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Session of 2000
          HOUSE BILL No. 3038           By Committee on Appropriations           3-15          

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10             AN  ACT concerning retirement; relating to deferred compensation plan
11             for state employees; administration and duties of the Kansas public
12             employees retirement system board of trustees; amending K.S.A. 75-
13             5521, 75-5523, 75-5524, 75-5528, 75-5529, 75-5529a and 75-5529b
14             and K.S.A. 1999 Supp. 75-5525 and repealing the existing sections;
15             also repealing K.S.A. 1999 Supp. 75-5529c.
16      
17       Be it enacted by the Legislature of the State of Kansas:
18             Section  1. K.S.A. 75-5521 is hereby amended to read as follows: 75-
19       5521. As used in this act:
20             (a) ``Beneficiary'' means any person designated to receive benefits
21       under a deferred compensation plan.
22             (b) ``Board'' means the Kansas public employees retirement system
23       board of trustees.
24             (c) ``Deferred compensation plan'' means a plan developed and ap-
25       proved as provided in this act and under which an employee sets aside a
26       specified amount of salary or compensation which may not be subject to
27       state or federal taxation until receipt thereof by the employee under
28       stated conditions in the future.
29             (c) ``Director'' means the director of accounts and reports.
30             (d) ``Employee'' means any person who is an elected or appointed
31       officer or any employee of the state in the classified service or unclassified
32       service under the Kansas civil service act, other than persons who are
33       employed on a seasonal or temporary basis.
34             (e) ``Participant'' means an eligible employee who has entered into
35       an agreement with the director of accounts and reports as provided in
36       K.S.A. 75-5524, and amendments thereto, to defer an amount of the em-
37       ployee's salary or compensation under the Kansas public employees de-
38       ferred compensation plan.
39             (f) ``State'' means the state of Kansas and any state agency as defined
40       in subsection (3) of K.S.A. 75-3701, and amendments thereto.
41             (g) ``Federal internal revenue code'' means the federal internal reve-
42       nue code of 1954 or 1986, as amended and as applicable to a governmental
43       deferred compensation plan.

2
  1             Sec.  2. K.S.A. 75-5523 is hereby amended to read as follows: 75-
  2       5523. (a) On and after July 1, 2000, the director board is authorized to
  3       establish a administer the deferred compensation plan as provided in
  4       K.S.A. 75-5521, and amendments thereto, in accordance with the federal
  5       revenue act of 1978, Public Law No. 95-600, subject to the approval of
  6       the secretary of administration section 457 of the federal internal revenue
  7       code. Such plan shall be the Kansas public employees deferred compen-
  8       sation plan. All powers and duties heretofore conferred by such plan upon
  9       the advisory committee on deferred compensation director of accounts
10       and reports and the secretary of administration are hereby transferred to
11       the director of personnel services or the director's designees board. The
12       board shall be successor in every way to the powers, duties and functions
13       of the director of accounts and reports and the secretary of administration
14       with regard to the deferred compensation plan in which such powers,
15       duties and functions were vested prior to July 1, 2000. Every act per-
16       formed in the exercise of such powers, duties and functions by or under
17       the authority of the board shall be deemed to have the same force and
18       effect as if performed by the director of accounts and reports and the
19       secretary of administration in which such powers, duties and functions
20       were vested prior to July 1, 2000. All liabilities incurred by the director
21       or secretary pursuant to the deferred compensation plan are transferred
22       to the board. Except as otherwise provided by this act, whenever the
23       director of accounts and reports or the secretary of administration, or
24       words of like effect, is referred to or designated by statute, contract or
25       other document, such reference or designation shall be deemed to apply
26       to the board.
27             (b) The director board may enter into an agreement or agreements
28       with approved insurers or other contracting parties qualified providers of
29       deferred compensation investment and administrative services whereby
30       benefits under the Kansas public employees deferred compensation plan
31       would be made available to those participants who contract with the di-
32       rector board for deferred compensation under K.S.A. 75-5524, and
33       amendments thereto. In addition, the director may enter into an agree-
34       ment with one or more qualified private firms for consolidated billing
35       services, participant enrollment services, participant accounts and other
36       services related to the administration of the Kansas public employees
37       deferred compensation plan.
38             (c) No significant costs shall be incurred by the state board as a result
39       of the administration of this act unless such costs are recovered by charg-
40       ing and collecting a service charge from all participants and in addition
41       thereto or in lieu thereof, where the director board has entered into
42       agreements with one or more qualified private contracting firms under
43       subsection (b), are recovered from such firms. The amount of any such

