J o u r n a l o f t h e S e n a t e SEVENTEENTH DAY -------- SENATE CHAMBER, TOPEKA, KANSAS Wednesday, February 5, 1997--2:30 p.m. The Senate was called to order by President Dick Bond. The roll was called with thirty-eight senators present. Senators Downey and Harris were excused. Invocation by Chaplain Fred S. Hollomon: Heavenly Father, We are a nation, it's been said, Of laws and not of men. And the status of our people On some laws depend. Laws can never change the heart, We know that for a fact; But laws can have a lot to do With the way we act. But laws are like computers, What they are producing Depends upon the person Who does the introducing. And since so much depends on us, We have a worthy cause; And the bottom line remains the same: ``Good people make good laws.'' So fill us with your righteousness As we confess our sin; We're a land of laws, but laws are made By women and by men. I pray in Jesus' Name, AMEN INTRODUCTION OF BILLS AND CONCURRENT RESOLUTIONS The following bills were introduced and read by title: SB 205An act concerning townships; relating to certain financial statements; amending K.S.A. 1996 Supp. 80-410 and repealing the existing section, by Senators Clark, Barone, Biggs, Bleeker, Brownlee, Corbin, Hardenburger, Harrington, Huelskamp, Jordan, Karr, Lee, Morris, Sallee, Salmans, Steffes, Tyson and Umbarger. SB 206An act relating to property taxation; concerning the remediation of clerical errors; amending K.S.A. 79-1702 and repealing the existing section, by Committee on Assessment and Taxation. SB 207An act concerning the Kansas corporation commission; investigations and complaints; hearings; amending K.S.A. 66-1,191 and 66-1,234 and K.S.A. 1996 Supp. 66-101d, 66-101e, 66-1,192, 66-1,204, 66-1,205, 66-1,219, 66-1,220 and 66-1,235 and repealing the existing sections, by Committee on Utilities. SB 208An act enacting the interstate ozone transport oversight act; providing for legislative review and recommendations regarding certain interstate memoranda of understanding and agreements, by Committee on Energy and Natural Resources. SB 209An act relating to income taxation; concerning the definition of state for tax paid credit purposes; amending K.S.A. 79-32,111 and repealing the existing section, by Committee on Federal and State Affairs. SB 210An act authorizing the conveyance of certain real property between the Kansas military board and Mr. and Mrs. Jon Flickinger and authorizing the acceptance and conveyance of real property owned by Mr. and Mrs. Jon Flickinger to the Kansas military board, by Joint Committee on State Building Construction. SB 211An act concerning disease reporting; amending K.S.A. 65-118 and repealing the existing section, by Committee on Public Health and Welfare. SB 212An act concerning public utilities and common carriers; change in rates and schedules; amending K.S.A. 1996 Supp. 66-117 and repealing the existing section, by Committee on Utilities. SB 213An act concerning school district finance; relating to local option budgets; amending K.S.A. 1996 Supp. 72-6433 and repealing the existing section; also repealing K.S.A. 1996 Supp. 72-6433a, by Committee on Education. SB 214An act concerning law enforcement; relating to training center; sheriffs; qualifications and officer training requirements; amending K.S.A. 19-801b and 74-5617 and K.S.A. 1996 Supp. 74-5602, 74-5605, 74-5608a and 74-5616 and repealing the existing sections; also repealing K.S.A. 1996 Supp. 74-5602a, by Committee on Judiciary. SB 215An act concerning effects of felony convictions on civil rights of convicted felons; maintenance of expungement records; amending K.S.A. 22-3722 and 43-158 and K.S.A. 1996 Supp. 21-4603d, 21-4611, 21-4615 and 21-4619 and repealing the existing sections; also repealing K.S.A. 1996 Supp. 21-4619b, by Committee on Judiciary. SB 216An act concerning civil procedure for limited actions; relating to application of code of civil procedure; renumbering of case; amending K.S.A. 61-1729 and repealing the existing section, by Committee on Judiciary. SB 217An act concerning emergency telephone services; relating to the financing thereof; amending K.S.A. 12-5303 and K.S.A. 1996 Supp. 12-5302 and repealing the existing sections, by Committee on Elections and Local Government. REFERENCE OF BILLS AND CONCURRENT RESOLUTIONS The following bills and resolution were referred to Committees as indicated: Assessment and Taxation SB 183, 184. Education: SB 181, 182. Elections and Local Government: SB 188, 190. Energy and Natural Resources: SCR 1608. Financial Institutions & Insurance: SB 185, 204. Judiciary: SB 189, 191, 192, 193, 194, 195, 203. Public Health and Welfare: SB 196, 197, 198, 199, 201, 202. Transportation and Tourism: SB 180, 200. Ways and Means: SB 186, 187. MESSAGE FROM THE HOUSE Announcing passage of HB 2021, 2083. INTRODUCTION OF HOUSE BILLS AND CONCURRENT RESOLUTIONS HB 2021, 2083 were thereupon introduced and read by title. CONFIRMATION OF APPOINTMENTS In accordance with Senate Rule 56, the following appointments, submitted by the Governor to the senate for confirmation, were considered. Senator Emert moved the following appointments be confirmed as recommended by the Standing Senate Committees: On the appointment to the: Department of Administration, Secretary: Daniel Raymond Stanley, Sr., serves at the pleasure of the Governor The vote was: Yeas 38, nays 0, present and passing 0, absent or not voting 2. Yeas: