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10  AN ACT concerning the Kansas public employees retirement system and
11    systems thereunder; relating to benefits; long-term disability ben-
12    efits and retirement annuity for disabled judges; annual final
13    average salary adjustment; workers compensation and social se-
14    [chcurity offset; amending K.S.A. 20-2609 and K.S.A. 1996 Supp. 74-
15    4927 and 74-4966 and repealing the existing section sections.
16
17  Be it enacted by the Legislature of the State of Kansas:
18    Section 1.  K.S.A. 20-2609 is hereby amended to read as fol-
19  lows: 20-2609. (a) Any judge who has become permanently physi-
20  cally or mentally disabled and who is not entitled to retire under
21  K.S.A. 20-2608 and amendments thereto may, upon being found
22  so disabled by the supreme court, retire under this section, and
23  upon such retirement such judge shall be entitled to receive an
24  annuity, each monthly payment of which shall be in an amount
25  equal to 3.5% of the final average salary of the judge, determined
26  as provided in subsection (b) of K.S.A. 20-2610 and amendments
27  thereto, multiplied by the number of total years of service, but
28  such monthly benefits shall be at least 25% but shall not exceed
29  70% of the final average salary of the judge, determined as pro-
30  vided in subsection (b) of K.S.A. 20-2610 and amendments thereto.
31    (b)  Any judge, or the conservator of any judge, desiring to re-
32  tire under the provisions of this section shall file an application for
33  such retirement with the clerk of the supreme court, which appli-
34  cation shall be in such form and contain such information as the
35  supreme court shall require. The court may require such judge to
36  be examined by a physician appointed by the court and may re-
37  quire such other evidence and proof of disability as it deems nec-
38  essary to reach a determination as to whether such judge is so
39  permanently disabled. If the supreme court shall determine that
40  any such judge is so permanently disabled it shall promptly notify
41  the board and thereupon such judge shall be placed on retirement
42  by the board and monthly receive the retirement annuity as pro-
43  vided in this section.
HB 2240--Am.
                                     

 1    (c)  Any judge receiving an annuity under the provisions of this
 2  section shall be considered an active judge for the purposes of
 3  K.S.A. 20-2608 and amendments thereto and shall, upon reaching
 4  age 65 or upon making application for retirement, have such jud-
 5  ge's retirement under this section terminated and such judge shall
 6  be placed on retirement under the provisions of K.S.A. 20-2608
 7  and amendments thereto.
 8    (d)  In the event that a judge eligible for a disability annuity
 9  authorized by this section shall be disabled for a period of five
10  years or more immediately preceding retirement, such judge's fi-
11  nal average salary shall be adjusted upon retirement by the actu-
12  arial salary assumption rates in existence during such period of
13  disability. Effective July 1, 1993, such judge's final average salary
14  shall be adjusted upon retirement by 5% for each year of disability
15  after July 1, 1993, but before July 1, 1997. Effective July 1, 1997, such
16  judge's final average salary shall be adjusted upon retirement by an
17  amount equal to the lesser of: (1)  The percentage increase in the con-
18  sumer price index for all urban consumers as published by the bureau of
19  labor statistics of the United States department of labor; or (2) four per-
20  cent per annum, measured from the month the disability occurs to the
21  month that is two months prior to the month of retirement, for each year
22  of disability after July 1, 1997.
23    (e)  The provisions of law in effect on the retirement date of a
24  judge under the retirement system for judges shall govern the re-
25  tirement benefit payable to the judge, any joint annuitant and any
26  beneficiary.
