Session of 1998
                   
HOUSE BILL No. 3024
         
By Committee on Appropriations
         
3-30
            9             AN ACT relating to the pooled money investment board; concerning
10             audits and comparative investment reviews; amending K.S.A. 46-1106,
11             75-4222 and 75-4234 and repealing the existing sections; also repealing
12             K.S.A. 75-627.
13            
14       Be it enacted by the Legislature of the State of Kansas:
15           Section 1. K.S.A. 46-1106 is hereby amended to read as follows:
16       46-1106. (a) A financial-compliance audit shall be conducted each year
17       of the general purpose financial statements prepared by the division of
18       accounts and reports for its annual financial report. This audit shall be
19       conducted in accordance with generally accepted governmental auditing
20       standards. The resulting written audit report shall be issued as soon after
21       the end of the fiscal year as is practicable. In addition, separate written
22       audit reports on the financial management practices of the office of the
23       state treasurer and the pooled money investment board shall be prepared
24       addressing the adequacy of financial management practices and compli-
25       ance with applicable state laws. Copies of this report such reports shall
26       be furnished to the governor, director of accounts and reports, director
27       of the budget, each state agency, the legislative post audit committee and
28       other persons or agencies as may be required by law or by the specifi-
29       cations of the audit. Any additional costs associated with preparing the
30       separate additional reports on the office of the state treasurer and the
31       pooled money investment board shall be borne by the office of the state
32       treasurer and the pooled money investment board in accordance with
33       K.S.A. 46-1121, and amendments thereto.
34           (b) Including financial-compliance audit work conducted as part of
35       the audit conducted pursuant to subsection (a), financial-compliance au-
36       dit work shall be conducted at each state agency at least once every three
37       years as directed by the legislative post audit committee. Written reports
38       on the results of such auditing shall be furnished to the governor, director
39       of accounts and reports, director of the budget, the state agency which is
40       audited, the legislative post audit committee and such other persons or
41       agencies as may be required by law or by the specifications of the audit.
42           (c) Books and accounts of the state treasurer and the director of ac-
43       counts and reports, including the bond register of the state treasurer, may

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  1       be examined monthly if the legislative post audit committee so deter-
  2       mines, and such examination may include detailed checking of every
  3       transaction or test checking.
  4           Any person receiving tax information under the provisions of subsec-
  5       tion (a) or (b) shall be subject to the same duty of confidentiality imposed
  6       by law upon the personnel of the department of revenue and shall be
  7       subject to any civil or criminal penalties imposed by law for violations of
  8       such duty of confidentiality.
  9           (d) The post auditor shall report immediately in writing to the leg-
10       islative post audit committee, governor and attorney general whenever it
11       appears in the opinion of the post auditor that there may have occurred
12       any violation of penal statutes or any instances of misfeasance, malfea-
13       sance or nonfeasance by a public officer or employee disclosed by any
14       audit or audit work conducted under the legislative post audit act. The
15       post auditor shall furnish the attorney general all information in the pos-
16       session of the post auditor relative to any report referred to the attorney
17       general. The attorney general shall institute and prosecute civil proceed-
18       ings against any such delinquent officer or employee, or upon such officer
19       or employee's official bond, or both, as may be needed to recover for the
20       state any funds or other assets misappropriated. The attorney general shall
21       also prosecute such ouster and criminal proceedings as the evidence in
22       the case warrants. Any person receiving tax information under the pro-
23       visions of this subsection shall be subject to the same duty of confiden-
24       tiality imposed by law upon the personnel of the department of revenue
25       and shall be subject to any civil or criminal penalties imposed by law for
26       violations of such duty of confidentiality.
27           (e) The post auditor shall immediately report to the committee on
28       surety bonds and insurance when any audit or audit work conducted un-
29       der the legislative post audit act discloses a shortage in the accounts of
30       any state agency, officer or employee.
31           (f) In the discharge of the duties imposed under the legislative post
32       audit act, the post auditor may require state agencies to preserve and
33       make available their accounts, records, documents, vouchers, requisitions,
34       payrolls, canceled checks or vouchers and coupons, and other evidence
35       of financial transactions.
36           (g) In the discharge of the duties imposed under the legislative post
37       audit act, the post auditor or firm conducting a financial-compliance audit
38       or conducting other financial-compliance audit work shall have access to
39       all books, accounts, records, files, documents and correspondence, con-
40       fidential or otherwise, of any person or state agency subject to the legis-
41       lative post audit act or in the custody of any such person or state agency.
42       Except as otherwise provided in this subsection, the post auditor or firm
43       conducting a financial-compliance audit or other financial-compliance au-

