by law, beginning with the employer's
  4       fiscal year coinciding with or following July 1, 1985, compensation shall
  5       include any amounts for tax sheltered annuities or deferred compensation
  6       plans. Beginning with the employer's fiscal year which begins in calendar
  7       year 1991, compensation shall include amounts under sections 403b, 457
  8       and 125 of the federal internal revenue code of 1986 and, as the board
  9       deems appropriate, any other section of the federal internal revenue code
10       of 1986 which defers or excludes amounts from inclusion in income. For
11       purposes of applying limits under the federal internal revenue code "com-
12       pensation" shall have the meaning as provided in K.S.A. 1999 Supp. 74-
13       49,123 and amendments thereto;
14             (10) "credited service" means the sum of participating service and
15       prior service and in no event shall credited service include any service
16       which is credited under another retirement plan authorized under any
17       law of this state;
18             (11) "dependent" means a parent or child of a member who is de-
19       pendent upon the member for at least 1/2 of such parent or child's support;
20             (12) "effective date" means the date upon which the system becomes
21       effective by operation of law;
22             (13) "eligible employer" means the state of Kansas, and any county,
23       city, township, special district or any instrumentality of any one or several
24       of the aforementioned or any noncommercial public television or radio
25       station located in this state which receives state funds allocated by the
26       Kansas public broadcasting commission whose employees are covered by
27       social security. If a class or several classes of employees of any above
28       defined employer are not covered by social security, such employer shall
29       be deemed an eligible employer only with respect to such class or those
30       classes of employees who are covered by social security;
31             (14) "employee" means any appointed or elective officer or employee
32       of a participating employer whose employment is not seasonal or tem-
33       porary and whose employment requires at least 1,000 hours of work per
34       year, but not including: (A) Any employee who is a contributing member
35       of the United States civil service retirement system; (B) any employee
36       who is a contributing member of the federal employees retirement sys-
37       tem; (C) any employee who is a leased employee of a participating em-
38       ployer. "Leased employee" means the same as provided in section 414 of
39       the federal internal revenue code; and (D) any employee or class of em-
40       ployees specifically exempted by law. After June 30, 1975, no person who
41       is otherwise eligible for membership in the Kansas public employees re-
42       tirement system shall be barred from such membership by reason of
43       coverage by, eligibility for or future eligibility for a retirement annuity


10

  1       under the provisions of K.S.A. 74-4925 and amendments thereto, except
  2       that no person shall receive service credit under the Kansas public em-
  3       ployees retirement system for any period of service for which benefits
  4       accrue or are granted under a retirement annuity plan under the provi-
  5       sions of K.S.A. 74-4925 and amendments thereto. After June 30, 1982,
  6       no person who is otherwise eligible for membership in the Kansas public
  7       employees retirement system shall be barred from such membership by
  8       reason of coverage by, eligibility for or future eligibility for any benefit
  9       under another retirement plan authorized under any law of this state,
10       except that no such person shall receive service credit under the Kansas
11       public employees retirement system for any period of service for which
12       any benefit accrues or is granted under any such retirement plan. Em-
13       ployee shall include persons who are in training at or employed by, or
14       both, a sheltered workshop for the blind operated by the secretary of
15       social and rehabilitation services. The entry date for such persons shall
16       be the beginning of the first pay period of the fiscal year commencing in
17       calendar year 1986. Such persons shall be granted prior service credit in
18       accordance with K.S.A. 74-4913 and amendments thereto. However, such
19       persons classified as home industry employees shall not be covered by
20       the retirement system. Employees shall include any member of a board
21       of county commissioners of any county and any council member or com-
22       missioner of a city whose compensation is equal to or exceeds $5,000 per
23       year;
24             (15) "entry date" means the date as of which an eligible employer
25       joins the system. The first entry date pursuant to this act is January 1,
26       1962;
27             (16) "executive secretary" means the managing officer of the system
28       employed by the board under this act;
29             (17) "final average salary" means in the case of a member who retires
30       prior to January 1, 1977, and in the case of a member who retires after
31       January 1, 1977, and who has less than five years of participating service
32       after January 1, 1967, the average highest annual compensation paid to
33       such member for any five years of the last 10 years of participating service
34       immediately preceding retirement or termination of employment, or in
35       the case of a member who retires on or after January 1, 1977, and who
36       has five or more years of participating service after January 1, 1967, the
37       average highest annual compensation paid to such member on or after
38       January 1, 1967, for any five years of participating service preceding re-
39       tirement or termination of employment, or, in any case, if participating
40       service is less than five years, then the average annual compensation paid
41       to the member during the full period of participating service, or, in any
42       case, if the member has less than one calendar year of participating service
43       such member's final average salary shall be computed by multiplying such