Barone, Becker, Biggs, Bleeker, Bond, Brownlee, Clark, Corbin, Emert, Feleciano, Gilstrap, Gooch, Goodwin, Hardenburger, Harrington, Hensley, Huelskamp, Jones, Jordan, Karr, Kerr, Langworthy, Lawrence, Lee, Morris, Oleen, Petty, Praeger, Ranson, Salisbury, Sallee, Salmans, Schraad, Steffes, Steineger, Tyson, Umbarger, Vidricksen. Absent or not voting: Downey, Harris. The appointment was confirmed. On the appoiintment to the: Executive Director of State Gaming Agency: Tracy T. Diel, serves at the pleasure of the Governor The vote was: Yeas 38, nays 0, present and passing 0, absent or not voting 2. Yeas: Barone, Becker, Biggs, Bleeker, Bond, Brownlee, Clark, Corbin, Emert, Feleciano, Gilstrap, Gooch, Goodwin, Hardenburger, Harrington, Hensley, Huelskamp, Jones, Jordan, Karr, Kerr, Langworthy, Lawrence, Lee, Morris, Oleen, Petty, Praeger, Ranson, Salisbury, Sallee, Salmans, Schraad, Steffes, Steineger, Tyson, Umbarger, Vidricksen. Absent or not voting: Downey, Harris. The appointment was confirmed. On the appointment to the: Kansas Racing and Gaming Commission: Gene M. Olander, term expires January 15, 2001 The vote was: Yeas 38, nays 0, present and passing 0, absent or not voting 2. Yeas: Barone, Becker, Biggs, Bleeker, Bond, Brownlee, Clark, Corbin, Emert, Feleciano, Gilstrap, Gooch, Goodwin, Hardenburger, Harrington, Hensley, Huelskamp, Jones, Jordan, Karr, Kerr, Langworthy, Lawrence, Lee, Morris, Oleen, Petty, Praeger, Ranson, Salisbury, Sallee, Salmans, Schraad, Steffes, Steineger, Tyson, Umbarger, Vidricksen. Absent or not voting: Downey, Harris. The appointment was confirmed. FINAL ACTION ON BILLS AND CONCURRENT RESOLUTIONS SB 17, An act relating to school buses; concerning the definition thereof; amending K.S.A. 72-8301 and repealing the existing section, was considered on final action. On roll call, the vote was: Yeas 37, nays 1, present and passing 0; absent or not voting 2. Yeas: Barone, Becker, Biggs, Bleeker, Bond, Brownlee, Clark, Corbin, Emert, Feleciano, Gilstrap, Gooch, Goodwin, Hardenburger, Harrington, Hensley, Huelskamp, Jones, Jordan, Kerr, Langworthy, Lawrence, Lee, Morris, Oleen, Petty, Praeger, Ranson, Salisbury, Sallee, Salmans, Schraad, Steffes, Steineger, Tyson, Umbarger, Vidricksen. Nays: Karr. Absent or not voting: Downey, Harris. The bill passed. EXPLANATION OF VOTE Mr. President, I would like to explain my ``no'' vote on SB 17. I am concerned our schools will realize a change in their liability insurance and a resulting increase in insurance costs. This new class of school bus law does not require the training and license now necessary to drive a regular school bus.--Gerald ``Jerry'' Karr SB 33, An act concerning municipalities; relating to the bonding of certain officers; amending K.S.A. 19-4204 and 19-4206 and repealing the existing sections, was considered on final action. On roll call, the vote was: Yeas 38, nays 0, present and passing 0; absent or not voting 2. Yeas: Barone, Becker, Biggs, Bleeker, Bond, Brownlee, Clark, Corbin, Emert, Feleciano, Gilstrap, Gooch, Goodwin, Hardenburger, Harrington, Hensley, Huelskamp, Jones, Jordan, Karr, Kerr, Langworthy, Lawrence, Lee, Morris, Oleen, Petty, Praeger, Ranson, Salisbury, Sallee, Salmans, Schraad, Steffes, Steineger, Tyson, Umbarger, Vidricksen. Absent or not voting: Downey, Harris. The bill passed, as amended. SB 37, An act concerning boards of education of school districts; conferring the power of local control thereon; imposing limitations; amending K.S.A. 72-8205 and repealing the existing section, was considered on final action. On roll call, the vote was: Yeas 38, nays 0, present and passing 0; absent or not voting 2. Yeas: Barone, Becker, Biggs, Bleeker, Bond, Brownlee, Clark, Corbin, Emert, Feleciano, Gilstrap, Gooch, Goodwin, Hardenburger, Harrington, Hensley, Huelskamp, Jones, Jordan, Karr, Kerr, Langworthy, Lawrence, Lee, Morris, Oleen, Petty, Praeger, Ranson, Salisbury, Sallee, Salmans, Schraad, Steffes, Steineger, Tyson, Umbarger, Vidricksen. Absent or not voting: Downey, Harris. The bill passed, as amended. SB 53, An act relating to income taxation; concerning rates of single-individual taxpayers; amending K.S.A. 1996 Supp. 79-32,110 and repealing the existing section, was considered on final action. On roll call, the vote was: Yeas 38, nays 0, present and passing 0; absent or not voting 2. Yeas: Barone, Becker, Biggs, Bleeker, Bond, Brownlee, Clark, Corbin, Emert, Feleciano, Gilstrap, Gooch, Goodwin, Hardenburger, Harrington, Hensley, Huelskamp, Jones, Jordan, Karr, Kerr, Langworthy, Lawrence, Lee, Morris, Oleen, Petty, Praeger, Ranson, Salisbury, Sallee, Salmans, Schraad, Steffes, Steineger, Tyson, Umbarger, Vidricksen. Absent or not voting: Downey, Harris. The bill passed. EXPLANATION OF VOTE Mr. President: I vote for this tax reduction for single individuals because I support returning surplus dollars to the taxpayer. However, I believe that we must acknowledge the larger scope of this issue. The singles taxpayer issue has been framed in a context of fairness. In the interest of fairness, we must recognize the inequality of the federal tax code which pushes married couples into a higher tax bracket. Our tax system has been built on the assumed ability to pay, so that people in higher brackets are taxed at a greater rate. If we are consistent, then we would agree that many singles, without the financial responsibility of raising children, do have the advantage of more discretionary income and ability to pay. I would hope we would apply the same standards of fairness and equality, and offer tax relief to families in the form of a per child tax credit, recognizing the additional obligations and responsibilities of parents, both single and married, in providing for their children. By extending to families a reasonable tax credit we are directly helping our Kansas children, enabling their parents to meet their physical needs and long range goals.