27    Section 1 2.  K.S.A. 1996 Supp. 74-4927 is hereby amended to read
28  as follows: 74-4927. (1) The board may establish a plan of death and long-
29  term disability benefits to be paid to the members of the retirement
30  system as provided by this section. The long-term disability benefit shall
31  not be payable until the member has been prevented from carrying out
32  each and every duty pertaining to the member's employment as a result
33  of sickness or injury for a period of 180 days and. The annual benefit shall
34  not exceed an amount equal to 66 2/3% of the member's annual rate of
35  compensation on the date such disability commenced and shall be payable
36  in equal monthly installments. In the event that a member's compensation
37  is not fixed at an annual rate but on an hourly, weekly, biweekly, monthly
38  or any other basis than annual, the board shall prescribe by rule and
39  regulation a formula for establishing a reasonable rate of annual compen-
40  sation to be used in determining the amount of the death or long-term
41  disability benefit for such member. Such plan shall provide that:
42    (A)  For deaths occurring prior to January 1, 1987, the right to receive
43  such death benefit shall cease upon the member's attainment of age 70
HB 2240--Am.
                                     

 1  or date of retirement whichever first occurs. The right to receive such
 2  long-term disability benefit shall cease (i) for a member who becomes
 3  eligible for such benefit before attaining age 60, upon the date that such
 4  member attains age 65 or the date of such member's retirement, which-
 5  ever first occurs, (ii) for a member who becomes eligible for such benefit
 6  at or after attaining age 60, the date that such member has received such
 7  benefit for a period of five years, upon the date that such member attains
 8  age 70, or upon the date of such member's retirement, whichever first
 9  occurs, (iii) for all disabilities incurred on or after January 1, 1987, for a
10  member who becomes eligible for such benefit at or after attaining age
11  70, the date that such member has received such benefit for a period of
12  12 months or upon the date of such member's retirement, whichever first
13  occurs, and (iv) for all disabilities incurred on or after January 1, 1987,
14  for a member who becomes eligible for such benefit at or after attaining
15  age 75, the date that such member has received such benefit for a period
16  of six months or upon the date of such member's retirement, whichever
17  first occurs.
18    (B)  Long-term disability benefit payments shall be in lieu of any ac-
19  cidental total disability benefit that a member may be eligible to receive
20  under subsection (3) of K.S.A. 74-4916 and amendments thereto. The
21  member must make an initial application for social security disability
22  benefits and, if denied such benefits, the member must pursue and exhaust
23  all administrative remedies of the social security administration which
24  include, but are not limited to, reconsideration and hearings. Such plan
25  may provide that any amount which a member receives as a social security
26  benefit or a disability benefit or compensation from any source by reason
27  of any employment including, but not limited, to, workers compensation
28  benefits may be deducted from the amount of insured long-term disability
29  benefit payments under such plan, except that not more than 50% of such
30  workers compensation benefits shall be deducted therefrom. During the
31  period in which such member is pursuing such administrative remedies
32  prior to a final decision of the social security administration, social se-
33  curity disability benefits may be estimated and may be deducted from the
34  amount of long-term disability benefit payments under such plan. Such
35  insured long-term disability payments shall accrue from the later of the
36  181st day of total disability or the first day upon which the member ceases
37  to draw compensation from the employer. If the social security benefit,
38  workers compensation benefit, other income or wages or other disability
39  benefit by reason of employment, or any part thereof, is paid in a lump
40  sum, the amount of the reduction shall be calculated on a monthly basis
41  over the period of time for which the lump sum is given. In no case shall
42  a member who is entitled to receive insured long-term disability benefits
43  receive less than $50 per month. As used in this section, ``workers com-
HB 2240--Am.
                                     

 1  pensation benefits'' means the total award of disability benefit payments
 2  under the workers compensation act notwithstanding any payment of at-
 3  torney fees from such benefits as provided in the workers compensation
 4  act.
 5    (C)  The plan may include other provisions relating to qualifications
 6  for benefits; schedules and graduation of benefits; limitations of eligibility
 7  for benefits by reason of termination of employment or membership;
 8  conversion privileges; limitations of eligibility for benefits by reason of
 9  leaves of absence, military service or other interruptions in service; lim-
10  itations on the condition of long-term disability benefit payment by reason
11  of improved health; requirements for medical examinations or reports; or
12  any other reasonable provisions as established by rule and regulation of
13  uniform application adopted by the board.