3
  1       significant costs incurred and to be recovered by the state shall be deter-
  2       mined by the director board. In determining such costs pursuant to this
  3       section, the board shall allocate the overall costs related to the board's
  4       various functions in a manner consistent with generally accepted account-
  5       ing practices. The board shall ensure that the administration of the de-
  6       ferred compensation plan neither diminishes the board's resources nor
  7       adds to the board's expenses in fulfilling the board's duties under K.S.A.
  8       74-4901 et seq., and amendments thereto.
  9             (d) Subject to the approval of the secretary of administration, the
10       director is authorized to negotiate and enter into contracts with qualified
11       insurers and other contracting parties for the purposes of establishing a
12       deferred compensation plan, including acquisition of actuarial and other
13       services necessary therefor. The director shall advertise for deferred com-
14       pensation proposals, shall negotiate with not less than three firms or other
15       contracting parties submitting such proposals, and shall select from
16       among those submitting such proposals the firm or firms or other con-
17       tracting party or parties to contract with for purposes of establishing a
18       deferred compensation plan. Contracts entered into under this act shall
19       not be subject to K.S.A. 75-3739 and amendments thereto.
20             Sec.  3. K.S.A. 75-5524 is hereby amended to read as follows: 75-
21       5524. (a) The director board is authorized to enter into a voluntary agree-
22       ment with any employee whereby the director agrees to defer and deduct
23       there shall be each payroll period a portion of the employee's salary or
24       compensation from the state in accordance with the Kansas public em-
25       ployees deferred compensation plan. Such agreement may require each
26       participant to pay a service charge to defray all or part of any significant
27       costs incurred and to be recovered by the state board pursuant to sub-
28       section (c) of K.S.A. 75-5523, and amendments thereto, as a result of the
29       administration of this act. Pursuant to this act and such agreements the
30       director is authorized to of accounts and reports shall deduct amounts
31       authorized in such agreements from the salary or compensation of such
32       employee each payroll period, as part of the system of regular payroll
33       deduction.
34             (b) On and after July 1, 2000, the minimum amount and the maxi-
35       mum amount which may be deferred in any one payroll period shall be
36       established by rules and regulations adopted under K.S.A. 75-5529 the
37       board.
38             (c) On and after July 1, 2000, the state may contribute to the deferred
39       compensation plan on behalf of any employee who has entered into a
40       voluntary agreement with the board an amount to match the employee's
41       contribution as provided in this section, except that any such contribution
42       by the state shall not cause the total employee and employer contributions
43       to exceed the limits as provided in section 457 of the federal internal

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  1       revenue code.
  2             (d) The Kansas public employees deferred compensation plan shall
  3       exist and be in addition to, and shall not be a part of any retirement or
  4       pension system for employees. The state shall not be responsible for any
  5       loss incurred by an employee under the Kansas public employees de-
  6       ferred compensation plan established and approved pursuant to this act.
  7             (d) (e) Any amount of the employee's salary or compensation that is
  8       deferred under such authorized agreement shall continue to be included
  9       as regular compensation for all purposes of computing retirement and
10       pension benefits earned by any such employee, but any sum deferred or
11       deducted shall not be subject to any state or local income taxes for the
12       year in which such sum is earned but shall be subject to applicable state
13       and local income taxes for the year in which such sum is received by the
14       employee.
15             (e) (f) The director board is hereby authorized to establish a maintain
16       and administer the deferred compensation clearing fund in the state
17       treasury in which shall be placed temporarily all compensation deferred
18       and deducted in accordance with this act, as provided for in any agree-
19       ment between an employee and the director.
20             Sec.  4. K.S.A. 1999 Supp. 75-5525 is hereby amended to read as
21       follows: 75-5525. (a) All moneys which are deferred and deducted by the
22       director of accounts and reports in accordance with the provisions of an
23       agreement entered into under K.S.A. 75-5524, and amendments thereto,
24       and the provisions of this act, shall remain assets of the state, shall be
25       disposed of in accordance with the terms of the agreement and shall be
26       held in trust in accordance with section 457 of the federal internal rev-
27       enue code of 1986, and amendments thereto, for the exclusive benefit of
28       participants and their beneficiaries, and shall be disposed of in accordance
29       with the terms of the agreement between the employee and the director.
30       The obligation of the state to the employee and approved insurers or
31       other contractors shall be a contractual obligation only and no preferred
32       or special interest in the deferred moneys shall accrue to such employee
33       or to such approved insurer or other contractor.
34             (b) Contributions payable to the deferred compensation plan pur-
35       suant to the plan shall not be subject to any premium tax or other charges
36       arising under the insurance laws of this state. If any such tax or charge
37       has been paid prior to the effective date of this act, the same shall be
38       refunded.
39             Sec.  5. K.S.A. 75-5528 is hereby amended to read as follows: 75-
40       5528. No participant or beneficiary shall have the right to commute, sell,
41       assign or otherwise transfer or convey the rights to receive any payments
42       under agreements compensation plans entered into pursuant to this act
43       for participation in the deferred compensation plan and such payments