11

  1       member's highest monthly salary received in that year by 12; in the case
  2       of a member who became a member under subsection (3) of K.S.A. 74-
  3       4925 and amendments thereto, or who became a member with a partic-
  4       ipating employer as defined in subsection (3) of K.S.A. 74-4931 and
  5       amendments thereto and who elects to have compensation paid in other
  6       than 12 equal installments, such compensation shall be annualized as if
  7       the member had elected to receive 12 equal installments for any such
  8       periods preceding retirement; in the case of a member who retires after
  9       July 1, 1987, the average highest annual compensation paid to such mem-
10       ber for any four years of participating service preceding retirement or
11       termination of employment; in the case of a member who retires on or
12       after July 1, 1993, who was first hired as an employee, as defined in
13       subsection (14) of K.S.A. 74-4902 and amendments thereto, prior to July
14       1, 1993, the average highest annual compensation, as defined in subsec-
15       tion (9), paid to such member for any four years of participating service
16       preceding retirement or termination of employment or the average high-
17       est annual salary, as defined in subsection (34), paid to such member for
18       any three years of participating service preceding retirement or termi-
19       nation of employment, whichever is greater; and in the case of a member
20       who retires on or after July 1, 1993, and who is first hired as an employee,
21       as defined in subsection (14) of K.S.A. 74-4902 and amendments thereto,
22       on or after July 1, 1993, the average highest annual salary, as defined in
23       subsection (34), paid to such member for any three years of participating
24       service preceding retirement or termination of employment. Final aver-
25       age salary shall not include any purchase of participating service credit
26       by a member as provided in subsection (2) of K.S.A. 74-4919h and
27       amendments thereto which is completed within five years of retirement.
28       For any application to purchase or repurchase service credit for a certain
29       period of service as provided by law received by the system after May 17,
30       1994, for any member who will have contributions deducted from such
31       member's compensation at a percentage rate equal to two or three times
32       the employee's rate of contribution or will begin paying to the system a
33       lump-sum amount for such member's purchase or repurchase and such
34       deductions or lump-sum payment commences after the commencement
35       of the first payroll period in the third quarter, "final average salary" shall
36       not include any amount of compensation or salary which is based on such
37       member's purchase or repurchase. Any application to purchase or repur-
38       chase multiple periods of service shall be treated as multiple applications.
39       For purposes of this subsection, the date that such member is first hired
40       as an employee for members who are employees of employers that
41       elected to participate in the system on or after January 1, 1994, shall be
42       the date that such employee's employer elected to participate in the sys-
43       tem. In the case of any former member who was eligible for assistance


12

  1       pursuant to K.S.A. 74-4925 and amendments thereto prior to July 1, 1998,
  2       for the purpose of calculating final average salary of such member, such
  3       member's final average salary shall be based on such member's salary
  4       while a member of the system or while eligible for assistance pursuant to
  5       K.S.A. 74-4925 and amendments thereto, whichever is greater;
  6             (18) "fiscal year" means, for the Kansas public employees retirement
  7       system, the period commencing July 1 of any year and ending June 30 of
  8       the next;
  9             (19) "Kansas public employees retirement fund" means the fund cre-
10       ated by this act for payment of expenses and benefits under the system
11       and referred to as the fund;
12             (20) "leave of absence" means a period of absence from employment
13       without pay, authorized and approved by the employer, and which after
14       the effective date does not exceed one year;
15             (21) "member" means an eligible employee who is in the system and
16       is making the required employee contributions; any former employee who
17       has made the required contributions to the system and has not received
18       a refund if such member is within five years of termination of employment
19       with a participating employer; or any former employee who has made the
20       required contributions to the system, has not yet received a refund and
21       has been granted a vested benefit;
22             (22) "military service" means service in the uniformed forces of the
23       United States, for which retirement benefit credit must be given under
24       the provisions of USERRA or service in the armed forces of the United
25       States or in the commissioned corps of the United States public health
26       service, which service is immediately preceded by a period of employ-
27       ment as an employee or by the entering into of an employment contract
28       with a participating employer and is followed by return to employment
29       as an employee with the same or another participating employer within
30       12 months immediately following discharge from such military service,
31       except that if the board determines that such return within 12 months
32       was made impossible by reason of a service-connected disability, the pe-
33       riod within which the employee must return to employment with a par-
34       ticipating employer shall be extended not more than two years from the
35       date of discharge or separation from military service;
36             (23) "normal retirement date" means the date on or after which a
37       member may retire with full retirement benefits pursuant to K.S.A. 74-
38       4914 and amendments thereto;
39             (24) "participating employer" means an eligible employer who has
40       agreed to make contributions to the system on behalf of its employees;
41             (25) "participating service" means the period of employment after
42       the entry date for which credit is granted a member;
43             (26) "prior service" means the period of employment of a member


