SESSION OF 2002

SUPPLEMENTAL NOTE ON SENATE BILL NO. 386

As Recommended by Senate Committee on

Ways and Means

Brief

       SB 386 would make anyone a special member of the Kansas Public Employees Retirement System (KPERS) if the person is retired or retires in the future under subsection (3) of KSA 74-4925 which establishes a group for Regents unclassified staff with prior service credit under KPERS. All assets and liabilities for this Regents’ group would be shifted to the KPERS Fund, including an unfunded actuarial liability. Currently, a group of unclassified staff who previously worked or continue to work at Regents’ institutions have prior service credit under KPERS, and the group is defined in statute for purposes of assessing an employer contribution rate to pay off an unfunded liability.

Background

       This bill is part of the Kerr-Morris package of budget adjustments. The bill makes statutory changes in law to merge a KPERS group for which a separate employer contribution is required to be budgeted at Regents’ institutions, and to incorporate the remaining liability and assets into the larger KPERS state/school group.

       The fiscal note indicates that a rate increase associated with the Regents’ group would be to increase the state/school employer contribution rate by 0.03 percent. The bill would be effective upon publication in the Kansas Register.

       Based on the December 31, 2000, actuarial valuation prepared for KPERS, the Regents’ group had an unfunded actuarial liability of $22,683,046. The employer contribution rate for this group in FY 2004 would be 2.20 percent, based on this valuation. For FY 2002, the contribution rate is 1.43 percent and for FY 2003, the rate is 1.67 percent. After passage of SB 386, there would be no need for future employer contributions to be calculated separately for this group if it were merged into the larger KPERS state/school group. Presumably, there would be savings possible in amounts budgeted for the Regents’ employer contributions. There would be no increase immediately in the state/school employer contribution rate due to this action, except for the annual increase of 0.2 percent allowed by current law.