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Session of 2000
          HOUSE BILL No. 3045           By Committee on Appropriations           3-22          

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  9             AN  ACT concerning retirement and pensions; relating to the Kansas
10             public employees retirement system; benefits; correction of errors by
11             the system; vesting; taxation of death benefits; purchase of service
12             credit; amending K.S.A. 13-14a11, 14-10a11 and 74-4927k and K.S.A.
13             1999 Supp. 13-14a07, 14-10a07, 20-2610, 20-2625, 74-4919p, 74-
14             4919q, 74-4921, 74-4924, 74-4927, 74-4958, 74-4958a, 74-4959, 74-
15             4960, 74-4960a and 74-4989 and repealing the existing sections; also
16             repealing K.S.A. 1999 Supp. 74-4921a.
17      
18       Be it enacted by the Legislature of the State of Kansas:
19             Section  1. K.S.A. 1999 Supp. 13-14a07 is hereby amended to read
20       as follows: 13-14a07. (a) If any officer or member of a police or fire
21       department, while in the performance of such officer's or member's du-
22       ties, is killed or dies as a result of an injury received, or dies of any disease
23       contracted by reason of such officer's or member's occupation as a po-
24       liceman or fireman, or dies after having retired and leaves a spouse, such
25       spouse, shall receive a monthly pension in an amount equal to 50% of the
26       monthly salary of such deceased officer or member, if such spouse was
27       lawfully married to such policeman or fireman at the time of such po-
28       liceman's or fireman's retirement. Commencing on the effective date of
29       this act, any surviving spouse, who was receiving benefits pursuant to this
30       section and who had such benefits terminated by reason of such spouse's
31       remarriage, shall be entitled to once again receive benefits pursuant to
32       this section, except that such surviving spouse shall not be entitled to
33       recover any benefits not received after the termination of benefits by
34       reason of such surviving spouse's remarriage but before the effective date
35       of this act. In the event there is no surviving spouse, then any child or
36       children of the deceased shall receive, in equal shares a monthly amount
37       equal to 50% of the monthly salary received at the time of retirement,
38       such sums to be paid until such child or children attain the age of 18
39       years or until such child or children attain the age of 23 years, if such
40       child or children are full-time students as provided in K.S.A. 74-49,117
41       and amendments thereto. Commencing on the effective date of this act,
42       any child who was receiving benefits pursuant to this section and who
43       had such benefits terminated by reason of such child's marriage, shall be

2
  1       entitled to once again receive benefits pursuant to this section subject to
  2       the limitations contained in this section, except that such child shall not
  3       be entitled to recover any benefits not received after the termination of
  4       benefits by reason of such child's marriage but before the effective date
  5       of this act.
  6             (b) Pursuant to the provisions of section 20, and amendments thereto,
  7       if any officer or member of such fire or police department, after having
  8       become eligible for retirement as provided in K.S.A. 13-14a08 and
  9       amendments thereto, is killed while not in the performance of such of-
10       ficer's or member's official duties, or dies, an amount equal to 50% of
11       such officer's or member's monthly salary shall be paid to such persons
12       for the periods of time provided in subsection (a) and shall be subject to
13       all the limitations provided in subsection (a).
14             (c) Payments to the surviving spouse, child or children under the
15       provisions of subsection (a) or (b) shall begin no later than December 31
16       of the calendar year immediately following the calendar year in which the
17       member died.
18             Sec.  2. K.S.A. 13-14a11 is hereby amended to read as follows: 13-
19       14a11. Pursuant to the provisions of section 20, and amendments thereto,
20       whenever an active or retired fireman or policeman shall die, the board
21       of trustees shall appropriate from the pension fund a sum of one hundred
22       dollars $100 to be paid for funeral expenses for such fireman or
23       policeman.
24             Sec.  3. K.S.A. 1999 Supp. 14-10a07 is hereby amended to read as
25       follows: 14-10a07. (a) If any officer or member of a police or fire de-
26       partment, while in the performance of such officer's or member's duties,
27       is killed or dies as a result of an injury received, or dies of any disease
28       contracted by reason of such officer's or member's occupation as a po-
29       liceman or fireman, or dies after having retired and leaves a spouse, such
30       spouse, shall receive a monthly pension in an amount equal to 50% of the
31       monthly salary of such deceased officer or member, if such spouse was
32       lawfully married to such policeman or fireman at the time of such po-
33       liceman's or fireman's retirement. Commencing on the effective date of
34       this act, any surviving spouse, who was receiving benefits pursuant to this
35       section and who had such benefits terminated by reason of such spouse's
36       remarriage, shall be entitled to once again receive benefits pursuant to
37       this section, except that such surviving spouse shall not be entitled to
38       recover any benefits not received after the termination of benefits by
39       reason of such surviving spouse's remarriage but before the effective date
40       of this act. In the event there is no surviving spouse, then any child or
41       children of the deceased, shall receive, in equal shares a monthly amount
42       equal to 50% of the monthly salary received at the time of death, such
43       sums to be paid until such child or children attain the age of 18 years or

3
  1       until such child or children attain the age of 23 years, if such child or
  2       children are full-time students as provided in K.S.A. 74-49,117 and
  3       amendments thereto. Commencing on the effective date of this act, any
  4       child who was receiving benefits pursuant to this section and who had
  5       such benefits terminated by reason of such child's marriage, shall be en-
  6       titled to once again receive benefits pursuant to this section subject to
  7       the limitations contained in this section, except that such child shall not
  8       be entitled to recover any benefits not received after the termination of
  9       benefits by reason of such child's marriage but before the effective date
10       of this act.
11             (b) Pursuant to the provisions of section 20, and amendments thereto,
12       if any officer or member of such fire or police department, after having
13       become eligible for retirement as provided in K.S.A. 14-10a08 and
14       amendments thereto, is killed while not in the performance of such of-
15       ficer's or member's official duties, or dies, an amount equal to 50% of
16       such officer's or member's monthly salary shall be paid to such persons
17       for the periods of time provided in subsection (a) and shall be subject to
18       all the limitations provided in subsection (a).
19             (c) Payments to the surviving spouse, child or children under the
20       provisions of subsection (a) or (b) must begin no later than December 31
21       of the calendar year immediately following the calendar year in which the
22       member died.
23             Sec.  4. K.S.A. 14-10a11 is hereby amended to read as follows: 14-
24       10a11. Subject to the provisions of section 20, and amendments thereto,
25       whenever an active or retired fireman or policeman shall die, the board
26       of trustees shall appropriate from the pension fund a sum of one hundred
27       dollars $100 to be paid for funeral expenses for such fireman or
28       policeman.
29             Sec.  5. K.S.A. 1999 Supp. 20-2610 is hereby amended to read as
30       follows: 20-2610. (a) (1) A judge who retires under K.S.A. 20-2608, and
31       amendments thereto, shall be entitled to receive an annual annuity pay-
32       able in monthly amounts subject to subsection (b), each such annual an-
33       nuity of which shall be in an amount equal to the total of 5% of the final
34       average salary of the judge, determined as provided in subsection (b),
35       multiplied by the number of the judge's years of service up to 10 years,
36       and 3.5% of the final average salary of the judge, determined as provided
37       in subsection (b), multiplied by the number of the judge's years of service
38       in excess of 10 years, but such annual annuity shall not exceed 70% of
39       the final average salary of such judge, determined as provided in subsec-
40       tion (b). A judge who retires under K.S.A. 20-2608 and amendments
41       thereto, and who became a member of the system after June 30, 1987,
42       shall be entitled to receive an annual annuity payable in monthly amounts
43       subject to subsection (b), each such annual amount of which shall be in

4
  1       an amount equal to the total of 3.5% of the final average salary of the
  2       judge, determined as provided in subsection (b), multiplied by the num-
  3       ber of the judge's years of service, but such annual annuity shall not
  4       exceed 70% of the final average salary of the judge, determined as pro-
  5       vided in subsection (b).
  6             (2) For purposes of this subsection, the date of membership for a
  7       district magistrate judge who became a member of the system as provided
  8       by K.S.A. 20-2620 and amendments thereto and who purchased service
  9       as provided in subsection (c) of K.S.A. 20-2620 and K.S.A. 74-49,123, and
10       amendments thereto shall be the day such district magistrate judge be-
11       came a district magistrate judge and if such district magistrate judge's
12       membership date as determined in this subsection is earlier than July 1,
13       1987, such district magistrate judge shall be entitled to the 5% of final
14       average salary calculation for up to 10 years of service as provided in this
15       subsection. Any additional cost associated with the provisions of this sub-
16       section shall be paid by such district magistrate judge by means of a single
17       lump-sum payment or equal annual payments for not to exceed five years.
18       The lump-sum or annual payments shall be determined by the system's
19       actuary by using the member's final average salary at the time of appli-
20       cation, actuarial assumptions and tables currently in use by the system
21       and the member's attained age. No participating employer shall pay all
22       or any part of any cost associated with the provisions of this subsection.
23             (b) For any judge who retires under K.S.A. 20-2608 or 20-2609, and
24       amendments thereto, on or after July 1, 1975, the annuity shall be based
25       on the final average salary of such judge as provided in this subsection.
26       The final average salary of a judge who becomes permanently physically
27       or mentally disabled and who is retired under K.S.A. 20-2608 or 20-2609,
28       and amendments thereto, shall be determined as if such judge had retired
29       on the date such judge became permanently physically or mentally disa-
30       bled. The final average salary of a former judge whose service is termi-
31       nated without retiring and who later retires under K.S.A. 20-2608, and
32       amendments thereto, shall be determined as if such former judge had
33       retired at the time such service was terminated.
34             In the case of judges who retire on or after July 1, 1993, the final
35       average salary shall mean the average highest annual salary paid to the
36       judge for any three years of the last 10 years of service as a judge im-
37       mediately preceding retirement or termination of employment, or if serv-
38       ice as a judge is less than three years, then the final average salary shall
39       be the average annual salary paid to the judge during the full period of
40       service as a judge, or if service as a judge is less than one year, then the
41       final average salary shall be computed by multiplying the amount of
42       monthly salary such judge was receiving at the time of retirement by 12.
43             (c) The provisions of law in effect on the retirement date of a judge