13

  1       prior to the entry date for which credit is granted a member under this
  2       act;
  3             (27) "prior service annual salary" means the highest annual salary,
  4       not including any amounts received as payment for overtime or as re-
  5       imbursement for travel or moving expense, received for personal services
  6       by the member from the current employer in any one of the three cal-
  7       endar years immediately preceding January 1, 1962, or the entry date of
  8       the employer, whichever is later, except that if a member entered the
  9       employment of the state during the calendar year 1961, the prior service
10       annual salary shall be computed by multiplying such member's highest
11       monthly salary received in that year by 12;
12             (28) "retirant" means a member who has retired under this system;
13             (29) "retirement benefit" means a monthly income or the actuarial
14       equivalent thereof paid in such manner as specified by the member pur-
15       suant to this act or as otherwise allowed to be paid at the discretion of
16       the board, with benefits accruing from the first day of the month coin-
17       ciding with or following retirement and ending on the last day of the
18       month in which death occurs. Upon proper identification a surviving
19       spouse may negotiate the warrant issued in the name of the retirant;
20             (30) "retirement system" or "system" means the Kansas public em-
21       ployees retirement system as established by this act and as it may be
22       amended;
23             (31) "social security" means the old age, survivors and disability in-
24       surance section of the federal social security act;
25             (32) "total disability" means a physical or mental disability which pre-
26       vents the member from engaging, for remuneration or profit, in any oc-
27       cupation for which the member is reasonably suited by education, training
28       or experience;
29             (33) "trust" means an express trust, created by a trust instrument,
30       including a will, designated by a member to receive payment of the in-
31       sured death benefit under K.S.A. 74-4927 and amendments thereto and
32       payment of the member's accumulated contributions under subsection
33       (1) of K.S.A. 74-4916 and amendments thereto. A designation of a trust
34       shall be filed with the board. If there is a designated trust at the time of
35       the member's death, the insured death benefit for the member under
36       K.S.A. 74-4927 and amendments thereto and the member's accumulated
37       contributions under subsection (1) of K.S.A. 74-4916 and amendments
38       thereto shall be paid to the trust in lieu of the member's beneficiary. If
39       no will is admitted to probate within six months after the death of the
40       member or no trustee qualifies within such six months or if the designated
41       trust fails, for any reason whatsoever, the insured death benefit under
42       K.S.A. 74-4927 and amendments thereto and the member's accumulated
43       contributions under subsection (1) of K.S.A. 74-4916 and amendments


14

  1       thereto shall be paid in accordance with the provisions of subsection (7)
  2       of this section as in other cases where there is no named beneficiary living
  3       at the time of the member's death and any payments so made shall be a
  4       full discharge and release to the system from any further claims;
  5             (34) "salary" means all salary and wages payable to a member for
  6       personal services performed for a participating employer, including main-
  7       tenance or any allowance in lieu thereof provided a member as part of
  8       salary. Salary shall not include reimbursement for travel or moving ex-
  9       penses, payment for accumulated sick leave or vacation or annual leave,
10       severance pay or any other payments to the member determined by the
11       board to not be payments for personal services performed for a partici-
12       pating employer constituting salary or on and after July 1, 1994, payment
13       pursuant to an early retirement incentive program made prior to the
14       retirement of the member. When the salary of a member who remains
15       in substantially the same position during any two consecutive years of
16       participating service used in calculating final average salary is increased
17       by an amount which exceeds 15%, then the amount of such increase
18       which exceeds 15% shall not be included in salary. Any contributions by
19       such member on the amount of such increase which exceeds 15% which
20       is not included in compensation shall be returned to the member. Unless
21       otherwise provided by law, salary shall include any amounts for tax shel-
22       tered annuities or deferred compensation plans. Salary shall include
23       amounts under sections 403b, 457 and 125 of the federal internal revenue
24       code of 1986 and, as the board deems appropriate, any other section of
25       the federal internal revenue code of 1986 which defers or excludes
26       amounts from inclusion in income. For purposes of applying limits under
27       the federal internal revenue code "salary" shall have the meaning as pro-
28       vided in K.S.A. 1999 Supp. 74-49,123 and amendments thereto. In any
29       case, if participating service is less than three years, then the average
30       annual salary paid to the member during the full period of participating
31       service, or, in any case, if the member has less than one calendar year of
32       participating service such member's final average salary shall be com-
33       puted by multiplying such member's highest monthly salary received in
34       that year by 12;
35             (35) "federal internal revenue code" means the federal internal rev-
36       enue code of 1954 or 1986, as in effect on July 1, 1998, and as applicable
37       to a governmental plan; and
38             (36) "USERRA" means the federal uniformed services employment
39       and reemployment rights act of 1994 as in effect on July 1, 1998. 
40       Sec.  6. K.S.A. 1999 Supp. 20-2601, 20-2603, 20-2609, 20-2610 and
41       74-4902 are hereby repealed.
42        Sec.  7. This act shall take effect and be in force from and after its
43       publication in the statute book.