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  1       dit work and all employees and former employees of the division of post
  2       audit or firm performing a financial-compliance audit or other financial-
  3       compliance audit work shall be subject to the same duty of confidentiality
  4       imposed by law on any such person or state agency with regard to any
  5       such books, accounts, records, files, documents and correspondence, and
  6       any information contained therein, and shall be subject to any civil or
  7       criminal penalties imposed by law for violations of such duty of confiden-
  8       tiality. The duty of confidentiality imposed on the post auditor and on
  9       firms conducting financial-compliance audits or other financial-compli-
10       ance audit work and all employees of the division of post audit and all
11       employees of such firms shall be subject to the provisions of subsection
12       (d), and the post auditor may furnish all such books, accounts, records,
13       files, documents and correspondence, and any information contained
14       therein to the attorney general pursuant to subsection (d). Upon receipt
15       thereof, the attorney general and all assistant attorneys general and all
16       other employees and former employees of the office of attorney general
17       shall be subject to the same duty of confidentiality with the exceptions
18       that any such information contained therein may be disclosed in civil
19       proceedings, ouster proceedings and criminal proceedings which may be
20       instituted and prosecuted by the attorney general in accordance with sub-
21       section (d), and any such books, accounts, records, files, documents and
22       correspondence furnished to the attorney general in accordance with sub-
23       section (d) may be entered into evidence in any such proceedings. Noth-
24       ing in this subsection shall be construed to supersede any requirement
25       of federal law.
26           (h) Any firm or firms which develop information in the course of
27       conducting a financial-compliance audit or other financial-compliance au-
28       dit work which the post auditor is required to report under subsection
29       (d) or (e) shall immediately report such information to the post auditor.
30       The post auditor shall then make the report required in subsection (d) or
31       (e).
32           New Sec. 2. Commencing on or before June 30, 1999, and at least
33       every two years thereafter, a comparative investment performance review
34       and an audit of the investment program of the pooled money investment
35       board shall be conducted. Such review and audit shall include an evalu-
36       ation of current investment policies and practices and of specific invest-
37       ments of the pooled money investment portfolio and recommendations
38       relating to the investment policies and practices and to specific invest-
39       ments of the portfolio as are considered necessary or desirable. The firm
40       or individual to perform the work required by this subsection shall be
41       selected in accordance with K.S.A. 75-37,102, and amendments thereto.
42       The cost of such comparative investment performance review and such
43       audit of the investment program of the pooled money investment board

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

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

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  1       folio.
  2           (b) A comparative investment performance review of the pooled
  3       money investment portfolio shall be contracted for periodically by the
  4       pooled money investment board. The costs of such review shall be paid
  5       from moneys appropriated to the state treasurer for operations of the
  6       pooled money investment board.
  7           (c) (b) The pooled money investment board shall may contract for
  8       the services of an external investment advisor to provide advisory services
  9       concerning the investment policies and practices of the pooled money
10       investment portfolio. Such investment advisor shall not be the person or
11       firm contracted with under subsection (b) section 2.
12           (d) (c) Moneys in the employment security fund established by K.S.A.
13       44-712, and amendments thereto, shall not be invested in the pooled
14       money investment portfolio except as may be authorized by the secretary
15       of human resources pursuant to subsection (e) of K.S.A. 44-712, and
16       amendments thereto.
17           (e) (d) For moneys in funds designated in this subsection that are in
18       the pooled money investment portfolio and which are not invested in the
19       municipal investment pool, interest is to be paid on such moneys based
20       on the average daily balance in the fund for each month and the net
21       earnings rate of the pooled money investment portfolio for such month.
22       This subsection shall apply to the state highway fund and funds for bonds
23       and other debt instruments of state agencies and authorities.
24           (f) (e) Moneys in funds designated in this subsection shall not be
25       invested in investment options of the municipal investment pool fund for
26       which the minimum term of such investment is less than 21 days. This
27       subsection shall apply to state moneys, other than moneys of municipal-
28       ities as described in subsection (a) of K.S.A. 12-1675, and amendments
29       thereto.
30           Sec. 5. K.S.A. 46-1106, 75-627, 75-4222 and 75-4234 are hereby re-
31       pealed.
32           Sec. 6. This act shall take effect and be in force from and after its
33       publication in the Kansas register.
34      
35