As Amended by House Committee of the Whole


House Sub. for S.B. 618 includes the House recommendations for the 1998 Kansas Public Employees Retirement System (KPERS) omnibus bill. The bill would grant automatic, post-retirement benefit increases linked to two-thirds the Consumer Price Index (CPI), and capped at no more than 2.0 percent, for any person after being retired for five years. The bill also would modify a number of KPERS statutes and would add other provisions as described in the following items.

Criminal Penalty. The provisions passed by the Senate in S.B. 618, which also are included in this substitute bill, would add a criminal penalty for making false statements pertaining to KPERS matters. The proposed change would delete references to "misdemeanor" and "$500," and would substitute language providing that such a person is "subject to the provisions of K.S.A. 21-3904" which is the criminal code section governing the presenting of a false claim. K.S.A. 21-3904 defines presenting a false claim as knowingly and with intent to defraud, presenting a false claim or demand to a public officer or body authorized to pay such claim, and provides a graduated level of severity depending upon the dollar amount of the fraud. Current law provides that a person who knowingly makes a false statement for the purpose of committing fraud shall be guilty of a misdemeanor and upon conviction subject to a fine of up to $500.

Restriction Rescinded. This provision would allow pre-July 1, 1995, members participating in a KPERS administered plan to retire under one system and to continue working under a second system while drawing retirement benefits from the original plan. This provision originally was included in S.B. 617 that was recommended for introduction by the Joint Committee on Pensions, Investments and Benefits. Current law passed in 1995 requires that if a person uses credit from one plan in order to retire under a different plan, then the person must retire from both plans in order to collect retirement benefits. Fiscal Note: KPERS staff estimates that 546 individuals could be affected by the issue of retiring under two systems, but that most active employees (80 percent) would not be involved in the fiscal consequences. The fiscal note indicates that 126 of those presently working under one plan (regular KPERS) and inactive under another plan (KP&F) would cost KPERS approximately $14 million if all individuals continued working until age 65. However, if all active members of this group retired as soon as eligible under regular KPERS, then the cost estimate is approximately $3.5 million. KPERS staff suggests that the cost most likely would be in the $10-$12 million range.

Service Credit Purchases. A provision was included that would authorize all service credit purchases that are currently 1.0 to be purchase optionally at 1.75 percent. This item also is included in S.B. 619. The Joint Committee on Pensions, Investments and Benefit studied this issue during the 1997 interim and recommended introduction of the bill which was assigned to the Senate for first consideration. The proposal would allow all KPERS service credit purchases currently based on a 1.0 percent multiplier to be acquired by the individual at the actuarial cost for either the present 1.0 percent multiplier, or an enhanced 1.75 percent multiplier.

A House floor amendment would allow active members who previously purchased service credit at 1.0 percent to buy an additional 0.75 percent as a lump sum purchase for the actuarial cost.

Technical Amendments. The following provisions requested by the KPERS Board of Trustees originally were included in S.B. 620, which was recommended for introduction by the Joint Committee on Pensions, Investments and Benefits to include these items. Fiscal Note: There is no administrative impact noted by KPERS.