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  1       under the retirement system for judges shall govern the retirement ben-
  2       efit payable to the judge, any joint annuitant and any beneficiary.
  3             (d) A judge who retires under K.S.A. 20-2608, and amendments
  4       thereto, and who, after such retirement, again is appointed or elected as
  5       a judge, shall have the judge's retirement annuity suspended as provided
  6       in this subsection. Such judge shall become an active member and make
  7       employee contributions to the system and receive service credit for any
  8       service after the date of commencement of service in such position. Upon
  9       again retiring, any credited service such member subsequently accrues
10       shall be added to all previous service and the retirement annuity shall be
11       recalculated in accordance with the provisions of this section.
12             Sec.  6. K.S.A. 1999 Supp. 20-2625 is hereby amended to read as
13       follows: 20-2625. (1) Any member of the retirement system for judges
14       may purchase, subject to the provisions of K.S.A. 1999 Supp. 74-49,123,
15       and amendments thereto, participating credit for periods of active service
16       in the armed forces of the United States or in the commissioned corps
17       of the United States public health service and for periods of service re-
18       quired to fulfill the requirements of section 651 of title 10, United States
19       code, which does not exceed six years. Such judge shall be entitled to
20       purchase one quarter of participating service credit for each year of serv-
21       ice required to fulfill the requirements of section 651 of title 10, United
22       States code. Such purchase shall be effected by the judge submitting
23       proof of such service acceptable to the board and electing in writing to
24       have employee contributions as provided in K.S.A. 20-2603 and amend-
25       ments thereto deducted from such judge's compensation at an additional
26       rate of contribution, in addition to the employee's rate of contribution as
27       provided in K.S.A. 20-2603 and amendments thereto, based upon the
28       judge's attained age at the time of purchase and using actuarial assump-
29       tions and tables in use by the retirement system at such time of purchase
30       for such periods of service. Such additional rate of contribution shall com-
31       mence at the beginning of the quarter following such election and shall
32       remain in effect until all of the full quarters of such service have been
33       purchased.
34             (2) Any member of the retirement system who has not retired may
35       purchase, subject to the provisions of K.S.A. 1999 Supp. 74-49,123, and
36       amendments thereto, participating service credit for military service as
37       described in this section by electing to effect such purchase by means of
38       a single lump-sum payment in lieu of employee contributions as provided
39       in this section. The lump-sum payment shall be an amount determined
40       by the actuary using the judge's then current annual rate of compensation,
41       the actuarial assumptions and tables currently in use by the retirement
42       system and the judge's attained age. No participating employer shall pay
43       all or any part of the cost of any additional participating service credit to

6
  1       be purchased by means of a lump-sum payment by a judge under this
  2       section.
  3             Sec.  7. K.S.A. 1999 Supp. 74-4919p is hereby amended to read as
  4       follows: 74-4919p. Any member may purchase, subject to the provisions
  5       of K.S.A. 74-49,123, and amendments thereto, service for periods of serv-
  6       ice in the United States peace corps which commenced on or after Jan-
  7       uary 1, 1962. At the election of the member, the benefit for each such
  8       period of service shall be equal to either 1% or 1.75% of the final average
  9       salary of any such member. For any member who elected to purchase
10       service credit as provided in this section prior to the effective date of this
11       act at the 1% rate, such member may elect to purchase such service credit
12       at an additional amount of .75% of final average salary of such member
13       in a lump-sum amount as otherwise provided in this subsection. Such
14       member may purchase such service by making application therefor prior
15       to date of retirement at an additional rate of contribution in addition to
16       the employee's rate of contribution as provided in K.S.A. 74-4919 and
17       amendments thereto, based upon the member's attained age at the time
18       of purchase and using actuarial assumptions and tables in use by the
19       retirement system at the time of such purchase. Such additional rate of
20       contribution shall commence at the beginning of the quarter following
21       such election and shall remain in effect until all quarters of such service
22       have been purchased. Any such member may purchase, subject to the
23       provisions of the provisions of K.S.A. 74-49,123, and amendments thereto,
24       service as described in this section by electing to effect such purchase by
25       means of a single lump-sum payment in lieu of employee contributions
26       as provided in this section in an amount equal to the then present value
27       of the benefits being purchased as determined by the actuary using the
28       member's attained age, annual compensation at the time of purchase and
29       the actuarial assumptions and tables then in use by this system. The lump-
30       sum payment shall be made immediately upon being notified of the
31       amount due. No participating employer shall pay the cost, or any part
32       thereof, of any service authorized to be purchased by a member under
33       this section. The provisions of this section shall be effective on and after
34       July 1, 1996.
35             Sec.  8. K.S.A. 1999 Supp. 74-4919q is hereby amended to read as
36       follows: 74-4919q. Any employee of a participating employer who is a
37       member of the Kansas public employees retirement system, who was
38       previously employed as an employee of the memorial union corporation
39       which is affiliated with Emporia state university, may elect to purchase,
40       subject to the provisions of K.S.A. 74-49,123, and amendments thereto,
41       service for such employment. At the election of the member, the benefit
42       for each such year of employment shall be equal to either 1% or 1.75%
43       of the final average salary of any such member. For any member who

7
  1       elected to purchase service credit as provided in this section prior to the
  2       effective date of this act at the 1% rate, such member may elect to pur-
  3       chase such service credit at an additional amount of .75% of final average
  4       salary of such member in a lump-sum amount as otherwise provided in
  5       this subsection. Such member may purchase, subject to the provisions of
  6       K.S.A. 74-49,123, and amendments thereto, such service by making ap-
  7       plication therefor prior to date of retirement at an additional rate of con-
  8       tribution in addition to the employee's rate of contribution as provided
  9       in K.S.A. 74-4919 and amendments thereto, based upon the member's
10       attained age at the time of purchase and using actuarial assumptions and
11       tables in use by the retirement system at the time of such purchase. Such
12       additional rate of contribution shall commence at the beginning of the
13       quarter following such election and shall remain in effect until all quarters
14       of such service have been purchased. Any such member may purchase,
15       subject to the provisions of K.S.A. 74-49,123, and amendments thereto,
16       service as described in this section by electing to effect such purchase by
17       means of a single lump-sum payment in lieu of employee contributions
18       as provided in this section in an amount equal to the then present value
19       of the benefits being purchased as determined by the actuary using the
20       member's attained age, annual compensation at the time of purchase and
21       the actuarial assumptions and tables then in use by this system. The lump-
22       sum payment shall be made immediately upon being notified of the
23       amount due. No participating employer shall pay the cost, or any part
24       thereof, of any service authorized to be purchased by a member under
25       this section. The provisions of this section shall be effective on and after
26       July 1, 1996.
27             Sec.  9. K.S.A. 1999 Supp. 74-4921 is hereby amended to read as
28       follows: 74-4921. (1) There is hereby created in the state treasury the
29       Kansas public employees retirement fund. All employee and employer
30       contributions shall be deposited in the state treasury to be credited to the
31       Kansas public employees retirement fund. The fund is a trust fund and
32       shall be used solely for the exclusive purpose of providing benefits to
33       members and member beneficiaries and defraying reasonable expenses
34       of administering the fund. Investment income of the fund shall be added
35       or credited to the fund as provided by law. All benefits payable under the
36       system, refund of contributions and overpayments, purchases or invest-
37       ments under the law and expenses in connection with the system unless
38       otherwise provided by law shall be paid from the fund. The director of
39       accounts and reports is authorized to draw warrants on the state treasurer
40       and against such fund upon the filing in the director's office of proper
41       vouchers executed by the chairperson or the executive secretary of the
42       board. As an alternative, payments from the fund may be made by credits
43       to the accounts of recipients of payments in banks, savings and loan as-

8
  1       sociations and credit unions. A payment shall be so made only upon the
  2       written authorization and direction of the recipient of payment and upon
  3       receipt of such authorization such payments shall be made in accordance
  4       therewith. Orders for payment of such claims may be contained on (a) a
  5       letter, memorandum, telegram, computer printout or similar writing, or
  6       (b) any form of communication, other than voice, which is registered upon
  7       magnetic tape, disc or any other medium designed to capture and contain
  8       in durable form conventional signals used for the electronic communi-
  9       cation of messages.
10             (2) The board shall have the responsibility for the management of
11       the fund and shall discharge the board's duties with respect to the fund
12       solely in the interests of the members and beneficiaries of the system for
13       the exclusive purpose of providing benefits to members and such mem-
14       ber's beneficiaries and defraying reasonable expenses of administering
15       the fund and shall invest and reinvest moneys in the fund and acquire,
16       retain, manage, including the exercise of any voting rights and disposal of
17       investments of the fund within the limitations and according to the pow-
18       ers, duties and purposes as prescribed by this section.
19             (3) Moneys in the fund shall be invested and reinvested to achieve
20       the investment objective which is preservation of the fund to provide
21       benefits to members and member beneficiaries, as provided by law and
22       accordingly providing that the moneys are as productive as possible, sub-
23       ject to the standards set forth in this act. No moneys in the fund shall be
24       invested or reinvested if the sole or primary investment objective is for
25       economic development or social purposes or objectives.
26             (4) In investing and reinvesting moneys in the fund and in acquiring,
27       retaining, managing and disposing of investments of the fund, the board
28       shall exercise the judgment, care, skill, prudence and diligence under the
29       circumstances then prevailing, which persons of prudence, discretion and
30       intelligence acting in a like capacity and familiar with such matters would
31       use in the conduct of an enterprise of like character and with like aims
32       by diversifying the investments of the fund so as to minimize the risk of
33       large losses, unless under the circumstances it is clearly prudent not to
34       do so, and not in regard to speculation but in regard to the permanent
35       disposition of similar funds, considering the probable income as well as
36       the probable safety of their capital.
37             (5) Notwithstanding subsection (4): (a) Total investments in common
38       stock may be made in the amount of up to 60% of the total book value
39       of the fund;
40             (b) the board may invest or reinvest moneys of the fund in alternative
41       investments if the following conditions are satisfied:
42             (i) The total of such alternative investments does not exceed more
43       than 5% of the total investment assets of the fund. If the total of such

9
  1       alternative investments exceeds more than 5% of the total investment
  2       assets of the fund on the effective date of this act, the board shall not
  3       invest or reinvest any moneys of the fund in alternative investments until
  4       the total of such alternative investments is less the 5% of the total in-
  5       vestment assets of the fund subject to the 5% limitation contained in this
  6       subsection. Nothing in this subsection requires the board to liquidate or
  7       sell the system's holdings in any alternative investment held by the system
  8       on the effective date of this act, unless such liquidation or sale would be
  9       in the best interest of the members and beneficiaries of the system and
10       be prudent under the standards contained in this section. The 5% limi-
11       tation contained in this section shall not have been violated if the total of
12       such alternative investments exceeds 5% of the total investment assets of
13       the fund as a result of market forces acting to increase the value of such
14       alternative investments relative to the rest of the system's investments;
15       however, the board shall not invest or reinvest any moneys of the fund
16       in alternative investments until the total of such alternative investments
17       is less than 5% of the total investment assets of the fund subject to the
18       5% limitation contained in this subsection;
19             (ii) if in addition to the system, there are at least two other sophisti-
20       cated investors, as defined by section 301 of the securities and exchange
21       act of 1933;
22             (iii) the system's share in any individual alternative investment is lim-
23       ited to an investment representing not more than 20% of any such indi-
24       vidual alternative investment;
25             (iv) the system has received a favorable and appropriate recommen-
26       dation from a qualified, independent expert in investment management
27       or analysis in that particular type of alternative investment;
28             (v) the alternative investment is consistent with the system's invest-
29       ment policies and objectives as provided in subsection (6);
30             (vi) the individual alternative investment does not exceed more than
31       2.5% of the total alternative investments made under this subsection. If
32       the alternative investment is made pursuant to participation by the system
33       in a multi-investor pool, the 2.5% limitation contained in this subsection
34       is applied to the underlying individual assets of such pool and not to
35       investment in the pool itself. The total of such alternative investments
36       made pursuant to participation by the system in any one individual multi-
37       investor pool shall not exceed more than 20% of the total of alternative
38       investments made by the system pursuant to this subsection. Nothing in
39       this subsection requires the board to liquidate or sell the system's holdings
40       in any alternative investments made pursuant to participation by the sys-
41       tem in any one individual multi-investor pool held by the system on the
42       effective date of this act, unless such liquidation or sale would be in the
43       best interest of the members and beneficiaries of the system and be pru-