--Laurie Bleeker Senators Brownlee, Harrington, Sallee, Salmans and Umbarger request the record to show they concur with the ``Explanation of Vote'' offered by Senator Bleeker on SB 53. SB 58, An act concerning the Kansas development finance authority; relating to the board of directors thereof; amending K.S.A. 1996 Supp. 74-8903 and repealing the existing section, was considered on final action. On roll call, the vote was: Yeas 38, nays 0, present and passing 0; absent or not voting 2. Yeas: Barone, Becker, Biggs, Bleeker, Bond, Brownlee, Clark, Corbin, Emert, Feleciano, Gilstrap, Gooch, Goodwin, Hardenburger, Harrington, Hensley, Huelskamp, Jones, Jordan, Karr, Kerr, Langworthy, Lawrence, Lee, Morris, Oleen, Petty, Praeger, Ranson, Salisbury, Sallee, Salmans, Schraad, Steffes, Steineger, Tyson, Umbarger, Vidricksen. Absent or not voting: Downey, Harris. The bill passed, as amended. SB 62, An act concerning veterinary practice; amending K.S.A. 47-816 and 47-826 and repealing the existing sections, was considered on final action. On roll call, the vote was: Yeas 38, nays 0, present and passing 0; absent or not voting 2. Yeas: Barone, Becker, Biggs, Bleeker, Bond, Brownlee, Clark, Corbin, Emert, Feleciano, Gilstrap, Gooch, Goodwin, Hardenburger, Harrington, Hensley, Huelskamp, Jones, Jordan, Karr, Kerr, Langworthy, Lawrence, Lee, Morris, Oleen, Petty, Praeger, Ranson, Salisbury, Sallee, Salmans, Schraad, Steffes, Steineger, Tyson, Umbarger, Vidricksen. Absent or not voting: Downey, Harris. The bill passed. SB 63, An act concerning public livestock markets; relating to injured, disabled or diseased animals; amending K.S.A. 1996 Supp. 47-1008 and repealing the existing section, was considered on final action. On roll call, the vote was: Yeas 38, nays 0, present and passing 0; absent or not voting 2. Yeas: Barone, Becker, Biggs, Bleeker, Bond, Brownlee, Clark, Corbin, Emert, Feleciano, Gilstrap, Gooch, Goodwin, Hardenburger, Harrington, Hensley, Huelskamp, Jones, Jordan, Karr, Kerr, Langworthy, Lawrence, Lee, Morris, Oleen, Petty, Praeger, Ranson, Salisbury, Sallee, Salmans, Schraad, Steffes, Steineger, Tyson, Umbarger, Vidricksen. Absent or not voting: Downey, Harris. The bill passed, as amended. SB 77, An act concerning the dispensing and administering of drugs; amending K.S.A. 65-1635 and repealing the existing section, was considered on final action. On roll call, the vote was: Yeas 38, nays 0, present and passing 0; absent or not voting 2. Yeas: Barone, Becker, Biggs, Bleeker, Bond, Brownlee, Clark, Corbin, Emert, Feleciano, Gilstrap, Gooch, Goodwin, Hardenburger, Harrington, Hensley, Huelskamp, Jones, Jordan, Karr, Kerr, Langworthy, Lawrence, Lee, Morris, Oleen, Petty, Praeger, Ranson, Salisbury, Sallee, Salmans, Schraad, Steffes, Steineger, Tyson, Umbarger, Vidricksen. Absent or not voting: Downey, Harris. The bill passed, as amended. SB 83, An act concerning the employment security law; amending K.S.A. 1996 Supp. 44709, 44-710 and 44-718 and repealing the existing sections, was considered on final action. On roll call, the vote was: Yeas 38, nays 0, present and passing 0; absent or not voting 2. Yeas: Barone, Becker, Biggs, Bleeker, Bond, Brownlee, Clark, Corbin, Emert, Feleciano, Gilstrap, Gooch, Goodwin, Hardenburger, Harrington, Hensley, Huelskamp, Jones, Jordan, Karr, Kerr, Langworthy, Lawrence, Lee, Morris, Oleen, Petty, Praeger, Ranson, Salisbury, Sallee, Salmans, Schraad, Steffes, Steineger, Tyson, Umbarger, Vidricksen. Absent or not voting: Downey, Harris. The bill passed, as amended. INTRODUCTION OF ORIGINAL MOTIONS AND SENATE RESOLUTIONS Senators Barone, Becker, Biggs, Bleeker, Bond, Brownlee, Clark, Corbin, Downey, Emert, Feleciano, Gilstrap, Gooch, Goodwin, Hardenburger, Harrington, Harris, Hensley, Huelskamp, Jones, Jordan, Karr, Kerr, Langworthy, Lawrence, Lee, Morris, Oleen, Petty, Praeger, Ranson, Salisbury, Sallee, Salmans, Schraad, Steffes, Steineger, Tyson, Umbarger and Vidricksen introduced the following Senate resolution, which was read: SENATE RESOLUTION No. 1812-- A RESOLUTION in memory of Colonel (Retired) E.W. ``Bill'' Hollenbeck. WHEREAS, Bill Hollenbeck, age 62, died January 2, 1997, after being in ill health for a few months; and WHEREAS, Bill Hollenbeck had served as the Assistant to the President of Pittsburg State University since 1981 and as the legislative liaison for the University. He also had served as Chairperson of the Military Science Department and as an adjunct professor in the University's history department and the psychology and counseling department; and WHEREAS, Bill Hollenbeck served in the U.S. Army from 1956 to 1981, which service included tours of duty in Germany and Vietnam and as a battalion commander and senior aide-de-camp. His military decorations included the Legion of Merit, the Bronze Star and the Purple Heart; and WHEREAS, Bill Hollenbeck earned a bachelor of science in education from Pittsburg State University where he was a four-year letterman in football. He later received a master