Session of 1998
                   
HOUSE BILL No. 3009
         
By Committee on Appropriations
         
3-12
            9             AN ACT relating to the pooled money investment board; concerning
10             audits and comparative investment reviews; amending K.S.A. 75-4222
11             and 75-4234 and repealing the existing sections; also repealing K.S.A.
12             75-627.
13            
14       Be it enacted by the Legislature of the State of Kansas:
15           New Section 1. (a) The accounts and transactions of the pooled
16       money investment board shall be subject to an annual financial-compli-
17       ance audit, and such other audits as directed by the legislative post audit
18       committee, under the legislative post audit act. The annual audit shall be
19       conducted as soon after the close of the fiscal year as practicable. The
20       auditor to conduct this audit work shall be a firm, as defined by K.S.A.
21       46-1112, and amendments thereto. The company or firm or person to do
22       the work shall be selected and shall perform such audit work as provided
23       in K.S.A. 46-1123, and amendments thereto, and K.S.A. 46-1125 through
24       46-1127, and amendments thereto. Such work shall be under contract
25       with the legislative post auditor in accordance with the legislative post
26       audit act. The post auditor shall compute annually the reasonably antic-
27       ipated cost of providing audits pursuant to this subsection, subject to
28       review and approval by the contract audit committee established by
29       K.S.A. 46-1120, and amendments thereto. Upon such approval, the
30       pooled money investment board shall reimburse the division of post audit
31       for the amount approved by the contract audit committee. The furnishing
32       of audit services pursuant to this subsection shall be a transaction between
33       the post auditor and the pooled money investment board and shall be
34       settled in accordance with the provisions of K.S.A. 75-5516, and amend-
35       ments thereto.
36           (b) Commencing on or before June 30, 1999, and at least every two
37       years thereafter, a comparative investment performance review and an
38       audit of the investment program of the pooled money investment board
39       shall be conducted. Such review and audit shall include an evaluation of
40       current investment policies and practices and of specific investments of
41       the pooled money investment portfolio and recommendations relating to
42       the investment policies and practices and to specific investments of the
43       portfolio as are considered necessary or desirable. The firm or individual

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  1       to perform the work required by this subsection shall be selected in ac-
  2       cordance with K.S.A. 75-37,102, and amendments thereto.
  3           Sec. 2. K.S.A. 75-4222 is hereby amended to read as follows: 75-
  4       4222. (a) It shall be unlawful for the pooled money investment board to
  5       award a state bank account to any depository bank in which any member
  6       of the board is interested as a stockholder or officer, except upon the
  7       unanimous vote of the other members of the board.
  8           (b) The board shall appoint a director of investments who shall be in
  9       the unclassified service under the Kansas civil service act. The board may
10       appoint investment officers and investment analysts, who shall be in the
11       unclassified service of the Kansas civil service act. In addition the board
12       may appoint such employees as may be needed who shall be in the clas-
13       sified service of the Kansas civil service act.
14           (c) From and after the effective date of this act, all current employees
15       of the office of the state treasurer performing any responsibilities, powers,
16       duties or functions related to the municipal investment pool fund are
17       hereby transferred to the pooled money investment board. All such em-
18       ployees shall retain all retirement benefits and all rights of civil service
19       which such employees had before the effective date of this act and their
20       service shall be deemed to have been continuous. All such transfers shall
21       be in accordance with civil service laws and rules and regulations.
22           (d) From and after the effective date of this act, the liability for all
23       accrued compensation, wages or salaries of employees who, immediately
24       prior to such date, were engaged in the performance of responsibilities,
25       powers, duties or functions relating to the municipal investment pool fund
26       in the office of the state treasurer and who are transferred to the pooled
27       money investment board pursuant to subsection (c), shall be assumed and
28       paid from appropriations to the state treasurer for operations of the mu-
29       nicipal investment pool fund and operations of the pooled money invest-
30       ment board.
31           (e) The employees working for the pooled money investment board
32       shall have access at all times to all papers, documents and property in the
33       custody or possession of the state treasurer that relate to duties of the
34       board, and the state treasurer shall take such steps as may be necessary
35       to make this provision of law effective for such purposes as the pooled
36       money investment board may indicate.
37           (f) On and after the effective date of this act, the state treasurer shall
38       provide the pooled money investment board office space, services, equip-
39       ment, materials and supplies, and all purchasing and related management
40       functions required by the pooled money investment board in the exercise
41       of the powers, duties and functions imposed or authorized upon such
42       board. The portion of the state treasurer's budget relating to the opera-
43       tions of the pooled money investment board shall be approved by the