10
  1       dent under the standards contained in this section. The 20% limitation
  2       contained in this subsection shall not have been violated if the total of
  3       such investment in any one individual multi-investor pool exceeds 20%
  4       of the total alternative investments of the fund as a result of market forces
  5       acting to increase the value of such a multi-investor pool relative to the
  6       rest of the system's alternative investments; however, the board shall not
  7       invest or reinvest any moneys of the fund in any such individual multi-
  8       investor pool until the value of such individual multi-investor pool is less
  9       than 20% of the total alternative investments of the fund;
10             (vii) the board has received and considered the investment manager's
11       due diligence findings submitted to the board as required by subsection
12       (6)(c); and
13             (viii) prior to the time the alternative investment is made, the system
14       has in place procedures and systems to ensure that the investment is
15       properly monitored and investment performance is accurately measured.
16             For purposes of this act, ``alternative investment'' means nontraditional
17       investments outside the established nationally recognized public stock
18       exchanges and government securities market. Alternative investments
19       shall include, but not be limited to, private placements, venture capital,
20       partnerships, limited partnerships and leveraged buyout partnerships;
21             (c) except as otherwise provided, the board may invest or reinvest
22       moneys of the fund in real estate investments if the following conditions
23       are satisfied:
24             (i) If, in addition to the system, there are at least two other sophis-
25       ticated investors, as defined by section 301 of the securities and exchange
26       act of 1933;
27             (ii) the system's share in any individual real estate investment is lim-
28       ited to an investment representing not more than 20% of any such indi-
29       vidual real estate investment;
30             (iii) The system has received a favorable and appropriate recommen-
31       dation from a qualified, independent expert in investment management
32       or analysis in that particular type of real estate investment;
33             (iv) (ii) the real estate investment is consistent with the system's in-
34       vestment policies and objectives as provided in subsection (6); and
35             (v) the total of such real estate investments made pursuant to partic-
36       ipation by the system in any one individual multi-investor pool shall not
37       exceed more than 20% of the total of real estate investments made by
38       the system pursuant to this subsection. Nothing in this subsection re-
39       quires the board to liquidate or sell the system's holdings in any real estate
40       investments made pursuant to participation by the system in any one
41       individual multi-investor pool held by the system on the effective date of
42       this act, unless such liquidation or sale would be in the best interest of
43       the members and beneficiaries of the system and be prudent under the

11
  1       standards contained in this section. The 20% limitation contained in this
  2       subsection shall not have been violated if the total of such investment in
  3       any one individual multi-investor pool exceeds 20% of the total real estate
  4       investments of the fund as a result of market forces acting to increase the
  5       value of such a multi-investor pool relative to the rest of the system's real
  6       estate investments; however, the board shall not invest or reinvest any
  7       moneys of the fund in any such individual multi-investor pool until the
  8       value of such individual multi-investor pool is less than 20% of the total
  9       real estate investments of the fund;
10             (vi) (iii) the board has received and considered the investment man-
11       ager's due diligence findings submitted to the board as required by sub-
12       section (6)(c);
13             (vii) prior to the time the real estate investment is made, the system
14       has in place procedures and systems to ensure that the investment is
15       properly monitored and investment performance is accurately measured;
16       and
17             (viii) the provisions of this subsection shall not apply to any real estate
18       investment held by the system on July 1, 1992; and
19             (d) the board shall not invest or reinvest moneys of the fund in any
20       banking institution, savings and loan association or credit union which
21       positions the system as a shareholder or owner of such banking institution,
22       savings and loan association or credit union.
23             (6) Subject to the objective set forth in subsection (3) and the stan-
24       dards set forth in subsections (4) and (5) the board shall formulate policies
25       and objectives for the investment and reinvestment of moneys in the fund
26       and the acquisition, retention, management and disposition of invest-
27       ments of the fund. Such policies and objectives shall include:
28             (a) Specific asset allocation standards and objectives;
29             (b) establishment of criteria for evaluating the risk versus the poten-
30       tial return on a particular investment;
31             (c) a requirement that all investment managers submit such man-
32       ager's due diligence findings on each investment to the board or invest-
33       ment advisory committee for approval or rejection prior to making any
34       alternative investment;
35             (d) a requirement that all investment managers shall immediately re-
36       port all instances of default on investments to the board and provide the
37       board with recommendations and options, including, but not limited to,
38       curing the default or withdrawal from the investment; and
39             (e) establishment of criteria that would be used as a guideline for
40       determining when no additional add-on investments or reinvestments
41       would be made and when the investment would be liquidated.
42             The board shall review such policies and objectives, make changes con-
43       sidered necessary or desirable and readopt such policies and objectives

12
  1       on an annual basis.
  2             (7) The board may enter into contracts with one or more persons
  3       whom the board determines to be qualified, whereby the persons under-
  4       take to perform the functions specified in subsection (2) to the extent
  5       provided in the contract. Performance of functions under contract so
  6       entered into shall be paid pursuant to rates fixed by the board subject to
  7       provisions of appropriation acts and shall be based on specific contractual
  8       fee arrangements. The system shall not pay or reimburse any expenses of
  9       persons contracted with pursuant to this subsection, except that after
10       approval of the board, the system may pay approved investment related
11       expenses subject to provisions of appropriation acts. The board shall re-
12       quire that a person contracted with to obtain commercial insurance which
13       provides for errors and omissions coverage for such person in an amount
14       to be specified by the board, provided that such coverage shall be at least
15       the greater of $500,000 or 1% of the funds entrusted to such person up
16       to a maximum of $10,000,000. The board shall require a person con-
17       tracted with to give a fidelity bond in a penal sum as may be fixed by law
18       or, if not so fixed, as may be fixed by the board, with corporate surety
19       authorized to do business in this state. Such persons contracted with the
20       board pursuant to this subsection and any persons contracted with such
21       persons to perform the functions specified in subsection (2) shall be
22       deemed to be agents of the board and the system in the performance of
23       contractual obligations.
24             (8)  (a) In the acquisition or disposition of securities, the board may
25       rely on the written legal opinion of a reputable bond attorney or attorneys,
26       the written opinion of the attorney of the investment counselor or man-
27       agers, or the written opinion of the attorney general certifying the legality
28       of the securities.
29             (b) The board shall employ or retain qualified investment counsel or
30       counselors or may negotiate with a trust company to assist and advise in
31       the judicious investment of funds as herein provided.
32             (9)  (a) Except as provided in subsection (7) and this subsection, the
33       custody of money and securities of the fund shall remain in the custody
34       of the state treasurer, except that the board may arrange for the custody
35       of such money and securities as it considers advisable with one or more
36       member banks or trust companies of the federal reserve system or with
37       one or more banks in the state of Kansas, or both, to be held in safe-
38       keeping by the banks or trust companies for the collection of the principal
39       and interest or other income or of the proceeds of sale. The services
40       provided by the banks or trust companies shall be paid pursuant to rates
41       fixed by the board subject to provisions of appropriation acts.
42             (b) The state treasurer and the board shall collect the principal and
43       interest or other income of investments or the proceeds of sale of secu-

13
  1       rities in the custody of the state treasurer and pay same when so collected
  2       into the fund.
  3             (c) The principal and interest or other income or the proceeds of sale
  4       of securities as provided in clause (a) of this subsection (9) shall be re-
  5       ported to the state treasurer and the board and credited to the fund.
  6             (10) The board shall with the advice of the director of accounts and
  7       reports establish the requirements and procedure for reporting any and
  8       all activity relating to investment functions provided for in this act in order
  9       to prepare a record monthly of the investment income and changes made
10       during the preceding month. The record will reflect a detailed summary
11       of investment, reinvestment, purchase, sale and exchange transactions
12       and such other information as the board may consider advisable to reflect
13       a true accounting of the investment activity of the fund.
14             (11) The board shall provide for an examination of the investment
15       program annually. The examination shall include an evaluation of current
16       investment policies and practices and of specific investments of the fund
17       in relation to the objective set forth in subsection (3), the standard set
18       forth in subsection (4) and other criteria as may be appropriate, and rec-
19       ommendations relating to the fund investment policies and practices and
20       to specific investments of the fund as are considered necessary or desir-
21       able. The board shall include in its annual report to the governor as pro-
22       vided in K.S.A. 74-4907, and amendments thereto, a report or a summary
23       thereof covering the investments of the fund.
24             (12)  (a) An annual financial-compliance audit of the system, includ-
25       ing any performance audit subjects which are directed to be included in
26       such annual audit by the legislative post audit committee, performance
27       audits of the system as prescribed under the Kansas governmental op-
28       erations law, and such other audits as are directed by the legislative post
29       audit committee under the Kansas legislative post audit act shall be con-
30       ducted. The annual financial-compliance audit shall include, but not be
31       limited to, a review of alternative investments of the system with any
32       estimates of permanent impairments to the value of such alternative in-
33       vestments reported by the system pursuant to K.S.A. 74-4907, and
34       amendments thereto.
35             (b) In accordance with this subsection (12), the annual financial-com-
36       pliance audit may include one or more performance audit subjects as
37       directed by the legislative post audit committee. In considering perform-
38       ance audit subjects to be included in any financial-compliance audit con-
39       ducted pursuant to this subsection (12), the legislative post audit com-
40       mittee shall consider recommendations and requests for performance
41       audits, relating to the system or the management thereof, by the joint
42       committee on pensions, investments and benefits or by any other com-
43       mittee or individual member of the legislature. Commencing with the

14
  1       financial-compliance audit for the fiscal year ending June 30, 1998, the
  2       legislative post audit committee shall specify if one or more performance
  3       audit subjects shall be included in the financial-compliance audit con-
  4       ducted pursuant to this subsection (12), in addition to such other subjects
  5       as may be directed to be included in the financial-compliance audit by
  6       the legislative post audit committee. Except as otherwise determined by
  7       the legislative post audit committee pursuant to this subsection (12), com-
  8       mencing with the financial-compliance audit for the fiscal year ending
  9       June 30, 1998, one or more performance audit subjects specified by the
10       legislative post audit committee shall be included at least once every two
11       fiscal years in a financial-compliance audit conducted pursuant to this
12       subsection (12). The legislative post audit committee may direct that one
13       or more performance audit subjects are to be included in a financial-
14       compliance audit conducted pursuant to this subsection (12) not more
15       than once during a specific period of three fiscal years, in lieu of once
16       every two fiscal years.
17             (c) The auditor to conduct the financial-compliance audit required
18       pursuant to this subsection (12) shall be specified in accordance with
19       K.S.A. 46-1122, and amendments thereto. If the legislative post audit
20       committee specifies under such statute that a firm, as defined by K.S.A.
21       46-1112, and amendments thereto, is to perform all or part of the audit
22       work of such audit, such firm shall be selected and shall perform such
23       audit work as provided in K.S.A. 46-1123, and amendments thereto, and
24       K.S.A. 46-1125 through 46-1127, and amendments thereto. The audits
25       required pursuant to this subsection (12) shall be conducted in accord-
26       ance with generally accepted governmental auditing standards. The fi-
27       nancial-compliance audit required pursuant to this subsection (12) shall
28       be conducted as soon after the close of the fiscal year as practicable, but
29       shall be completed no later than six months after the close of the fiscal
30       year. The post auditor shall annually compute the reasonably anticipated
31       cost of providing the financial-compliance audit pursuant to this subsec-
32       tion (12), subject to review and approval by the contract audit committee
33       established by K.S.A. 46-1120, and amendments thereto. Upon such ap-
34       proval, the system shall reimburse the division of post audit for the
35       amount approved by the contract audit committee. The furnishing of the
36       financial-compliance audit pursuant to this subsection (12) shall be a
37       transaction between the legislative post auditor and the system and shall
38       be settled in accordance with the provisions of K.S.A. 75-5516, and
39       amendments thereto.
40             (d) Any internal assessment or examination of alternative investments
41       of the system performed by any person or entity employed or retained
42       by the board which evaluates or monitors the performance of alternative
43       investments shall be reported to the legislative post auditor so that such