of science in education from Wichita State University and a certificate of advanced study in counseling and guidance from Boston University; and WHEREAS, Bill Hollenbeck was married to JoAnn Bill in 1955. She and their two daughters, Susan Camille Flinn and Patricia Ann Hollenbeck, survive his death; and WHEREAS, Bill Hollenbeck had a unique ability to relate to and gain the respect of other people--whether working with officials of state government in Topeka or with faculty and support staff at Pittsburg State University. He made a habit of seeing the positive side of every person or issue; and WHEREAS, In the death of Bill Hollenbeck, the nation, the state, Pittsburg State University, his many friends and his family have lost a loyal and distinguished public servant, a dear friend and a beloved family member: Now, therefore, Be it resolved by the Senate of the State of Kansas: That we extend our deepest sympathy to the family of Bill Hollenbeck; and Be it further resolved: That the Secretary of the Senate be directed to send an enrolled copy of this resolution to Mrs. E.W. Hollenbeck, 2806 E. Eighth Street, Pittsburg, Kansas 66762 and Dr. John Darling, President, Pittsburg State University, 1701 S. Broadway, Pittsburg, Kansas 66762. On emergency motion of Senator Barone SR 1812 was adopted unanimously. President John Darling, President of Pittsburg State University accompanied Mrs. JoAnn Hollenbeck and Patricia Ann, wife and daughter of Bill Hollenbeck, also his mother and sister Agnes Gallup and Roberta Dageforde. REPORTS OF STANDING COMMITTEES Committee on Assessment and Taxation recommends SB 109 be passed. Also SB 51 be amended on page 1, in line 16, before the comma by inserting ``, the privilege tax on net income of insurance companies imposed under article 28 of chapter 40 of the Kansas Statutes Annotated and the privilege tax as measured by net income of financial institutions imposed pursuant to article 11 of chapter 79 of the Kansas Statutes Annodated''; in line 17, after ``income'' by inserting ``or privilege''; in line 20, by striking the first ``of'' and inserting ``or''; also, in line 20, before the period by inserting ``and machinery and equipment classified for such purposes in subclass (2) of class 2''; In the title, in line 9, after ``income'' by inserting ``or privilege''; and the bill be passed as amended. SB 107 be amended on page 1, in line 39, by striking all after the comma; in line 40, by striking all before ``an''; in line 42, by striking all after ``county''; in line 43, by striking ``valuation''; and the bill be passed as amended. Committee on Education recommends SB 13 be amended on page 1, in line 37, before ``or'', by inserting ``, school district''; in line 40, by striking ``annual''; also in line 40, by striking all after ``payments'' and inserting ``in any year in excess of ``; On page 2, by striking all of lines 18 through 40; in line 41, by striking ``(e)'' and inserting ``(d)''; and the bill be passed as amended. Committee on Federal and State Affairs recommends SB 69 be amended on page 1, in line 28, following ``(c)'' by inserting ``(1)''; following line 31, by inserting: ``(2) Traffic in any contraband, as defined by rules and regulations adopted by the secretary, in a correctional institution by an employee of a correctional institution is a severity level 5, nonperson felony.''; Also on page 1, in line 37, by striking ``statute book'' and inserting ``Kansas register''; and the bill be passed as amended. Committee on Financial Institutions and Insurance recommends SB 55 be passed. Also SB 12 be amended on page 1, in line 19, after ``information'' by inserting ``, to the extent known by the medical benefit plan provider,''; in line 27, by striking ``may'' and inserting ``shall''; in line 33, following the period, by inserting ``Such information may be used solely for the purpose of determining whether medical assistance has been paid or is eligible to be paid by the secretary for which a recovery from a medical benefit plan provider is due under K.S.A. 39-719a and amendments thereto.''; On page 2, following line 19, by inserting a subsection as follows: ``(e) No medicaid provider who rendered professional services to a medicaid beneficiary and was paid by the secretary for such services shall be liable to the medical benefit plan provider for any amounts recovered pursuant to this act or pursuant to the provisions of K.S.A. 39-719a and amendments thereto.''; and the bill be passed as amended. SB 15 be amended on page 1, in line 42, by striking the semicolon and inserting: ``direct, nongroup life, health, annuity and supplemental policies or contracts, unallocated annuity contracts covering individuals participating in a governmental deferred compensation plan established under section 457 of the U.S. internal revenue code pursuant to K.S.A. 75-5521 through 75-5529a, and amendments thereto, whether or not a resident, or the beneficiaries of each such individual if deceased,''; by striking all of line 43; On page 2, in line 1, by striking all before ``certificates'' and inserting ``and for''; by striking lines 3 to 6, inclusive; preceding line 7, by inserting a new section as follows: ``Sec. 2. K.S.A. 40-3008 is hereby amended to read as follows: 40-3008. (a) If a member insurer is an impaired domestic insurer, the association may, in its discretion and subject to any conditions imposed by the association that do not impair the contractual