[As Amended by Senate Committee of the
Whole]
As Amended by Senate Committee
Session of 2000
SENATE BILL No. 653
By Committee on Ways and Means
3-2
11 AN ACT
establishing an intergovernmental transfer program; concern-
12 ing nursing facilities
owned and operated by units of government; re-
13 lating to the federal
medical assistance (medicaid) program; establish-
14 ing an
intergovernmental transfer fund, an
intergovernmental
15 transfer
administration fund, a long-term care loan fund, a
senior
16 services trust fund
and a senior services fund within the state treasury;
17 authorizing certain
participation agreements, loans, grants and con-
18 tracts; amending
K.S.A. 75-5321a and repealing the existing section.
19
20 Be it enacted by the Legislature of the
State of Kansas:
21 Section
1. K.S.A. 75-5321a is hereby amended to read as follows:
75-
22 5321a. The secretary of social and
rehabilitation services shall take nec-
23 essary actions to transfer the
administration of certain long-term care
24 programs and services to the secretary of
aging. The programs shall in-
25 clude the nursing facility services payment
program, the home and com-
26 munity based nursing
facility services for the frail elderly waiver
program,
27 the case management for the frail
elderly program and the income eligible
28 (home care) program. Excluding nursing
facility programs, the programs
29 to be transferred shall not include
long-term care programs for individuals
30 under the age of 65 with mental illness,
mental retardation, other mental
31 disabilities or physical disabilities. All
such transfers shall be made only
32 in accordance with federal grant
requirements related to such programs.
33 New Sec.
2. (a) The secretary of social and
rehabilitation services
34 and the secretary of aging shall take
necessary actions to establish an
35 intergovernmental transfer program as a
part of the nursing facility serv-
36 ices payment program within the medicaid
state plan.
37 (a)
(b) In implementing the intergovernmental
transfer program, the
38 state treasurer shall periodically
transfer state general funds and federal
39 funds in amounts certified by
the secretary of aging shall disburse
mon-
40 eys received from the federal
government for the intergovernmental
41 transfer program and moneys
transferred from the state general
42 fund to the intergovernmental
transfer fund for the program to units
2
1 of government which have entered into
participation agreements with the
2 secretary of aging and the secretary
of social and rehabilitation services.
3 The amount of state general
funds transferred to the units of government
4 moneys disbursed to the units
of government from moneys trans-
5 ferred from the state general
fund to the intergovernmental transfer
6 fund for the program
shall not exceed the amount necessary to match
7 federal funds available to the state
under the intergovernmental transfer
8 program. The secretary of aging shall
periodically calculate the amount
9 of federal funds available under the
program according to the program
10 methodology prescribed for the
intergovernmental transfer program
11 in the medicaid state plan.
12 (b)
(c) The secretary of social and rehabilitation
services and the sec-
13 retary of aging are authorized to enter
into intergovernmental transfer
14 program participation agreements with units
of government which own
15 and operate nursing facilities. The
participation agreements may permit
16 the units of government to retain a
participation fee specified by the
17 secretary of aging from program
funds moneys received under the in-
18 tergovernmental transfer
program which are otherwise required to be
19 transferred back to the secretary of
aging.
20
(c) Program funds transferred from participating units
of government
21 to the secretary of aging shall be
deposited in the intergovernmental
22 transfer fund established within
the state treasury. The state treasurer
23 shall distribute portions of the
transferred funds attributable to medicaid
24 federal financial participation
within the intergovernmental transfer fund
25 to the senior services trust fund
and the long-term care loan fund estab-
26 lished within the state treasury in
the amounts required by this section.
27 The state treasurer shall transfer
the portion of the transferred funds
28 attributable to medicaid state
matching funds into the state general fund.
29
(d) Distributions from the senior services trust fund through
the in-
30 tergovernmental transfer program
may not be used to create or fund an
31 entitlement program not in
existence on the effective date of this act. The
32 secretary of aging may recover the
department's costs of administering
33 the intergovernmental transfer
program from the intergovernmental
34 transfer fund after certifying the
amount of those costs to the state trea-
35 surer each calendar
quarter.
36
(e) Subject to appropriations, from the total program funds
trans-
37 ferred into the intergovernmental
transfer fund before July 1, 2001:
38 (1) A
portion, not to exceed 60%, shall be transferred to the
senior
39 services trust fund to be invested
and managed by the Kansas public
40 employment retirement system board
of trustees as described in sections
41 3 and 4 of this act and amendments
thereto. Each calendar quarter, the
42 board of trustees shall transfer
the interest earned on the senior services
43 trust fund investments to the
senior services fund within the state treas-
3
1 ury. Subject to
appropriations, the moneys in senior services fund
shall
2 be used by the secretary of
aging only for projects intended to reduce
3 future medicaid costs to the
state, to help seniors avoid premature insti-
4 tutionalization or to improve
the quality of care or the quality of life of
5 seniors who are customers of
long-term care programs, or for state match
6 for senior service programs
authorized by federal law.
7
(2) A portion, not to exceed 25%, shall be transferred to the
state
8 general fund.