15
  1       report may be reviewed in accordance with the annual financial-compli-
  2       ance audits conducted pursuant to this subsection (12).
  3             Sec.  10. K.S.A. 1999 Supp. 74-4924 is hereby amended to read as
  4       follows: 74-4924. (1) Any person who shall knowingly make any false
  5       statement, or who shall falsify or permit to be falsified any record nec-
  6       essary for carrying out the intent of this act for the purpose of committing
  7       fraud, shall be subject to the provisions of K.S.A. 21-3904 and amend-
  8       ments thereto.
  9             (2) Should any error in any records or in any calculation of the Kansas
10       public employees retirement system result in any member or beneficiary
11       receiving more or less than he would have been entitled to receive had
12       the records or calculations been correct, the board shall correct such
13       error, and, as far as practicable, make future payments in such a manner
14       that the actuarial equivalent of the benefit to which such member or
15       beneficiary was entitled shall be paid and may recover any overpayments.
16       In the event a member has withdrawn, all or part of, such member's
17       accumulated contributions in a manner not in compliance with the pro-
18       visions of this act or the regulations of the system the amount of such
19       withdrawal, plus interest at a rate specified by the board, shall be de-
20       ducted from any amounts, including group insurance benefits, which shall
21       become due the member or such member's beneficiaries under the pro-
22       visions of this act.
23             (3)  (a) Notwithstanding the provisions of subsection (2), the board is
24       not required to collect any benefit overpayment that is of more than 60
25       months' standing when discovered, if any errors in the records or calcu-
26       lations of the system that resulted in such overpayment are attributable
27       solely to incorrect procedures or calculations by the system and there is
28       no evidence of fraud or misconduct on the part of the member or other
29       person receiving the benefit.
30             (b) The board shall make reasonable efforts to recover all benefit over-
31       payment of 60 months' standing or less, including the imposition of an
32       actuarially calculated reduction in an ongoing monthly benefit payment
33       or the deduction of the total overpaid amount from any refund of contri-
34       butions or group life insurance benefits that become due and payable to
35       the member or member's beneficiary.
36             (c) No monthly benefit reduction imposed under this section for the
37       purpose of collecting an overpayment shall result in a monthly benefit
38       payment that is more than 10% lower than the monthly benefit payment
39       would have been without such collection-related reduction, except that
40       the monthly benefit payment in all cases must first be reduced to the
41       correct amount as provided by the terms of this section before the 10%
42       cap on collection-related reductions is imposed.
43             Sec.  11. K.S.A. 1999 Supp. 74-4927 is hereby amended to read as

16
  1       follows: 74-4927. (1) The board may establish a plan of death and long-
  2       term disability benefits to be paid to the members of the retirement
  3       system as provided by this section. The long-term disability benefit shall
  4       not be payable until the member has been prevented from carrying out
  5       each and every duty pertaining to the member's employment as a result
  6       of sickness or injury for a period of 180 days and the annual benefit shall
  7       not exceed an amount equal to 662/3% of the member's annual rate of
  8       compensation on the date such disability commenced and shall be payable
  9       in equal monthly installments. In the event that a member's compensation
10       is not fixed at an annual rate but on an hourly, weekly, biweekly, monthly
11       or any other basis than annual, the board shall prescribe by rule and
12       regulation a formula for establishing a reasonable rate of annual compen-
13       sation to be used in determining the amount of the death or long-term
14       disability benefit for such member. Such plan shall provide that:
15             (A) For deaths occurring prior to January 1, 1987, the right to receive
16       such death benefit shall cease upon the member's attainment of age 70
17       or date of retirement whichever first occurs. The right to receive such
18       long-term disability benefit shall cease (i) for a member who becomes
19       eligible for such benefit before attaining age 60, upon the date that such
20       member attains age 65 or the date of such member's retirement, which-
21       ever first occurs, (ii) for a member who becomes eligible for such benefit
22       at or after attaining age 60, the date that such member has received such
23       benefit for a period of five years, upon the date that such member attains
24       age 70, or upon the date of such member's retirement, whichever first
25       occurs, (iii) for all disabilities incurred on or after January 1, 1987, for a
26       member who becomes eligible for such benefit at or after attaining age
27       70, the date that such member has received such benefit for a period of
28       12 months or upon the date of such member's retirement, whichever first
29       occurs, and (iv) for all disabilities incurred on or after January 1, 1987,
30       for a member who becomes eligible for such benefit at or after attaining
31       age 75, the date that such member has received such benefit for a period
32       of six months or upon the date of such member's retirement, whichever
33       first occurs.
34             (B) Long-term disability benefit payments shall be in lieu of any ac-
35       cidental total disability benefit that a member may be eligible to receive
36       under subsection (3) of K.S.A. 74-4916 and amendments thereto. The
37       member must make an initial application for social security disability ben-
38       efits and, if denied such benefits, the member must pursue and exhaust
39       all administrative remedies of the social security administration which
40       include, but are not limited to, reconsideration and hearings. Such plan
41       may provide that any amount which a member receives as a social security
42       benefit or a disability benefit or compensation from any source by reason
43       of any employment including, but not limited to, workers compensation

17
  1       benefits may be deducted from the amount of long-term disability benefit
  2       payments under such plan. During the period in which such member is
  3       pursuing such administrative remedies prior to a final decision of the
  4       social security administration, social security disability benefits may be
  5       estimated and may be deducted from the amount of long-term disability
  6       benefit payments under such plan. Such long-term disability payments
  7       shall accrue from the later of the 181st day of total disability or the first
  8       day upon which the member ceases to draw compensation from the em-
  9       ployer. If the social security benefit, workers compensation benefit, other
10       income or wages or other disability benefit by reason of employment, or
11       any part thereof, is paid in a lump-sum, the amount of the reduction shall
12       be calculated on a monthly basis over the period of time for which the
13       lump-sum is given. In no case shall a member who is entitled to receive
14       long-term disability benefits receive less than $50 per month. As used in
15       this section, ``workers compensation benefits'' means the total award of
16       disability benefit payments under the workers compensation act notwith-
17       standing any payment of attorney fees from such benefits as provided in
18       the workers compensation act.
19             (C) The plan may include other provisions relating to qualifications
20       for benefits; schedules and graduation of benefits; limitations of eligibility
21       for benefits by reason of termination of employment or membership;
22       conversion privileges; limitations of eligibility for benefits by reason of
23       leaves of absence, military service or other interruptions in service; lim-
24       itations on the condition of long-term disability benefit payment by reason
25       of improved health; requirements for medical examinations or reports; or
26       any other reasonable provisions as established by rule and regulation of
27       uniform application adopted by the board.
28             (D) On and after April 30, 1981, the board may provide under the
29       plan for the continuation of long-term disability benefit payments to any
30       former member who forfeits the entitlement to continued service credit
31       under the retirement system or continued assistance in the purchase of
32       retirement annuities under K.S.A. 74-4925 and amendments thereto and
33       to continued long-term disability benefit payments and continued death
34       benefit coverage, by reason of the member's withdrawal of contributions
35       from the retirement system or the repurchase of retirement annuities
36       which were purchased with assistance received under K.S.A. 74-4925 and
37       amendments thereto. Such long-term disability benefit payments may be
38       continued until such individual dies, attains age 65 or is no longer disa-
39       bled, whichever occurs first.
40             (E) Any visually impaired person who is in training at and employed
41       by a sheltered workshop for the blind operated by the secretary of social
42       and rehabilitation services and who would otherwise be eligible for the
43       long-term disability benefit as described in this section shall not be eli-

18
  1       gible to receive such benefit due to visual impairment as such impairment
  2       shall be determined to be a preexisting condition.
  3             (2)  (A) In the event that a member becomes eligible for a long-term
  4       disability benefit under the plan authorized by this section such member
  5       shall be given participating service credit for the entire period of such
  6       disability. Such member's final average salary shall be computed in ac-
  7       cordance with subsection (17) of K.S.A. 74-4902 and amendments thereto
  8       except that the years of participating service used in such computation
  9       shall be the years of salaried participating service.
10             (B) In the event that a member eligible for a long-term disability
11       benefit under the plan authorized by this section shall be disabled for a
12       period of five years or more immediately preceding retirement, such
13       member's final average salary shall be adjusted upon retirement by the
14       actuarial salary assumption rates in existence during such period of dis-
15       ability. Effective July 1, 1993, such member's final average salary shall be
16       adjusted upon retirement by 5% for each year of disability after July 1,
17       1993, but before July 1, 1998. Effective July 1, 1998, such member's final
18       average salary shall be adjusted upon retirement by an amount equal to
19       the lesser of: (i) The percentage increase in the consumer price index for
20       all urban consumers as published by the bureau of labor statistics of the
21       United States department of labor minus 1%; or (ii) four percent per
22       annum, measured from the month the disability occurs the member's last
23       day on the payroll to the month that is two months prior to the month
24       of retirement, for each year of disability after July 1, 1998.
25             (C) In the event that a member eligible for a long-term disability
26       benefit under the plan authorized by this section shall be disabled for a
27       period of five years or more immediately preceding death, such member's
28       current annual rate shall be adjusted by the actuarial salary assumption
29       rates in existence during such period of disability. Effective July 1, 1993,
30       such member's current annual rate shall be adjusted upon death by 5%
31       for each year of disability after July 1, 1993, but before July 1, 1998.
32       Effective July 1, 1998, such member's current annual rate shall be ad-
33       justed upon death by an amount equal to the lesser of: (i) The percentage
34       increase in the consumer price index for all urban consumers published
35       by the bureau of labor statistics of the United States department of labor
36       minus 1%; or (ii) four percent per annum, measured from the month the
37       disability occurs the member's last day on the payroll to the month that
38       is two months prior to the month of death, for each year of disability after
39       July 1, 1998.
40             (3)  (A) To carry out the legislative intent to provide, within the funds
41       made available therefor, the broadest possible coverage for members who
42       are in active employment or involuntarily absent from such active em-
43       ployment, the plan of death and long-term disability benefits shall be