obligations of the impaired insurer, that are approved by the commissioner and that are, except in cases of court-ordered conservation or rehabilitation, also approved by the impaired insurer: (1) Guarantee, assume or reinsure, or cause to be guaranteed, assumed or reinsured, any or all of the policies or contracts of the impaired insurer; (2) provide such moneys, pledges, notes, guarantees or other means as are proper to effectuate the provisions of paragraph (1) of this subsection and assure payment of the contractual obligations of the impaired insurer pending action under paragraph (1); or (3) lend money to the impaired insurer. (b) (1) If a member insurer is an impaired insurer, whether domestic, foreign or alien, and the insurer is not paying claims timely, then subject to the preconditions specified in paragraph (2) of this subsection, the association shall, in its discretion, either: (A) Take any of the actions specified in subsection (a), subject to the conditions therein; or (B) provide substitute benefits in lieu of the contractual obligations of the impaired insurer solely for health claims, periodic annuity benefit payments, death benefits, supplemental benefits and cash withdrawals for policy or contract owners who petition therefor under claims of emergency or hardship in accordance with standards proposed by the association and approved by the commissioner. (2) The association shall be subject to the requirements of paragraph (1) of this subsection only if: (A) The laws of the impaired insurer's state of domicile provide that: (i) The delinquency proceeding shall not be dismissed; (ii) neither the impaired insurer nor its assets shall be returned to the control of its shareholders or private management; and (iii) it shall not be permitted to solicit or accept new business or have any suspended or revoked license restored; and until all payments of or on account of the impaired insurer's contractual obligations by all guaranty associations, along with all expenses thereof and interest on all such payments and expenses, shall have been repaid to the guaranty associations or a plan of repayment by the impaired insurer shall have been approved by the guaranty associations; and (B) (i) with respect to the impaired insurer who is a domestic insurer, it has been placed under an order of rehabilitation by a court of competent jurisdiction in this state; or (ii) with respect to the impaired insurer who is a foreign or alien insurer: (aa) It has been prohibited from soliciting or accepting new business in this state; (bb) its certificate of authority has been suspended or revoked in this state; and (cc) a petition for rehabilitation or liquidation has been filed in a court of competent jurisdiction in its state of domicile by the commissioner of the state. (c) If a member insurer is an insolvent insurer, the association shall, in its discretion, either: (1) (A) Guarantee, assume or reinsure, or cause to be guaranteed, assumed or reinsured, the policies or contracts of the insolvent insurer; (B) assure payment of the contractual obligations of the insolvent insurer; and (C) provide such moneys, pledges, guarantees or other means as are reasonably necessary to discharge such duties; or (2) with respect only to life and health policies, provide benefits and coverages in accordance with subsection (d). (d) When proceeding under subsection (b)(1)(B) or (c)(2), the association shall, with respect only to life and health insurance policies: (1) Assure payment of benefits for premiums identical to the premiums and benefits, except for terms of conversion and renewability, that would have been payable under the policies of the insolvent insurer, for claims incurred: (A) With respect to group policies, not later than the earlier of the next renewal date under such policies or contracts or 45 days, but in no event less than 30 days, after the date on which the association becomes obligated with respect to such policies; (B) with respect to individual policies, not later than the earlier of the next renewal date, if any, under such policies or one year, but in no event less than 30 days, from the date on which the association becomes obligated with respect to such policies; (2) make diligent efforts to provide all known insureds or group policyholders with respect to group policies 30 days' notice of the termination of the benefits provided; and (3) with respect to individual policies, make available to each known insured, or owner if other than the insured, and with respect to an individual formerly insured under a group policy who is not eligible for replacement group coverage, make available substitute coverage on an individual basis in accordance with the provisions of paragraph (4) of this subsection, if the insureds had a right under law or the terminated policy to convert coverage to individual coverage or to continue an individual policy in force until a specified age or for a specified time, during which the insurer had no right unilaterally to make changes in any provision of the policy or had a right only to make changes in premium by class; (4) (A) in providing the substitute coverage required under paragraph (3) of this subsection, the association may offer either to reissue the terminated coverage or to issue an alternative policy; (B) alternative or reissued policies shall be offered without requiring evidence of insurability, and shall not provide for any waiting period