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  1       pooled money investment board prior to submission to the director of
  2       the budget.
  3           (g) The director of investments shall keep and preserve a written
  4       record of the board's proceedings.
  5           (h) The board shall make an annual report to the legislature of the
  6       investments by the board of all moneys under the jurisdiction and control
  7       of the board, by filing a copy of the report with the chief clerk of the
  8       house of representatives and with the secretary of the senate no later than
  9       the 10th calendar day of each regular session of the legislature.
10           (i) The board shall provide for an audit of the investment program at
11       least every two years. Such audit shall be conducted by a firm as defined
12       in K.S.A. 46-1112, and amendments thereto. Such audit shall be con-
13       ducted in accordance with generally accepted governmental auditing
14       standards. Such audit shall include an evaluation of current investment
15       policies and practices and of specific investments of the pooled money
16       investment portfolio and recommendations relating to the investment
17       policies and practices and to specific investments of the portfolio as are
18       considered necessary or desirable. The resulting written audit report shall
19       be issued as soon after the end of the fiscal year as is practicable. Copies
20       of this report shall be furnished to the governor, director of accounts and
21       reports, director of the budget and the legislative post audit committee.
22       A copy of the report shall be filed with the chief clerk of the house of
23       representatives and with the secretary of the senate no later than the 10th
24       calendar day of the regular session of the legislature following completion
25       of such audit. The cost of such audit work shall be borne by the pooled
26       money investment board.
27           Sec. 3. K.S.A. 75-4234 is hereby amended to read as follows: 75-
28       4234. (a) Except as provided in subsection (d) (c), all moneys in the state
29       treasury shall be invested as a single portfolio which is hereby designated
30       as the pooled money investment portfolio. The portfolio shall be invested
31       in accordance with article 42 of chapter 75 of the Kansas Statutes An-
32       notated, and amendments thereto. The director of investments shall com-
33       pute daily the earnings of the portfolio, including realized gains and losses.
34       The pooled money investment board by written policy may provide for
35       allocation of unrealized gains or losses. The director of investments shall
36       calculate on a daily basis and shall deduct from earnings an administrative
37       fee which shall be set by the board and applied as a fixed percentage of
38       moneys in the pooled money investment portfolio. The administrative fee
39       shall not exceed .25% annually on moneys deposited in the municipal
40       investment pool and .10% annually on other moneys in the pooled money
41       investment portfolio. The director of investments shall deposit the ad-
42       ministrative fee in accordance with K.S.A. 75-4235, and amendments
43       thereto. The gross earnings, after deduction of the administrative fee, shall

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  1       be designated as the net earnings of the pooled money investment port-
  2       folio.
  3           (b) A comparative investment performance review of the pooled
  4       money investment portfolio shall be contracted for periodically by the
  5       pooled money investment board. The costs of such review shall be paid
  6       from moneys appropriated to the state treasurer for operations of the
  7       pooled money investment board.
  8           (c) (b) The pooled money investment board shall may contract for
  9       the services of an external investment advisor to provide advisory services
10       concerning the investment policies and practices of the pooled money
11       investment portfolio. Such investment advisor shall not be the person or
12       firm contracted with under subsection (b) section 1.
13           (d) (c) Moneys in the employment security fund established by K.S.A.
14       44-712, and amendments thereto, shall not be invested in the pooled
15       money investment portfolio except as may be authorized by the secretary
16       of human resources pursuant to subsection (e) of K.S.A. 44-712, and
17       amendments thereto.
18           (e) (d) For moneys in funds designated in this subsection that are in
19       the pooled money investment portfolio and which are not invested in the
20       municipal investment pool, interest is to be paid on such moneys based
21       on the average daily balance in the fund for each month and the net
22       earnings rate of the pooled money investment portfolio for such month.
23       This subsection shall apply to the state highway fund and funds for bonds
24       and other debt instruments of state agencies and authorities.
25           (f) (e) Moneys in funds designated in this subsection shall not be
26       invested in investment options of the municipal investment pool fund for
27       which the minimum term of such investment is less than 21 days. This
28       subsection shall apply to state moneys, other than moneys of municipal-
29       ities as described in subsection (a) of K.S.A. 12-1675, and amendments
30       thereto.
31           Sec. 4. K.S.A. 75-627, 75-4222 and 75-4234 are hereby repealed.
32           Sec. 5. This act shall take effect and be in force from and after its
33       publication in the Kansas register.
34