19
  1       subject to adjustment from time to time by the board within the limita-
  2       tions of this section. The plan may include terms and provisions which
  3       are consistent with the terms and provisions of group life and long-term
  4       disability policies usually issued to those employers who employ a large
  5       number of employees. The board shall have the authority to establish and
  6       adjust from time to time the procedures for financing and administering
  7       the plan of death and long-term disability benefits authorized by this
  8       section. Either the insured death benefit or the insured disability benefit
  9       or both such benefits may be financed directly by the system or by one
10       or more insurance companies authorized and licensed to transact group
11       life and group accident and health insurance in this state.
12             (B) The board may contract with one or more insurance companies,
13       which are authorized and licensed to transact group life and group acci-
14       dent and health insurance in Kansas, to underwrite or to administer or
15       to both underwrite and administer either the insured death benefit or the
16       long-term disability benefit or both such benefits. Each such contract with
17       an insurance company under this subsection shall be entered into on the
18       basis of competitive bids solicited and administered by the board. Such
19       competitive bids shall be based on specifications prepared by the board.
20             (i) In the event the board purchases one or more policies of group
21       insurance from such company or companies to provide either the insured
22       death benefit or the long-term disability benefit or both such benefits,
23       the board shall have the authority to subsequently cancel one or more of
24       such policies and, notwithstanding any other provision of law, to release
25       each company which issued any such canceled policy from any liability
26       for future benefits under any such policy and to have the reserves estab-
27       lished by such company under any such canceled policy returned to the
28       system for deposit in the group insurance reserve of the fund.
29             (ii) In addition, the board shall have the authority to cancel any policy
30       or policies of group life and long-term disability insurance in existence
31       on the effective date of this act and, notwithstanding any other provision
32       of law, to release each company which issued any such canceled policy
33       from any liability for future benefits under any such policy and to have
34       the reserves established by such company under any such canceled policy
35       returned to the system for deposit in the group insurance reserve of the
36       fund. Notwithstanding any other provision of law, no premium tax shall
37       be due or payable by any such company or companies on any such policy
38       or policies purchased by the board nor shall any brokerage fees or com-
39       missions be paid thereon.
40             (4)  (A) There is hereby created in the state treasury the group in-
41       surance reserve fund. Investment income of the fund shall be added or
42       credited to the fund as provided by law. The cost of the plan of death
43       and long-term disability benefits shall be paid from the group insurance

20
  1       reserve fund, which shall be administered by the board. Each participat-
  2       ing employer shall appropriate and pay to the system in such manner as
  3       the board shall prescribe in addition to the employee and employer re-
  4       tirement contributions an amount equal to .6% of the amount of com-
  5       pensation on which the members' contributions to the Kansas public em-
  6       ployees retirement system are based for deposit in the group insurance
  7       reserve fund.
  8             (B) The director of the budget and the governor shall include in the
  9       budget and in the budget request for appropriations for personal services
10       a sum to pay the state's contribution to the group insurance reserve fund
11       as provided by this section and shall present the same to the legislature
12       for allowances and appropriation.
13             (C) The provisions of subsection (4) of K.S.A. 74-4920 and amend-
14       ments thereto shall apply for the purpose of providing the funds to make
15       the contributions to be deposited to the group insurance reserve fund.
16             (D) Any dividend or retrospective rate credit allowed by an insurance
17       company or companies shall be credited to the group insurance reserve
18       fund and the board may take such amounts into consideration in deter-
19       mining the amounts of the benefits under the plan authorized by this
20       section.
21             (5) The death benefit provided under the plan of death and long-
22       term disability benefits authorized by this section shall be known and
23       referred to as insured death benefit. The long-term disability benefit pro-
24       vided under the plan of death and long-term disability benefits authorized
25       by this section shall be known and referred to as long-term disability
26       benefit.
27             (6) The board is hereby authorized to establish an optional death
28       benefit plan. Except as provided in subsection (7), such optional death
29       benefit plan shall be made available to all employees who are covered or
30       may hereafter become covered by the plan of death and long-term disa-
31       bility benefits authorized by this section. The cost of the optional death
32       benefit plan shall be paid by the applicant either by means of a system
33       of payroll deductions or direct payment to the board. The board shall
34       have the authority and discretion to establish such terms, conditions, spec-
35       ifications and coverages as it may deem to be in the best interest of the
36       state of Kansas and its employees which should include term death ben-
37       efits for the person's period of active state employment regardless of age,
38       but in no case, on and after January 1, 1989, shall the maximum allowable
39       coverage be less than $200,000. The cost of the optional death benefit
40       plan shall not be established on such a basis as to unreasonably discrim-
41       inate against any particular age group. The board shall have full admin-
42       istrative responsibility, discretion and authority to establish and continue
43       such optional death benefit plan and the director of accounts and reports

21
  1       of the department of administration shall when requested by the board
  2       and from funds appropriated or available for such purpose establish a
  3       system to make periodic deductions from state payrolls to cover the cost
  4       of the optional death benefit plan coverage under the provisions of this
  5       subsection (6) and shall remit all deductions together with appropriate
  6       accounting reports to the system. There is hereby created in the state
  7       treasury the optional death benefit plan reserve fund. Investment income
  8       of the fund shall be added or credited to the fund as provided by law. All
  9       funds received by the board, whether in the form of direct payments,
10       payroll deductions or otherwise, shall be accounted for separately from
11       all other funds of the retirement system and shall be paid into the optional
12       death benefit plan reserve fund, from which the board is authorized to
13       make the appropriate payments and to pay the ongoing costs of admin-
14       istration of such optional death benefit plan as may be incurred in carrying
15       out the provisions of this subsection (6).
16             (7) Any employer other than the state of Kansas which is currently a
17       participating employer of the Kansas public employees retirement system
18       or is in the process of affiliating with the Kansas public employees retire-
19       ment system may also elect to affiliate for the purposes of subsection (6).
20       All such employers shall make application for affiliation with such system,
21       to be effective on January 1 next following application. Such optional
22       death benefit plan shall not be available for employees of employers spec-
23       ified under this subsection until after July 1, 1988.
24             Sec.  12. K.S.A. 74-4927k is hereby amended to read as follows: 74-
25       4927k. (a) For the purposes of providing the ``insured death benefit'' and
26       ``long-term disability benefit'' as prescribed in K.S.A. 74-4927 and amend-
27       ments thereto and of providing the ``accidental death benefit'' as pre-
28       scribed in subsection (2) of K.S.A. 74-4916 and amendments thereto, to
29       all state officers who have filed an election as provided in subsection (a)
30       or (b) of K.S.A. 74-4911f, on and after the first day of the first payroll
31       period of the fiscal year ending June 30, 1989 and amendments thereto,
32       the term ``member'' as used in K.S.A. 74-4927 and amendments thereto
33       and subsection (2) of K.S.A. 74-4916 and amendments thereto and as
34       used in this section shall include the aforementioned such state officers.
35             (b) The state agency employing any member shall pay to the Kansas
36       public employees retirement system in such manner as the board of trus-
37       tees shall prescribe, beginning with the first day of the first payroll period
38       of the fiscal year ending June 30, 1989, and each payroll period thereafter,
39       an amount sufficient to pay the employer's contribution to the group
40       insurance reserve as provided in subsection (4) of K.S.A. 74-4927 and
41       amendments thereto.
42             (c) The state agency employing any member shall maintain a file of
43       the beneficiaries named by the persons covered under this section in the

22
  1       form and manner as prescribed by the board of trustees of the Kansas
  2       public employees retirement system.
  3             (d) Coverage under the plan of death and long-term disability ben-
  4       efits and accidental death benefits shall begin with the first day of the
  5       first payroll period of the fiscal year ending June 30, 1989, for such mem-
  6       ber. Notwithstanding any provision of law to the contrary, the provisions
  7       of this section shall not apply to any person employed by the legislative
  8       branch of the state of Kansas who elected to be covered by the provisions
  9       of K.S.A. 74-4911f, and amendments thereto, as provided in subsection
10       (e) of K.S.A. 46-1302, and amendments thereto, or who is first employed
11       on or after July 1, 1996, by the legislative branch of the state of Kansas
12       as described in K.S.A. 46-1302, and amendments thereto.
13             Sec.  13. K.S.A. 1999 Supp. 74-4958 is hereby amended to read as
14       follows: 74-4958. (1) Any member who retires on or after July 1, 1993,
15       shall be entitled to receive an age and service retirement benefit equal
16       to 2.5% of such member's final average salary multiplied by the number
17       of years of credited service except that in no case shall such retirement
18       benefit exceed 80% of such member's final average salary.
19             (2) Any member who is appointed or employed prior to July 1, 1989,
20       who does not make an election pursuant to K.S.A. 74-4955a and amend-
21       ments thereto and who retires before such member's normal retirement
22       date shall receive an early retirement benefit equal to the annual retire-
23       ment benefit payable had the member retired on the normal retirement
24       date reduced by an amount equal to the product of (A) such annual re-
25       tirement benefit payable had the member retired on the normal retire-
26       ment date, multiplied by (B) the product of .4% multiplied by the number
27       of months difference, to the nearest whole month, between the member's
28       attained age at the time of retirement and age 55.
29             (3) Pursuant to the provisions of section 20, and amendments thereto,
30       upon the death after retirement of a member who was covered, up to the
31       entry date of the member's employer, by a pension system under the
32       provisions of K.S.A. 12-5001 to 12-5007, inclusive, and amendments
33       thereto, or K.S.A. 13-14a01 to 13-14a14, inclusive, and amendments
34       thereto, or K.S.A. 14-10a01 to 14-10a15, inclusive, and amendments
35       thereto, and who had not elected to retire under one of the options pro-
36       vided under K.S.A. 74-4964 and amendments thereto, the member's
37       spouse, if such spouse was the member's lawfully wedded spouse for a
38       period of not less than one year at the time of the member's retirement
39       or if such spouse had been the member's lawfully wedded spouse for at
40       least three years after the time of the member's retirement, shall receive
41       a lump-sum benefit equal to 1/2 the member's final average salary at the
42       time of the member's retirement and shall receive an annual spouse's
43       benefit equal to 75% of the member's retirement benefit payable in

23
  1       monthly installments, to accrue from the last day of the month following
  2       the member's date of death and ending on the last day of the month in
  3       which the spouse dies. Commencing on the effective date of this act, any
  4       surviving spouse, who was receiving benefits pursuant to this section and
  5       who had such benefits terminated by reason of such spouse's remarriage,
  6       shall be entitled to once again receive benefits pursuant to this section,
  7       except that such surviving spouse shall not be entitled to recover any
  8       benefits not received after the termination of benefits by reason of such
  9       surviving spouse's remarriage but before the effective date of this act. If
10       there is no surviving spouse, or if after the death of the spouse there
11       remain one or more children under the age of 18 years or one or more
12       children under the age of 23 years who is a full-time student as provided
13       in K.S.A. 74-49,117 and amendments thereto, the annual spouse's benefit
14       shall be payable, subject to the provisions of K.S.A. 1999 Supp. 74-49,123
15       and amendments thereto, in equal shares to such children and each child's
16       share shall end on the last day of the month in which such child attains
17       the age of 18 years or dies, whichever occurs earlier or in which such
18       child attains the age of 23 years if such child is a full-time student as
19       provided in K.S.A. 74-49,117 and amendments thereto. Commencing on
20       the effective date of this act, any child who was receiving benefits pur-
21       suant to this section and who had such benefits terminated by reason of
22       such child's marriage, shall be entitled to once again receive benefits
23       pursuant to this section subject to the limitations contained in this section,
24       except that such child shall not be entitled to recover any benefits not
25       received after the termination of benefits by reason of such child's mar-
26       riage but before the effective date of this act. All payments due under
27       this section to a minor shall be made to a legally appointed conservator
28       of such minor as provided in subsection (7) of K.S.A. 74-4902 and amend-
29       ments thereto. No person shall be entitled to receive more than one
30       benefit under the provisions of this subsection. Any person who otherwise
31       meets the qualifications to receive more than one benefit under this sub-
32       section shall elect the benefit such person shall receive.
33             (4) Upon the death after retirement of a member who had not elected
34       to retire under one of the options provided under K.S.A. 74-4964 and
35       amendments thereto, such member's beneficiary shall receive an amount
36       equal to the excess, if any, of such member's accumulated contributions
37       over the sum of all retirement benefit payments made.
38             (5) The provisions of law in effect on the retirement date of a member
39       under the system shall govern the retirement benefit payable to the re-
40       tirant, any joint annuitant and any beneficiary.
41             Sec.  14. K.S.A. 1999 Supp. 74-4958a is hereby amended to read as
42       follows: 74-4958a. (1) Any member who retires on or after July 1, 1993,
43       shall be entitled to receive an age and service retirement benefit equal