or exclusion that would not have applied under the terminated policy; and (C) the association may reinsure any alternative or reissued policy; (5) (A) alternative policies adopted by the association shall be subject to the approval of the commissioner. The association may adopt alternative policies of various types for future issuance without regard to any particular impairment or insolvency; (B) alternative policies shall contain at least the minimum statutory provisions required in this state and provide benefits that shall not be unreasonable in relation to the premiums charged. The association shall set the premiums in accordance with a table of rates which it shall adopt. The premiums shall reflect the amount of insurance to be provided and the age and class of risk of each insured, but shall not reflect any changes in the health of the insured after the original policy was last underwritten; (C) any alternative policy issued by the association shall provide coverage of a type similar to that of the policy issued by the impaired or insolvent insurer, as determined by the association; (6) if the association elects to reissue the insured's terminated coverage at a premium rate different from that charged under the terminated policy, the premium shall be set by the association in accordance with the amount of insurance provided and the age and class of risk, subject to approval by the commissioner and by a court of competent jurisdiction; (7) the association's obligations with respect to coverage under any policy of the impaired or insolvent insurer or under any reissued or alternative policy shall cease on the date such coverage or policy is replaced by another similar policy by the policyholder, the insured or the association. (e) When proceeding under subsection (b)(1)(B) or (c) with respect to any policy or contract carrying guaranteed minimum interest rates, the association shall assure the payment or crediting of a rate of interest consistent with subsection (n)(3). (f) Nonpayment of premiums within 31 days after the date required under the terms of any guaranteed, assumed, alternative or reissued policy or contract or substitute coverage shall terminate the association's obligations under such policy or coverage under this act with respect to such policy or coverage, except with respect to any claims incurred or any net cash surrender value which may be due in accordance with the provisions of this act. (g) Premiums due after entry of an order of liquidation of an insolvent insurer shall belong to and be payable at the direction of the association, and the association shall be liable for unearned premiums due to policy or contract owners arising after the entry of such order. (h) The protection provided by this act shall not apply where any guaranty protection is provided to residents of this state by the laws of the domiciliary state or jurisdiction of the impaired or insolvent insurer other than this state. (i) In carrying out its duties under subsections (b) and (c), the association may, subject to approval by the court: (1) Impose permanent policy or contract liens in connection with any guarantee, assumption or reinsurance agreement, if the association finds that the amounts which can be assessed under this act are less than the amounts needed to assure full and prompt performance of the association's duties under this act, or that the economic or financial conditions as they affect member insurers are sufficiently adverse to render the imposition of such permanent policy or contract liens to be in the public interest; and (2) impose temporary moratoriums or liens on payments of cash values and policy loans, or any other right to withdraw funds held in conjunction with policies or contracts, in addition to any contractual provisions for deferral of cash or policy loan value. (j) If the association fails to act within a reasonable period of time as provided in subsections (b)(1)(B), (c) and (d) of this section, the commissioner shall have the powers and duties of the association under this act with respect to impaired or insolvent insurers. (k) The association may render assistance and advice to the commissioner, upon request, concerning rehabilitation, payment of claims, continuance of coverage or the performance of other contractual obligations of any impaired or insolvent insurer. (l) The association shall have standing to appear before any court in this state with jurisdiction over an impaired or insolvent insurer concerning which the association is or may become obligated under this act. Such standing shall extend to all matters germane to the powers and duties of the association, including, but not limited to, proposals for reinsuring or guaranteeing the covered policies of the impaired insurer and the determination of the covered policies or contracts and contractual obligations. The association shall also have the right to appear or intervene before a court in another state with jurisdiction over an impaired or insolvent insurer for which the association is or may become obligated or with jurisdiction over a third party against whom the association may have rights through subrogation of the insurer's policyholders. (m) (1) Any person receiving benefits under this act shall be deemed to have assigned the rights under any cause of action relating to the covered policy or contract to the association to the extent of the benefits received because of this