14    (D)  On and after April 30, 1981, the board may provide under the
15  plan for the continuation of long-term disability benefit payments to any
16  former member who forfeits the entitlement to continued service credit
17  under the retirement system or continued assistance in the purchase of
18  retirement annuities under K.S.A. 74-4925 and amendments thereto and
19  to continued long-term disability benefit payments and continued death
20  benefit coverage, by reason of the member's withdrawal of contributions
21  from the retirement system or the repurchase of retirement annuities
22  which were purchased with assistance received under K.S.A. 74-4925 and
23  amendments thereto. Such long-term disability benefit payments may be
24  continued until such individual dies, attains age 65 or is no longer disa-
25  bled, whichever occurs first.
26    (E)  Any visually impaired person who is in training at and employed
27  by a sheltered workshop for the blind operated by the secretary of social
28  and rehabilitation services and who would otherwise be eligible for the
29  insured long-term disability benefit as described in this section shall not
30  be eligible to receive such benefit due to visual impairment as such im-
31  pairment shall be determined to be a preexisting condition.
32    (2) (A)  In the event that a member becomes eligible for a long-term
33  disability benefit under the plan authorized by this section such member
34  shall be given participating service credit for the entire period of such
35  disability. Such member's final average salary shall be computed in ac-
36  cordance with subsection (17) of K.S.A. 74-4902 and amendments thereto
37  except that the years of participating service used in such computation
38  shall be the years of salaried participating service.
39    (B)  In the event that a member eligible for a long-term disability
40  benefit under the plan authorized by this section shall be disabled for a
41  period of five years or more immediately preceding retirement, such
42  member's final average salary shall be adjusted upon retirement by the
43  actuarial salary assumption rates in existence during such period of dis-
HB 2240--Am.
                                     

 1  ability. Effective July 1, 1993, such member's final average salary shall be
 2  adjusted upon retirement by 5% for each year of disability after July 1,
 3  1993, but before July 1, 1997. Effective July 1, 1997, such member's
 4  final average salary shall be adjusted upon retirement by an
 5  amount equal to the lesser of: (i)  The percentage increase in the
 6  consumer price index for all urban consumers as published by the
 7  bureau of labor statistics of the United States department of labor;
 8  or (ii)  four percent per annum, measured from the month the
 9  disability occurs to the month that is two months prior to the month
10  of retirement, for each year of disability after July 1, 1997.
11    (C)  In the event that a member eligible for a long-term disability
12  benefit under the plan authorized by this section shall be disabled for a
13  period of five years or more immediately preceding death, such member's
14  current annual rate shall be adjusted by the actuarial salary assumption
15  rates in existence during such period of disability. Effective July 1, 1993,
16  such member's current annual rate shall be adjusted upon death by 5%
17  for each year of disability after July 1, 1993, but before July 1, 1997.
18  Effective July 1, 1997, such member's current annual rate shall be
19  adjusted upon death by an amount equal to the lesser of: (i)  The
20  percentage increase in the consumer price index for all urban con-
21  sumers published by the bureau of labor statistics of the United
22  States department of labor; or (ii)  four percent per annum, mea-
23  [chsured from the month the disability occurs to the month that is
24  two months prior to the month of death, for each year of disability
25  after July 1, 1997.
26    (3) (A)  To carry out the legislative intent to provide, within the funds
27  made available therefor, the broadest possible coverage for members who
28  are in active employment or involuntarily absent from such active em-
29  ployment, the plan of death and long-term disability benefits shall be
30  subject to adjustment from time to time by the board within the limita-
31  tions of this section. The plan may include terms and provisions which
32  are consistent with the terms and provisions of group life and long-term
33  disability policies usually issued to those employers who employ a large
34  number of employees. The board shall have the authority to establish and
35  adjust from time to time the procedures for financing and administering
36  the plan of death and long-term disability benefits authorized by this
37  section. Either the insured death benefit or the insured disability benefit
38  or both such benefits may be financed directly by the system or by one
39  or more insurance companies authorized and licensed to transact group
40  life and group accident and health insurance in this state.
41    (B)  The board may contract with one or more insurance companies,
42  which are authorized and licensed to transact group life and group acci-
43  dent and health insurance in Kansas, to underwrite or to administer or
HB 2240--Am.