24
  1       to 2.5% of such member's final average salary multiplied by the number
  2       of years of credited service except that in no case shall such retirement
  3       benefit exceed 80% of such member's final average salary.
  4             (2) Any member who retires before such member's normal retire-
  5       ment date shall receive an early retirement benefit equal to the annual
  6       retirement benefit payable had the member retired on the normal retire-
  7       ment date reduced by an amount equal to the product of (A) such annual
  8       retirement benefit payable had the member retired on the normal retire-
  9       ment date, multiplied by (B) the product of .4% multiplied by the number
10       of months difference, to the nearest whole month, between the member's
11       attained age at the time of retirement and age 55.
12             (3) Pursuant to the provisions of section 20, and amendments thereto,
13       upon the death after retirement of a member who was covered, up to the
14       entry date of the member's employer, by a pension system under the
15       provisions of K.S.A. 12-5001 to 12-5007, inclusive, and amendments
16       thereto, or K.S.A. 13-14a01 to 13-14a14, inclusive, and amendments
17       thereto, or K.S.A. 14-10a01 to 14-10a15, inclusive, and amendments
18       thereto, and who had not elected to retire under one of the options pro-
19       vided under K.S.A. 74-4964 and amendments thereto, the member's
20       spouse, if such spouse was the member's lawfully wedded spouse for a
21       period of not less than one year at the time of the member's retirement
22       or if such spouse had been the member's lawfully wedded spouse for at
23       least three years after the time of the member's retirement, shall receive
24       a lump-sum benefit equal to 1/2 the member's final average salary at the
25       time of the member's retirement and shall receive an annual spouse's
26       benefit equal to 75% of the member's retirement benefit payable in
27       monthly installments, to accrue from the first day of the month following
28       the member's date of death and ending on the last day of the month in
29       which the spouse dies. Commencing on the effective date of this act, any
30       surviving spouse, who was receiving benefits pursuant to this section and
31       who had such benefits terminated by reason of such spouse's remarriage,
32       shall be entitled to once again receive benefits pursuant to this section,
33       except that such surviving spouse shall not be entitled to recover any
34       benefits not received after the termination of benefits by reason of such
35       surviving spouse's remarriage but before the effective date of this act. If
36       there is no surviving spouse, or if after the death of the spouse there
37       remain one or more children under the age of 18 years or one or more
38       children under the age of 23 years who is a full-time student as provided
39       in K.S.A. 74-49,117 and amendments thereto, the annual spouse's benefit
40       shall be payable, subject to the provisions of K.S.A. 1999 Supp. 74-49,123
41       and amendments thereto, in equal shares to such children and each child's
42       share shall end on the last day of the month in which such child attains
43       the age of 18 years or dies, whichever occurs earlier or in which such

25
  1       child attains the age of 23 years, if such child is a full-time student as
  2       provided in K.S.A. 74-49,117 and amendments thereto. Commencing on
  3       the effective date of this act, any child who was receiving benefits pur-
  4       suant to this section and who had such benefits terminated by reason of
  5       such child's marriage, shall be entitled to once again receive benefits
  6       pursuant to this section subject to the limitations contained in this section,
  7       except that such child shall not be entitled to recover any benefits not
  8       received after the termination of benefits by reason of such child's mar-
  9       riage but before the effective date of this act. All payments due under
10       this section to a minor shall be made to a legally appointed conservator
11       of such minor as provided in subsection (7) of K.S.A. 74-4902 and amend-
12       ments thereto. No person shall be entitled to receive more than one
13       benefit under the provisions of this subsection. Any person who otherwise
14       meets the qualifications to receive more than one benefit under this sub-
15       section shall elect the benefit such person shall receive.
16             (4) Upon the death after retirement of a member who had not elected
17       to retire under one of the options provided under K.S.A. 74-4964 and
18       amendments thereto, such member's beneficiary shall receive an amount
19       equal to the excess, if any, of such member's accumulated contributions
20       over the sum of all retirement benefit payments made.
21             (5) The provisions of this section shall be effective on and after July
22       1, 1989 and shall apply only to members who were appointed or employed
23       prior to July 1, 1989, and who made an election pursuant to K.S.A. 74-
24       4955a and amendments thereto; and persons appointed or employed on
25       or after July 1, 1989.
26             (6) The provisions of law in effect on the retirement date of a member
27       under the system shall govern the retirement benefit payable to the re-
28       tirant, any joint annuitant and any beneficiary.
29             Sec.  15. K.S.A. 1999 Supp. 74-4959 is hereby amended to read as
30       follows: 74-4959. (1) Upon the death from service-connected causes as
31       defined in this act, of an active contributing member prior to retirement,
32       the following benefits shall be payable if a report of the event, in a form
33       acceptable to the board, is filed in the office of the executive secretary of
34       the board within 200 days after the date of the act of duty causing such
35       death and an application for such benefits, in such form and manner as
36       prescribed by the board, is filed in the office of the executive secretary
37       of the board within two years of the date of death, but the board may
38       waive such time limits for a reasonable period if in the judgment of the
39       board the failure to meet these limits was due to lack of knowledge or
40       incapacity:
41             (a) To the member's spouse, if lawfully wedded to the member at the
42       time of the member's death, an annual spouse's benefit equal to 50% of
43       the member's final average salary, which shall accrue from the first day

26
  1       of the month coinciding with or following the member's death and shall
  2       end on the first day of the month in which the spouse's death occurs.
  3       Commencing on the effective date of this act, any surviving spouse, who
  4       was receiving benefits pursuant to this section and who had such benefits
  5       terminated by reason of such spouse's remarriage, shall be entitled to
  6       once again receive benefits pursuant to this section, except that such
  7       surviving spouse shall not be entitled to recover any benefits not received
  8       after the termination of benefits by reason of such surviving spouse's
  9       remarriage but before the effective date of this act.
10             (b) Subject to the provisions of K.S.A. 1999 Supp. 74-49,123 and
11       amendments thereto, to the member's children under the age of 18 years
12       or under the age of 23 years, if such children are full-time students as
13       provided in K.S.A. 74-49,117 and amendments thereto an annual chil-
14       dren's benefit equal to 10% of the member's final average salary for each
15       such child, which shall accrue from the first day of the month coinciding
16       with or following the member's death and shall end on the last day of the
17       month in which such child attains the age of 18 years or dies, whichever
18       occurs earlier or in which such child attains the age of 23 years, if such
19       child is a full-time student as provided in K.S.A. 74-49,117 and amend-
20       ments thereto, except that if there is no eligible spouse, or if upon the
21       death of the spouse there remain one or more children under the age of
22       18 years or under the age of 23 years, if such children are full-time stu-
23       dents as provided in K.S.A. 74-49,117 and amendments thereto, the an-
24       nual spouse's benefit shall be paid in equal shares to such children and
25       each child's share shall end on the last day of the month in which such
26       child attains the age of 18 years or dies, whichever occurs earlier or in
27       which such child attains the age of 23 years, if such child is a full-time
28       student as provided in K.S.A. 74-49,117 and amendments thereto. Com-
29       mencing on the effective date of this act, any child who was receiving
30       benefits pursuant to this section and who had such benefits terminated
31       by reason of such child's marriage, shall be entitled to once again receive
32       benefits pursuant to this section subject to the limitations contained in
33       this section, except that such child shall not be entitled to recover any
34       benefits not received after the termination of benefits by reason of such
35       child's marriage but before the effective date of this act.
36             (c) In no case shall benefits payable under the provisions of para-
37       graphs (a) and (b) of this subsection (1) exceed 75% of the member's
38       final average salary.
39             (2) Pursuant to the provisions of section 20, and amendments thereto,
40       upon the death from causes not service-connected of an active contrib-
41       uting member prior to retirement, the member's spouse, if lawfully wed-
42       ded to the member at the time of the member's death, shall receive
43       immediately a lump-sum benefit equal to 100% of the member's final

27
  1       average salary and shall be entitled to receive an annual death benefit
  2       equal to the member's retirement benefit calculated as if the member
  3       had retired on the member's normal retirement date, but based upon the
  4       member's final average salary and years of credited service on the date
  5       of death but not to exceed the amount of the annual spouse's benefit
  6       provided in paragraph (a) of subsection (1). An application for such ben-
  7       efits in such form and manner as prescribed by the board must be filed
  8       in the office of the executive secretary of the board within two years of
  9       the date of death, but the board may waive such time limit for a reason-
10       able period if in the judgment of the board the failure to meet this limit
11       was due to the lack of knowledge or incapacity. On and after July 1, 1993,
12       the annual spouse's benefit under this subsection (2) shall accrue from
13       the first day of the month coinciding with or following the member's
14       death and shall continue until the spouse's death. Commencing on the
15       effective date of this act, any surviving spouse, who was receiving benefits
16       pursuant to this section and who had such benefits terminated by reason
17       of such spouse's remarriage, shall be entitled to once again receive ben-
18       efits pursuant to this section, except that such surviving spouse shall not
19       be entitled to recover any benefits not received after the termination of
20       benefits by reason of such surviving spouse's remarriage but before the
21       effective date of this act. If there is no eligible spouse or if after the death
22       of the spouse there remain one or more children of the member under
23       the age of 18 years or one or more children of the member under the
24       age of 23 years, if such children are full-time students as provided in
25       K.S.A. 74-49,117 and amendments thereto, the spouse's benefit shall be
26       payable, subject to the provisions of K.S.A. 1999 Supp. 74-49,123 and
27       amendments thereto, in equal shares to such children and each child's
28       share shall end on the last day of the month in which such child attains
29       the age of 18 years or dies, whichever occurs earlier or in which such
30       child attains the age of 23 years, if such child is a full-time student as
31       provided in K.S.A. 74-49,117 and amendments thereto. Commencing on
32       the effective date of this act, any child who was receiving benefits pur-
33       suant to this section and who had such benefits terminated by reason of
34       such child's marriage, shall be entitled to once again receive benefits
35       pursuant to this section subject to the limitations contained in this section,
36       except that such child shall not be entitled to recover any benefits not
37       received after the termination of benefits by reason of such child's mar-
38       riage but before the effective date of this act.
39             (3) Upon the death of a member prior to retirement, if no benefits
40       are payable under the provisions of subsection (1) or (2), the sum of the
41       member's accumulated contributions shall be paid to the member's
42       beneficiary.
43             (4) All payments due under this section to a minor shall be made to