act, whether the benefits are payments of or on account of contractual obligations, continuation of coverage or provision of substitute or alternative coverages. The association may require an assignment to it of such rights and cause of action by any payee, policy or contract owner, beneficiary, insured or annuitant as a condition precedent to the receipt of any right or benefits conferred by this act upon such person. (2) The subrogation rights of the association under this subsection shall have the same priority against the assets of the impaired or insolvent insurer as that possessed by the person entitled to receive benefits under this act. (3) In addition to paragraphs (1) and (2), the association shall have all common-law rights of subrogation and any other equitable or legal remedy which would have been available to the impaired or insolvent insurer or holder of a policy or contract with respect to such policy or contracts. (n) The contractual obligations of the impaired or insolvent insurer for which the association becomes, or may become, liable shall be as great as but no greater than the contractual obligations of the impaired or insolvent insurer would have been in the absence of an impairment or insolvency unless such obligations are reduced as permitted by subsection (e) but the association shall not provide coverage for: (1) Any portion of a policy or contract not guaranteed by the insurer, or under which the risk is borne by the policy or contract holder; (2) any policy or contract of reinsurance, unless assumption certificates have been issued; (3) any portion of a policy or contract to the extent that the rate of interest on which it is based: (A) Averaged over the period of four years prior to the date on which the association becomes obligated with respect to such policy or contract, exceeds a rate of interest determined by subtracting two percentage points from Moody's corporate bond yield average averaged for that same four-year period or for such lesser period if the policy or contract was issued less than four years before the association became obligated; and (B) on and after the date on which the association becomes obligated with respect to such policy or contract, exceeds the rate of interest determined by subtracting three percentage points from Moody's corporate bond yield average as most recently available; (4) any plan or program of an employer, association or similar entity to provide life, health or annuity benefits to its employees or members to the extent that such plan or program is self-funded or uninsured, including but not limited, to benefits payable by an employer, association or similar entity under: (A) A multiple employer welfare arrangement as defined in section 514 of the employee retirement income security act of 1974, as amended; (B) a minimum premium group insurance plan; (C) a stop-loss group insurance plan; or (D) an administrative services only contract; (5) any portion of a policy or contract to the extent that it provides dividends or experience rating credits, or provides that any fees or allowances be paid to any person, including the policy or contract holder, in connection with the service to or administration of such policy or contract; (6) any policy or contract issued in this state by a member insurer at a time when it was not licensed or did not have a certificate of authority to issue such policy or contract in this state; and (7) any unallocated annuity contract, except as provided in subsection (b) of K.S.A. 403003 and amendments thereto. (o) The benefits for which the association may become liable shall in no event exceed the lesser of: (1) The contractual obligations for which the insurer is liable or would have been liable if it were not an impaired or insolvent insurer; or (2) with respect to any one life, regardless of the number of policies or contracts: (A) $300,000 in life insurance death benefits, but not more than $100,000 in net cash surrender and net cash withdrawal values for life insurance; (B) $100,000 in health insurance benefits, including any net cash surrender and net cash withdrawal values; or (C) $100,000 in the present value of annuity benefits, including net cash surrender and net cash withdrawal values; (D) In no event shall the association be liable to expend more than $300,000 in the aggregate with respect to any one life as provided in paragraph (A), (B) or (C) of this subsection. (E) Any increased limits of liability of the guaranty association by this act shall not apply to an impaired or insolvent insurer for which the guaranty association becomes liable prior to July 1, 1993. The provisions of subsection (o) shall not apply to annuity contracts for future economic loss procured pursuant to a judgment or settlement agreement in a medical malpractice liability action. (p) The association may: (1) Enter into such contracts as are necessary or proper to carry out the provisions and purposes of this act; (2) sue or be sued, including taking any legal actions necessary or proper to recover any unpaid assessments under K.S.A. 40-3009 and amendments thereto, and to settle claims or potential claims against it; (3) borrow money to effect the purposes of this act. Any notes or other evidence of indebtedness of the association not in default shall be legal investments for domestic insurers and may be carried as admitted assets; (4) employ or retain such persons as are necessary to handle the financial