SESSION OF 2001

SUPPLEMENTAL NOTE ON SUBSTITUTE FOR SENATE BILL NO. 365

As Amended by Senate Committee of the Whole

Brief ⁽¹⁾

The substitute bill would extend for two quarters in FY 2002 the present moratorium on the employer contributions for insurance payments that finance the death and long-term disability benefits program administered by the Kansas Public Employees Retirement System (KPERS). Public employers affected would be contributors to the Judges Retirement System, the state/school and local KPERS plans, and Regents retirement annuity plans.

Background

The change was recommended by the Senate Ways and Means Committee to implement statutory revisions associated with its recommendations in the Senate version of the 2001 Omnibus appropriations bill (SB 363). The Senate Committee changed the original title of the bill as introduced and recommended a substitute bill that eliminates references to KPERS, retirement, and pensions. The substitute bill's title refers only to certain employer contributions. The Senate Committee of the Whole amendment was technical, correcting one of two changes in dates to be consistent.

The 2000 Legislature approved a five-quarter moratorium covering the last quarter of FY 2000 and four quarters of FY 2001 for insurance payments that finance the death and long-term disability benefits program. Extending the moratorium for another four quarters in FY 2002 would yield estimated savings of $13.8 million in state and local governmental employer contributions.

Financial Impact KPERS Employer Contributions for Death and Disability (In Millions)

	Estimated	Estimated
Estimated Payments	FY 2001	FY 2002

State/School/TIAA/Other	$ 20.52	$ 10.80
Local Units	5.54	3.00
Totals	$ 26.06	$ 13.80
State General Fund	$ 17.45	$ 9.20
School Only SGF	$ 13.34	$ 6.60

The FY 2002 estimate of state savings would be $10.8 million, of which $9.2 million would be from the State General Fund and $1.6 million would be from all other funds. The KPERS school estimated State General Fund savings is $6.6 million for death and disability in FY 2002. Local units would save $3.0 million.

KPERS projections indicate that if an additional six-month moratorium is enacted, then the funded ratio for the KPERS death and long-term disability benefits program would be between 81 percent and 86 percent at the end of FY 2002. The funded ratio at the end of FY 2001 (the conclusion of the present five-quarter moratorium) for the program would be between 94 and 97 percent, according to projections from KPERS. The funded ratio prior to the employer contribution moratorium had been greater than 100 percent, and at the end of FY 1999 had been 115 percent.

1. *Supplemental notes are prepared by the Legislative Research Department and do not express legislative intent. The supplemental note and fiscal note for this bill may be accessed on the Internet at http://www.ink.org/public/legislative/fulltext.cgi