28
  1       a legally appointed conservator of such minor as provided in subsection
  2       (7) of K.S.A. 74-4902 and amendments thereto.
  3             Sec.  16. K.S.A. 1999 Supp. 74-4960 is hereby amended to read as
  4       follows: 74-4960. (1) If any active contributing member becomes totally
  5       and permanently disabled due to service-connected causes as defined in
  6       subsection (10) of K.S.A. 74-4952 and amendments thereto, such mem-
  7       ber shall be retired and the following benefits shall become payable and
  8       shall continue until the member's death or until the member recovers
  9       from the disability if: A report of the event in a form acceptable to the
10       board is filed in the office of the executive secretary of the board within
11       220 days after the date of the event or act of duty causing such disability;
12       and an application for such benefit, in such form and manner as the board
13       prescribes, is filed by the member or the member's authorized represen-
14       tative in the office of the executive secretary of the board within two years
15       of the date of disability:
16             (a) On and after July 1, 1993, the member shall receive a retirement
17       benefit equal to 50% of the member's final average salary or, if the mem-
18       ber has no dependents, as defined in subsection (1)(b), the retirement
19       benefit the member would have been entitled to as provided under K.S.A.
20       74-4958 and amendments thereto had the member retired, whichever is
21       greater. Such benefit shall accrue from the day upon which the member
22       ceases to draw compensation.
23             (b) Each of the member's children under the age of 18 years or each
24       of the member's children under the age of 23 years who is a full-time
25       student as provided in K.S.A. 74-49,117 and amendments thereto shall
26       receive an annual benefit equal to 10% of the member's final average
27       salary. Such benefit shall accrue from the day upon which the member
28       ceases to draw compensation and shall end on the last day of the month
29       in which each such child or children shall attain the age of 18 years or
30       die, whichever occurs earlier or in which such children attain the age of
31       23 years, if such child is a full-time student as provided in K.S.A. 74-
32       49,117 and amendments thereto. Commencing on the effective date of
33       this act, any child who was receiving benefits pursuant to this section and
34       who had such benefits terminated by reason of such child's marriage,
35       shall be entitled to once again receive benefits pursuant to this section
36       subject to the limitations contained in this section, except that such child
37       shall not be entitled to recover any benefits not received after the ter-
38       mination of benefits by reason of such child's marriage but before the
39       effective date of this act.
40             (c) In no case shall the total of the benefits payable under paragraphs
41       (a) and (b) of this subsection (1) be in excess of 75% of the member's
42       final average salary.
43             (d) Pursuant to the provisions of section 20, and amendments thereto,

29
  1       in the event a member who is retired under subsection (1) dies within
  2       two years after the date of such retirement and no benefits are payable
  3       under subsection (3) of K.S.A. 74-4958 and amendments thereto, then
  4       benefits may be payable under subsection (1) of K.S.A. 74-4959 and
  5       amendments thereto.
  6             (e) Pursuant to the provisions of section 20, and amendments thereto,
  7       in the event a member who is retired under subsection (1) dies more
  8       than two years after the date of such retirement, and the proximate cause
  9       of such death is the service-connected cause from which the disability
10       resulted and no benefits are payable under subsection (3) of K.S.A. 74-
11       4958 and amendments thereto, then benefits may be payable under sub-
12       section (1) of K.S.A. 74-4959 and amendments thereto. The provisions of
13       this paragraph (e) of this subsection (1) shall apply in all cases of such
14       members who die after June 30, 1978.
15             (f) Pursuant to the provisions of section 20, and amendments thereto,
16       in the event a member who is retired under subsection (1) dies after the
17       date of such retirement, and no benefits are payable under paragraphs
18       (d) and (e) of subsection (1), nor under subsection (3) of K.S.A. 74-4958
19       and amendments thereto, the following benefits shall be payable:
20             (i) To the member's spouse, if lawfully wedded to the member at the
21       time of the member's death, a lump-sum benefit equal to 50% of the
22       member's final average salary at the time of the member's retirement.
23             (ii) To the member's spouse, if lawfully wedded to the member at
24       the time of the member's death, an annual benefit equal to 50% of the
25       member's retirement benefit payable in monthly installments, to accrue
26       from the first day of the month following the member's date of death and
27       ending on the last day of the month in which the spouse dies. Com-
28       mencing on the effective date of this act, any surviving spouse, who was
29       receiving benefits pursuant to this section and who had such benefits
30       terminated by reason of such spouse's remarriage, shall be entitled to
31       once again receive benefits pursuant to this section, except that such
32       surviving spouse shall not be entitled to recover any benefits not received
33       after the termination of benefits by reason of such surviving spouse's
34       remarriage but before the effective date of this act. If there is no surviving
35       spouse, or if after the death of the spouse there remain one or more
36       children under the age of 18 years or one or more children under the age
37       of 23 years who is a full-time student as provided in K.S.A. 74-49,117 and
38       amendments thereto, the annual spouse's benefit shall be payable, subject
39       to the provisions of K.S.A. 1999 Supp. 74-49,123 and amendments
40       thereto, in equal shares to such children and each child's share shall end
41       on the last day of the month in which such child attains the age of 18
42       years or dies, whichever occurs earlier or in which such child attains the
43       age of 23 years, if such child is a full-time student as provided in K.S.A.

30
  1       74-49,117 and amendments thereto. Commencing on the effective date
  2       of this act, any child who was receiving benefits pursuant to this section
  3       and who had such benefits terminated by reason of such child's marriage,
  4       shall be entitled to once again receive benefits pursuant to this section
  5       subject to the limitations contained in this section, except that such child
  6       shall not be entitled to recover any benefits not received after the ter-
  7       mination of benefits by reason of such child's marriage but before the
  8       effective date of this act.
  9             The provisions of paragraph (f) of subsection (1) shall apply in all cases
10       of such members who die after December 1, 1984.
11             (2)  (a) If any active contributing member, prior to such member's
12       normal retirement, becomes totally and permanently disabled for a period
13       of 180 days from causes not service-connected, and not as the result of a
14       willfully negligent or intentional act of the member, such member shall
15       be retired and the following benefit shall become payable and shall con-
16       tinue until the member's death or until the member recovers from such
17       disability, whichever occurs first, if a report of the disability in a form
18       acceptable to the board is filed in the office of the executive secretary of
19       the board within 220 days after the date of the commencement of such
20       disability and if an application for such benefit in such form and manner
21       as the board shall prescribe is filed in the office of the executive secretary
22       of the board within two years of the date of disability:
23             A retirement benefit equal to 2.5% of the member's final average salary
24       multiplied by the number of years of credited service or the retirement
25       benefit the member would have been entitled to as provided under K.S.A.
26       74-4958 and amendments thereto had the member retired, whichever is
27       greater, multiplied by the number of years of credited service except that
28       such retirement benefit shall be at least equal to 25% of the member's
29       final average salary but shall not exceed the amount of the retirement
30       benefit provided in paragraph (a) of subsection (1). Such benefit shall not
31       become payable until satisfactory evidence shall be presented to the board
32       that the member is and has been totally and permanently disabled for a
33       period of 180 days, but benefits shall accrue from the day upon which
34       the member ceases to draw compensation.
35             (b) Pursuant to the provisions of section 20, and amendments thereto,
36       in the event a member who is retired under subsection (2) dies after the
37       date of such retirement, and no benefits are payable under subsection (3)
38       of K.S.A. 74-4958 and amendments thereto, the following benefits shall
39       be payable:
40             (i) To the member's spouse, if lawfully wedded to the member at the
41       time of the member's death, a lump-sum benefit equal to 50% of the
42       member's final average salary at the time of the member's retirement.
43             (ii) To the member's spouse, if lawfully wedded to the member at

31
  1       the time of the member's death, an annual benefit equal to 50% of the
  2       member's retirement benefit payable in monthly installments, to accrue
  3       from the first day of the month following the member's date of death and
  4       ending on the last day of the month in which the spouse dies. Com-
  5       mencing on the effective date of this act, any surviving spouse, who was
  6       receiving benefits pursuant to this section and who had such benefits
  7       terminated by reason of such spouse's remarriage, shall be entitled to
  8       once again receive benefits pursuant to this section, except that such
  9       surviving spouse shall not be entitled to recover any benefits not received
10       after the termination of benefits by reason of such surviving spouse's
11       remarriage but before the effective date of this act. If there is no surviving
12       spouse, or if after the death of the spouse there remain one or more
13       children under the age of 18 years or one or more children under the age
14       of 23 years who are full-time students as provided in K.S.A. 74-49,117
15       and amendments thereto, the annual spouse's benefit shall be payable,
16       subject to the provisions of K.S.A. 1999 Supp. 74-49,123 and amendments
17       thereto, in equal shares to such children and each child's share shall end
18       on the last day of the month in which such child attains the age of 18
19       years or dies, whichever occurs earlier or in which such child attains the
20       age of 23 years, if such child is a full-time student as provided in K.S.A.
21       74-49,117 and amendments thereto. Commencing on the effective date
22       of this act, any child who was receiving benefits pursuant to this section
23       and who had such benefits terminated by reason of such child's marriage,
24       shall be entitled to once again receive benefits pursuant to this section
25       subject to the limitations contained in this section, except that such child
26       shall not be entitled to recover any benefits not received after the ter-
27       mination of benefits by reason of such child's marriage but before the
28       effective date of this act.
29             The provisions of paragraph (b) of subsection (2) shall apply in all cases
30       of such members who die after July 1, 1989.
31             (3) Any member who was employed for compensation by an em-
32       ployer other than the member's participating employer and whose disa-
33       bility was incurred in the course of such other employment shall not be
34       eligible for any of the benefits provided in subsection (2).
35             (4) If a member becomes totally and permanently disabled and no
36       benefits are payable under subsection (1) or (2), the sum of the member's
37       accumulated contributions shall be paid to the member.
38             (5) Any member receiving benefits under this section shall submit to
39       medical examination, not more frequent than annually, by one or more
40       physicians or any other practitioners of the healing arts holding a valid
41       license issued by Kansas state board of healing arts, as the board of trus-
42       tees may direct. If upon such medical examination, the examiner's report
43       to the board states that the retirant is physically able and capable of re-

32
  1       suming employment with the same or a different participating employer,
  2       the disability benefits shall terminate. A retirant who has been receiving
  3       benefits under the provisions of this section and who returns to employ-
  4       ment, as defined in subsection (4) of K.S.A. 74-4952 and amendments
  5       thereto, of a participating employer shall immediately commence accru-
  6       ing service credit which shall be added to that which has been accrued
  7       by virtue of previous service.
  8             (6) Any retirant who has been receiving benefits under the provisions
  9       of this section for a period of five years shall be deemed finally retired
10       and shall not be subject to further medical examinations, except that if
11       the board of trustees shall have reasonable grounds to question whether
12       the retirant remains totally and permanently disabled, a further medical
13       examination or examinations may be required.
14             (7) Refusal or neglect to submit to examination as provided in sub-
15       section (5) shall be sufficient cause for suspending or discontinuing ben-
16       efit payments under this section and if such refusal or neglect shall con-
17       tinue for a period of one year, the member's rights in and to all benefits
18       under this system may be revoked by the board.
19             (8) Any retirement benefits payable under the provisions of this sec-
20       tion shall be in lieu of normal retirement benefits as provided in subsec-
21       tions (1) and (2) of K.S.A. 74-4958 and amendments thereto.
22             (9) Each member shall report to such member's participating em-
23       ployer any event or act of duty causing disability within 200 days after
24       such event or act of duty. The member's participating employer shall file
25       in the office of the executive secretary of the board, in a form acceptable
26       to the board, a report of the event or act of duty causing disability within
27       220 days after the event or act of duty.
28             (10) In any case of any event occurring prior to July 1, 1979, and after
29       June 30, 1998, for which a report of the event was made by the partici-
30       pating employer to the director of workers' compensation in accordance
31       with K.S.A. 44-557 and amendments thereto, such report to the director
32       of workers' compensation shall satisfy the requirement under subsection
33       (1) of this section to file a report of such event, in a form acceptable to
34       the board within 220 days. No such report to the director of workers'
35       compensation shall be deemed to satisfy such requirement with respect
36       to events occurring on or after July 1, 1979, and prior to July 1, 1998.
37             (11) All payments due under this section to a minor shall be made to
38       a legally appointed conservator of such minor.
39             (12) The provisions of this section shall apply only to members who
40       were appointed or employed prior to July 1, 1989, and who did not make
41       an election pursuant to K.S.A. 74-4955a and amendments thereto.
42             (13) Any retirant who has been receiving benefits under the provi-
43       sions of this section and who returns to employment with the same or