5
  1       and rights are expressly declared to be and shall be unassignable.
  2             Sec.  6. K.S.A. 75-5529 is hereby amended to read as follows: 75-
  3       5529. The secretary of administration, upon the recommendation of the
  4       director, board may adopt rules and regulations, in the manner provided
  5       in K.S.A. 75-3706, and amendments thereto, for the implementation and
  6       administration of this act. The director board shall maintain such accounts
  7       and records as are necessary and appropriate to the efficient operation of
  8       this act.
  9             Sec.  7. K.S.A. 75-5529a is hereby amended to read as follows: 75-
10       5529a. Subject to the approval of the secretary of administration, the
11       director of accounts and reports The board may enter into agreements
12       for the participation of local governments of the state of Kansas, which
13       are defined as eligible employers by subsection (13) of K.S.A. 74-4902
14       and amendments thereto, and their employees, as defined by subsection
15       (14) of K.S.A. 74-4902 and amendments thereto except that such em-
16       ployees local government need not be employed by a participating em-
17       ployer under the Kansas public employees retirement system, within the
18       deferred compensation plan for state employees established under K.S.A.
19       75-5523 and amendments thereto. Such participation may include any
20       such eligible employer local government and employees when authorized
21       by the governing body of the eligible employer local government by or-
22       dinance or resolution. Except for such participation agreements, the di-
23       rector of accounts and reports or any other state officer or employee
24       board shall not be involved nor incur any expense in the administration
25       of such plan as it applies to local governments or their employees.
26             Sec.  8. K.S.A. 75-5529b is hereby amended to read as follows: 75-
27       5529b. The governing body of any local government of the state of Kansas,
28       which is defined as an eligible employer by K.S.A. 74-4902 and which
29       has agreed to participate in the Kansas public employees deferred com-
30       pensation plan, may establish such conditions as the governing body
31       deems advisable to govern the terms of agreement for the voluntary par-
32       ticipation of its employees in such plan. Such conditions may include, but
33       are not limited to, the local government's provision of an employer con-
34       tribution to match the employee's contribution as provided in the em-
35       ployee's voluntary agreement with the local government, except that any
36       such contribution by the local government shall not cause the total em-
37       ployee and employer contributions to exceed the limits as provided in
38       section 457 of the federal internal revenue code. Any amount of an em-
39       ployee's salary or compensation that is deferred under such agreement
40       shall continue to be included as regular compensation for all purposes of
41       computing retirement and pension benefits earned by such employee,
42       but any sum deferred or deducted shall not be subject to any state or
43       local income tax for the year in which such sum is earned but shall be

6
  1       subject to applicable state and local income taxes for the year in which
  2       such sum is received by the employee. 
  3       Sec.  9. K.S.A. 75-5521, 75-5523, 75-5524, 75-5528, 75-5529, 75-
  4       5529a and 75-5529b and K.S.A. 1999 Supp. 75-5525 and 75-5529c re
  5       hereby repealed.
  6        Sec.  10. This act shall take effect and be in force from and after its
  7       publication in the statute book.