transactions of the association, and to perform such other functions as become necessary or proper under this act; (5) take such legal action as may be necessary to avoid payment of improper claims; or (6) exercise, for the purposes of this act and to the extent approved by the commissioner, the powers of a domestic life or health insurer, but in no case may the association issue insurance policies or annuity contracts other than those issued to perform its obligations under this act. (q) The association may join an organization of one or more other state associations of similar purposes to further the purposes and administer the powers and duties of the association. And by renumbering sections accordingly; Also on page 2, in line 7, by striking ``is'' and inserting ``and 40-3008 are''; On page 1, in the title, in line 11, after ``40-3003'' by inserting ``and 40-3008''; in line 12, by striking ``section'' and inserting ``sections''; and the bill be passed as amended.''; SB 57 be amended on page 4, in line 36, after ``children'' by inserting ``or grandchildren''; in line 37, after ``children'' by inserting ``or grandchildren''; in line 43, after ``spouses'' by inserting ``parents''; also in line 43, by striking ``and'' and inserting a comma; also in line 43, after ``children'' by inserting ``, grandchildren, parents, the spouses' children, grandchildren and parents''; On page 5, in line 7, by striking ``and'' and inserting a comma; also in line 7, after ``children'' by inserting ``, grandchildren, parents, their spouses' children, grandchildren and parents''; and the bill be passed as amended. Committee on Judiciary recommends SB 101 be passed. Committee on Transportation and Tourism recommends SB 118 be passed. REPORT ON ENGROSSED BILLS SB 33, 37, 58, 63, 77, 83 reported correctly engrossed February 5, 1997. REPORT ON ENROLLED BILLS SR 1807, 1808, 1809, 1810 reported correctly enrolled, properly signed and presented to the Secretary of the Senate on February 4, 1997. COMMITTEE OF WHOLE On motion of Senator Emert, the Senate resolved itself into Committee of the Whole, for consideration of bills on the calendar under the heading of General Orders with Senator Oleen in the chair. Recommended that: SB 10, 11, 16 be passed. A motion to return SB 36 to the Committee on Education failed, and the Committee recommended SB 36 be passed. Also SB 82 be amended by adoption of the committee amendments, and the bill be passed as amended. SB 1 be amended by motion of Senator Kerr on on page 3, by striking all in lines 13 through 35; And by renumbering existing sections accordingly; Also on page 3, in line 36, by striking ``and 75-6701 are'' and inserting ``is''; In the title, in line 10, by striking ``and 75-6701''; in line 11, by striking ``sections'' and inserting ``section'', and the bill be passed as amended. SB 14 be amended by motion of Senator Ranson on page 1, in line 18, by striking ``There is hereby established the'' and inserting: ``The secretary of administration shall establish an''; in line 19, by striking all after ``compensation''; by striking all in lines 20 through 23; in line 24, by striking all before the period, and the bill be passed as amended. SB 41 be amended by motion of Senator Langworthy on line 17, after ``23'' by inserting ``determined without regard to subsection (c) thereof''; by striking all in lines 20 through 22; after line 22, by inserting the following: ``(b) For all taxable years commencing after December 31, 1996, there shall be allowed as a credit against the tax liability of a resident individual imposed under the Kansas income tax act an amount equal to $3,000 for the taxable year in which occurs the lawful adoption of a child in the custody of the secretary of social and rehabilitation services or a child with special needs, whether or not such individual is reimbursed for all or part of qualified adoption expenses or has received a public or private grant therefor. As used in this subsection, terms and phrases shall have the meanings ascribed thereto by the provisions of section 23 of the federal internal revenue code. No credit shall be allowed under subsection (a) for any qualified adoption expenses incurred in the adoption of a child described by this subsection. (c) The credit allowed by subsections (a) and (b) shall not exceed the amount of the tax imposed by K.S.A. 79-32,110, and amendments thereto, reduced by the sum of any other credits allowable pursuant to law. If the amount of such tax credit exceeds the taxpayer's income tax liability for such taxable year, the amount thereof which exceeds such tax liability may be carried over for deduction from the taxpayer's income tax liability in the next succeeding taxable year or years until the total amount of the tax credits has been deducted from tax liability, except that no such tax credit shall be carried over for deduction after the fifth taxable year succeeding the taxable year in which the credit was claimed.'', and the bill be passed as amended. SB 22 be amended by adoption of the committee amendments, be further amended by motion of Senator Steineger on page 5, in line 20, after ``for'', by inserting ``an area vocational school, an area vocational-technical school, a technical college, or''; in line 21, by striking ``71-701'' and inserting ``72-4412'', and the bill be passed as further amended. On motion of Senator Emert the Senate adjourned until 2:30 p.m., Thursday, February 6, 1997.