33
  1       different participating employer in the system shall be deemed no longer
  2       retired.
  3             Sec.  17. K.S.A. 1999 Supp. 74-4960a is hereby amended to read as
  4       follows: 74-4960a. (1) If any active contributing member who is appointed
  5       or employed on or after July 1, 1989, or who makes an election pursuant
  6       to K.S.A. 74-4955a and amendments thereto to be covered by the pro-
  7       visions of this act becomes disabled as defined in subsection (2), such
  8       member shall receive a monthly benefit equal to 50% of the member's
  9       final average salary at the time such member was disabled payable in
10       monthly installments, accruing from the first day upon which the member
11       ceases to draw compensation, if a report of the disability in such form
12       and manner as the board shall prescribe is filed in the office of the ex-
13       ecutive secretary of the board within 220 days after the date of the com-
14       mencement of such disability and if an application for such benefit in
15       such form and manner as the board shall prescribe is filed in the office
16       of the executive secretary of the board within two years of the date of the
17       commencement of such disability.
18             (2) For the purposes of this section, ``disabled'' means total inability
19       to perform permanently the duties of the position of policeman or
20       fireman.
21             (3) Pursuant to the provisions of section 20, and amendments thereto,
22       in the event a member who is disabled and entitled to such benefits as
23       provided in subsection (1) dies after the date of such disability, and no
24       benefits are payable under subsection (3) of K.S.A. 74-4958 and amend-
25       ments thereto, the following benefits shall be payable:
26             (i) To the member's spouse, if lawfully wedded to the member at the
27       time of the member's death, a lump-sum benefit equal to 50% of the
28       member's final average salary at the time such member was disabled.
29             (ii) To the member's spouse, if lawfully wedded to the member at
30       the time of the member's death, an annual benefit equal to 50% of the
31       member's benefit payable in monthly installments, to accrue from the
32       first day of the month following the member's date of death and ending
33       on the last day of the month in which the spouse dies. Commencing on
34       the effective date of this act, any surviving spouse, who was receiving
35       benefits pursuant to this section and who had such benefits terminated
36       by reason of such spouse's remarriage, shall be entitled to once again
37       receive benefits pursuant to this section, except that such surviving spouse
38       shall not be entitled to recover any benefits not received after the ter-
39       mination of benefits by reason of such surviving spouse's remarriage but
40       before the effective date of this act. If there is no surviving spouse, or if
41       after the death of the spouse there remain one or more children under
42       the age of 18 years or one or more children under the age of 23 years
43       who is a full-time student as provided in K.S.A. 74-49,117 and amend-

34
  1       ments thereto, the annual spouse's benefit shall be payable, subject to
  2       the provisions of K.S.A. 1999 Supp. 74-49,123 and amendments thereto,
  3       in equal shares to such children and each child's share shall end on the
  4       last day of the month in which such child attains the age of 18 years or
  5       dies, whichever occurs earlier or in which such child attains the age of 23
  6       years, if such child is a full-time student as provided in K.S.A. 74-49,117
  7       and amendments thereto. Commencing on the effective date of this act,
  8       any child who was receiving benefits pursuant to this section and who
  9       had such benefits terminated by reason of such child's marriage, shall be
10       entitled to once again receive benefits pursuant to this section subject to
11       the limitations contained in this section, except that such child shall not
12       be entitled to recover any benefits not received after the termination of
13       benefits by reason of such child's marriage but before the effective date
14       of this act.
15             (4) Any member who was employed for compensation by an em-
16       ployer other than the member's participating employer and whose disa-
17       bility was incurred in the course of such other employment shall not be
18       eligible for any of the benefits provided in subsection (1) or (3).
19             (5) If a member becomes totally and permanently disabled and no
20       benefits are payable under subsection (1), the sum of the member's ac-
21       cumulated contributions shall be paid to the member.
22             (6) Any member receiving benefits under this section shall submit to
23       medical examination, not more frequent than annually, by one or more
24       physicians or any other practitioners of the healing arts holding a valid
25       license issued by the state board of healing arts to practice a branch of
26       the healing arts, as the board of trustees may direct. If upon such medical
27       examination, the examiner's report to the board states that the member
28       is physically able and capable of resuming employment with the same or
29       a different participating employer, the disability benefits shall terminate.
30       A member who has been receiving benefits under the provisions of this
31       section and who returns to employment, as defined in subsection (4) of
32       K.S.A. 74-4952 and amendments thereto, of a participating employer shall
33       immediately commence accruing service credit which shall be added to
34       that which has been accrued by virtue of previous service.
35             (7) Any member who has been receiving benefits under the provi-
36       sions of this section for a period of five years shall be deemed permanent
37       and shall not be subject to further medical examinations, except that if
38       the board of trustees shall have reasonable grounds to question whether
39       the member remains totally and permanently disabled, a further medical
40       examination or examinations may be required.
41             (8) Refusal or neglect to submit to examination as provided in sub-
42       section (6) shall be sufficient cause for suspending or discontinuing ben-
43       efit payments under this section and if such refusal or neglect shall con-

35
  1       tinue for a period of one year, the member's rights in and to all benefits
  2       under this system may be revoked by the board.
  3             (9) In the event that a member becomes disabled and is eligible for
  4       benefits provided in this section, such member shall be given participating
  5       service credit for the entire period of such disability.
  6             (10) Any member who is receiving benefits pursuant to this section
  7       shall file annually a statement of earnings for the previous year in such
  8       form and manner as the board shall prescribe. Any disability benefit paid
  9       to a member entitled to such benefit pursuant to this section shall be
10       reduced by the board in an amount equal to a $1 reduction in such benefit
11       for every $2 of earnings of such member which were earned during the
12       previous year while such member was disabled. Such reduction shall ap-
13       ply only to a member's earnings which exceed $10,000.
14             (11) Any benefits provided pursuant to this section and any partici-
15       pating service credit given pursuant to subsection (9) shall terminate upon
16       the earliest date such member is eligible for retirement upon attainment
17       of the normal retirement date as provided in K.S.A. 74-4964a and amend-
18       ments thereto.
19             (12) Any member who has received benefits under the provisions of
20       this section for a period of five years or more immediately preceding
21       retirement shall have such member's final average salary adjusted upon
22       retirement by the actuarial salary assumption rates in existence during
23       such period. Effective July 1, 1993, each member's current annual rate
24       shall be adjusted upon retirement by 5% for each year of disability after
25       July 1, 1993, but before July 1, 1998. Effective July 1, 1998, such mem-
26       ber's current annual rate shall be adjusted upon retirement by an amount
27       equal to the lesser of: (1) The percentage increase in the consumer price
28       index for all urban consumers as published by the bureau of labor statistics
29       of the United States department of labor minus one percent; or (2) four
30       percent per annum, measured from the month the disability occurs the
31       member's last day on the payroll to the month that is two months prior
32       to the month of retirement, for each year of disability after July 1, 1998.
33             (13) All payments due under this section to a minor shall be made to
34       a legally appointed conservator of such minor.
35             (14) The provisions of this section shall be effective on and after July
36       1, 1989 and shall apply only to members who were appointed or employed
37       prior to July 1, 1989, and who made an election pursuant to K.S.A. 74-
38       4955a and amendments thereto; and persons appointed or employed on
39       or after July 1, 1989.
40             (15) Any retirant who has been receiving benefits under the provi-
41       sions of this section and who returns to employment with the same or
42       different participating employer in the system shall be deemed no longer
43       retired.

36
  1             Sec.  18. K.S.A. 1999 Supp. 74-4989 is hereby amended to read as
  2       follows: 74-4989. (1) (a) Except as provided in (b), pursuant to the pro-
  3       visions of section 20, and amendments thereto, upon the death of a retir-
  4       ant, the board of trustees of the Kansas public employees retirement
  5       system shall pay a lump-sum death benefit to the retirant's beneficiary
  6       which shall not exceed $4,000 for such retirant, less any amount payable
  7       for funeral benefits under the applicable provisions of any local police or
  8       fire pension plan, as defined by subsection (c) of K.S.A. 12-5001 and
  9       amendments thereto.
10             (b) Notwithstanding the provisions of K.S.A. 74-4923 and amend-
11       ments thereto, any amounts owed the system shall be deducted from such
12       lump-sum death benefit.
13             (2) As used in this section, ``retirant'' means any person who is a
14       member or special member of the Kansas public employees retirement
15       system, the Kansas police and firemen's retirement system, the state
16       school retirement system or the retirement system for judges and who
17       has retired.
18             New Sec.  19. (a) Except as otherwise provided in subsection (b), any
19       member of the system who becomes eligible for another retirement plan
20       authorized under any law of this state or who becomes ineligible for the
21       Kansas public employees retirement plan due to a reduction of hours,
22       who: (1) Has not been granted a vested retirement benefit in the system
23       as provided in K.S.A. 74-4917, and amendments thereto; and (2) has
24       reached the early or normal retirement dates as provided in K.S.A. 74-
25       4914, and amendments thereto, shall be eligible to receive a retirement
26       benefit based on such member's years of service and have interest cred-
27       ited annually to such member's account from the time the member first
28       becomes eligible under this subsection and for so long as they remain
29       eligible under the provisions of this subsection notwithstanding the fact
30       that such member has not been granted a vested retirement benefit as
31       provided in K.S.A. 74-4917, and amendments thereto. Receipt of such
32       retirement benefit shall be as otherwise provided by law.
33             (b) If the status of such member is no longer as described in subsec-
34       tion (a), the vesting requirements specified by K.S.A. 74-4917, and
35       amendments thereto shall be applicable to such member.
36             (c) The provisions of this section shall be part of and supplemental
37       to the provisions of K.S.A. 74-4901 et seq., and amendments thereto.
38             New Sec.  20.  The death benefits, survivor benefits and funeral ex-
39       penses that are provided to surviving spouses, minor children and other
40       beneficiaries as a result of a nonduty related death or retirant death pur-
41       suant to K.S.A. 13-14a07, 13-14a11, 14-10a07, 14-10a11, 74-4958, 74-
42       4958a, 74-4959, 74-4960, 74-4960a and 74-4989, and amendments
43       thereto, are in the nature of life insurance; are provided by the partici-

37
  1       pating employers for the protection of members' spouses, survivors or
  2       beneficiaries as provided in those sections; and are not subject to regu-
  3       lation of the state of Kansas department of insurance. 
  4       Sec.  21. K.S.A. 13-14a11, 14-10a11 and 74-4927k and K.S.A. 1999
  5       Supp. 13-14a07, 14-10a07, 20-2610, 20-2625, 74-4919p, 74-4919q, 74-
  6       4921, 74-4921a, 74-4924, 74-4927, 74-4958, 74-4958a, 74-4959, 74-4960,
  7       74-4960a and 74-4989 are hereby repealed.
  8        Sec.  22. This act shall take effect and be in force from and after its
  9       publication in the statute book.