                                     

 1  to both underwrite and administer either the insured long-term death
 2  benefit or the insured disability benefit or both such benefits. Each such
 3  contract with an insurance company under this subsection shall be en-
 4  tered into on the basis of competitive bids solicited and administered by
 5  the board. Such competitive bids shall be based on specifications pre-
 6  pared by the board.
 7    (i)  In the event the board purchases one or more policies of group
 8  insurance from such company or companies to provide either the insured
 9  death benefit or the insured long-term disability benefit or both such
10  benefits, the board shall have the authority to subsequently cancel one
11  or more of such policies and, notwithstanding any other provision of law,
12  to release each company which issued any such canceled policy from any
13  liability for future benefits under any such policy and to have the reserves
14  established by such company under any such canceled policy returned to
15  the system for deposit in the group insurance reserve of the fund.
16    (ii)  In addition, the board shall have the authority to cancel any policy
17  or policies of group life and long-term disability insurance in existence
18  on the effective date of this act and, notwithstanding any other provision
19  of law, to release each company which issued any such canceled policy
20  from any liability for future benefits under any such policy and to have
21  the reserves established by such company under any such canceled policy
22  returned to the system for deposit in the group insurance reserve of the
23  fund. Notwithstanding any other provision of law, no premium tax shall
24  be due or payable by any such company or companies on any such policy
25  or policies purchased by the board nor shall any brokerage fees or com-
26  missions be paid thereon.
27    (4) (A)  The cost of the plan of death and long-term disability benefits
28  shall be paid from a special reserve hereby created in the fund, to be
29  known as the group insurance reserve. Each participating employer shall
30  appropriate and pay to the system in such manner as the board shall
31  prescribe in addition to the employee and employer retirement contri-
32  butions an amount equal to .6% of the amount of compensation on which
33  the members' contributions to the Kansas public employees retirement
34  system are based for deposit in the group insurance reserve of the Kansas
35  public employees retirement fund.
36    (B)  The director of the budget and the governor shall include in the
37  budget and in the budget request for appropriations for personal services
38  a sum to pay the state's contribution to the group insurance reserve as
39  provided by this section and shall present the same to the legislature for
40  allowances and appropriation.
41    (C)  The provisions of subsection (4) of K.S.A. 74-4920 and amend-
42  ments thereto shall apply for the purpose of providing the funds to make
43  the contributions to be deposited to the group insurance reserve.
HB 2240--Am.
                                     

 1    (D)  Any dividend or retrospective rate credit allowed by an insurance
 2  company or companies shall be credited to the group insurance reserve
 3  and the board may take such amounts into consideration in determining
 4  the amounts of the benefits under the plan authorized by this section.
 5    (5)  The death benefit provided under the plan of death and long-
 6  term disability benefits authorized by this section shall be known and
 7  referred to as insured death benefit. The long-term disability benefit pro-
 8  vided under the plan of death and long-term disability benefits authorized
 9  by this section shall be known and referred to as insured long-term dis-
10  ability benefit.
11    (6)  The board is hereby authorized to establish an optional death
12  benefit plan. Except as provided in subsection (7), such optional death
13  benefit plan shall be made available to all employees who are covered or
14  may hereafter become covered by the plan of death and long-term disa-
15  bility benefits authorized by this section. The cost of the optional death
16  benefit plan shall be paid by the applicant either by means of a system
17  of payroll deductions or direct payment to the board. The board shall
18  have the authority and discretion to establish such terms, conditions, spec-
19  ifications and coverages as it may deem to be in the best interest of the
20  state of Kansas and its employees which should include term death ben-
21  efits for the person's period of active state employment regardless of age,
22  but in no case, on and after January 1, 1989, shall the maximum allowable
23  coverage be less than $200,000. The cost of the optional death benefit
24  plan shall not be established on such a basis as to unreasonably discrim-
25  inate against any particular age group. The board shall have full admin-
26  istrative responsibility, discretion and authority to establish and continue
27  such optional death benefit plan and the director of accounts and reports
28  of the department of administration shall when requested by the board
29  and from funds appropriated or available for such purpose establish a
30  system to make periodic deductions from state payrolls to cover the cost
31  of the optional death benefit plan coverage under the provisions of this
32  subsection (6) and shall remit all deductions together with appropriate
33  accounting reports to the system. All funds received by the board,
34  whether in the form of direct payments, payroll deductions or otherwise,
35  shall be accounted for separately from all other funds of the retirement
36  system and shall be paid into a special reserve hereby created in the fund,
37  to be known as the optional death benefit plan reserve, from which re-
38  serve the board is authorized to make the appropriate payments and to
39  pay the ongoing costs of administration of such optional death benefit
40  plan as may be incurred in carrying out the provisions of this subsection
41    (6).
42    (7)  Any employer other than the state of Kansas which is currently a
43  participating employer of the Kansas public employees retirement system
HB 2240--Am.
                                     

 1  or is in the process of affiliating with the Kansas public employees retire-
 2  ment system may also elect to affiliate for the purposes of subsection (6).
 3  All such employers shall make application for affiliation with such system,
 4  to be effective on January 1 next following application. Such optional
 5  death benefit plan shall not be available for employees of employers spec-
 6  ified under this subsection until after July 1, 1988.
 7    Sec. 3.  K.S.A. 1996 Supp. 74-4966 is hereby amended to read
 8  as follows: 74-4966. (a) In the case of any member whose employ-
 9  ment shall be covered by social security and who is a member of
10  the class certified in the case of Brazelton v. Kansas public em-
11  ployees retirement system, 227 K. 443, 607 P.2d 510 (1980), any
12  benefits payable under the provisions of K.S.A. 74-4958, 74-4959
13  and 74-4960 shall be reduced by an amount equal to 1/2 of the
14  original social security benefits accruing from employment with
15  the participating employer at the time the member retired. For
16  any member already retired on the effective date of this act, no
17  reduction of the original social security benefits shall be applicable
18  to benefits paid prior to the effective date of this act. The member
19  must make an initial application for social security benefits from employ-
20  ment with the participating employer and, if denied such benefits, the
21  member must pursue and exhaust all administrative remedies of the social
22  security administration which include, but are not limited to, reconsid-
23  eration and hearings. Until such initial application for benefits has been
24  approved by the social security administration, social security benefits
25  may be estimated and may be deducted from the amount of any benefits
26  payable as provided in this subsection.
27    (b)  For any member other than a member who is a member of
28  the class certified in the case of Brazelton v. Kansas public em-
29  ployees retirement system, 227 K. 443, 607 P.2d 510 (1980), no
30  benefits shall be reduced because of social security benefits. Any
31  benefits which first become payable on or after January 1, 1976,
32  by reason of employment with a participating employer partici-
33  pating in the Kansas police and firemen's retirement system, which
34  employment was also covered by social security, shall be reduced
35  by an amount equal to the value of the difference between con-
36  tributions actually made by the member and contributions which
37  would have been made had there been no reduction for contri-
38  butions to social security. The amount of reduction shall be made
39  by the board upon the advice of the actuary at the time benefits
40  become payable and shall continue until benefits are no longer
41  payable. Should a member, whose employment prior to January 1,
42  1976, with a participating employer participating in the Kansas
43  police and firemen's retirement system, such employment also be-
HB 2240--Am.
                                     

 1  ing covered by social security, repay in a lump sum prior to January
 2  1, 1977, or on date of retirement, whichever is earlier, an amount
 3  equal to the difference between contributions actually made by
 4  the member and contributions which would have been made had
 5  there been no reduction for contributions to social security, there
 6  shall be no reduction as heretofore provided. If the payment is
 7  made after January 1, 1977, but prior to retirement, the member
 8  will pay the actual amount plus interest which shall accrue from
 9  January 1, 1976, at a rate specified by the board of trustees.
10    Sec. 2 4.  K.S.A. 20-2609 and K.S.A. 1996 Supp. 74-4927 is and 74-
11  4966 are hereby repealed.
12    Sec. 3 5.  This act shall take effect and be in force from and after its
13  publication in the statute book.