9
(3) A portion, not to exceed 15%, shall be transferred to the
long-
10 term care loan fund for use by the
secretary of aging to make market-
11 rate, low-interest or no-interest,
fully or partially secured or unsecured
12 loans for the following types of
projects: (d) (1) There is hereby
es-
13 tablished the intergovernmental
transfer fund in the state treasury
14 which shall be administered by the
secretary of aging in accordance
15 with this act. All expenditures from
the intergovernmental transfer
16 fund shall be to disburse the state
match amount under the inter-
17 governmental transfer program and
shall be made in accordance
18 with appropriation acts upon warrants
of the director of accounts
19 and reports issued pursuant to
vouchers approved by the secretary
20 of aging or the secretary's designee.
Subject to the provisions of
21 appropriation acts, when the
secretary of aging determines that an
22 amount of federal medicaid moneys is
available for the intergov-
23 ernmental transfer program, the
secretary of aging shall determine
24 the amount required as the state
match and shall certify that
25 amount to the director of accounts
and reports. Upon receipt of each
26 such state match certification, the
director of accounts and reports
27 shall transfer the amount certified
by revenue transfer from the
28 state general fund to the
intergovernmental transfer fund. Upon the
29 crediting of such state match amount
in the intergovernmental
30 transfer fund, the secretary of aging
shall disburse the amount of
31 federal moneys and the state match
amount to the units of govern-
32 ment that have entered into
participation agreements under the
33 program.
34 (2) Each
unit of government receiving a disbursement under
35 the intergovernmental transfer
program shall reimburse the amount
36 of money received, less the amount of
the participation fee, to the
37 secretary of aging. Upon receipt of
each amount of moneys from
38 participating units of government
under the intergovernmental
39 transfer program, the secretary of
aging shall deposit the entire
40 amount in the state treasury to the
credit of the intergovernmental
41 transfer fund. The secretary of aging
shall determine the amount of
42 each such deposit that was
transferred from the state general fund
43 to match medicaid federal funds under
the intergovernmental trans-
4
1 fer program and shall certify
such amount to the director of ac-
2 counts and reports. Upon
receipt of each such certification, the di-
3 rector of accounts and reports
shall retransfer the amount certified
4 from the intergovernmental
transfer fund to the state general fund.
5
(e) There is hereby established the intergovernmental
transfer
6 administration fund in the
state treasury which shall be adminis-
7 tered by the secretary of aging
in accordance with this act. All ex-
8 penditures from the
intergovernmental transfer administration fund
9 shall be to pay the costs of
administering the intergovernmental
10 transfer program and shall be made in
accordance with appropri-
11 ation acts upon warrants of the
director of accounts and reports
12 issued pursuant to vouchers approved
by the secretary of aging or
13 the secretary's designee. The
secretary of aging shall recover the
14 costs of administering the
intergovernmental transfer program from
15 the intergovernmental transfer fund
by certifying the amount of
16 such costs to the director of
accounts and reports each calendar
17 quarter. Upon receipt of each
certification of costs from the secre-
18 tary of aging under this subsection,
the director of accounts and
19 reports shall transfer the amount
certified from the intergovern-
20 mental transfer fund to the
intergovernmental transfer administra-
21 tion fund.
22 (f) After
each amount of moneys is credited to the intergovern-
23 mental transfer fund and the amount
of the state match that had
24 been transferred from the state
general fund has been transferred
25 back to the state general fund
pursuant to subsection (d)(2), and
26 after the transfer of the amount
certified by the secretary of aging
27 to the intergovernmental transfer
administration fund pursuant to
28 subsection (e), if any, the director
of accounts and reports shall
29 transfer the remaining amount in the
intergovernmental transfer
30 fund as follows:
31 (1) During
the period from the effective date of this act through
32 June 30, 2001, 60% of such amount
shall be transferred to the senior
33 services trust fund established by
section 3 and amendments
34 thereto,
25% [9.7%] of
such amount shall be transferred to the
state
35 general fund
[state medicaid match fund--department on aging,
36 15.3% of such amount shall be
transferred to the state medicaid
37 match fund--SRS] and
15% of such amount shall be transferred to
38 the long-term care loan fund
established by subsection (h); and
39 (2) after
June 30, 2001, 70% of such amount shall be trans-
40 ferred to the senior services trust
fund and 30% of such amount
41 shall be transferred to the
state general fund [following
special rev-
42 enue funds in an amount specified by
appropriation acts of the leg-
43 islature for each such fund: State
medicaid match fund--depart-
5
1 ment on aging and the state
medicaid match fund--SRS].
2
(g) There is hereby established the senior services fund in
the
3 state treasury which shall be
administered by the secretary of aging
4 in accordance with this act.
All expenditures from the senior serv-
5 ices fund shall be made in
accordance with appropriation acts upon
6 warrants of the director of
accounts and reports issued pursuant to
7 vouchers approved by the
secretary of aging or the secretary's des-
8 ignee. Moneys in the senior
services fund shall be used by the sec-
9 retary of aging only for
projects intended (1) to reduce future med-
10 icaid costs to the state, (2) to help
seniors avoid premature
11 institutionalization, (3) to improve
the quality of care or the quality
12 of life of seniors who are customers
of long-term care programs, or
13 (4) to satisfy state matching
requirements for senior service pro-
14 grams authorized by federal law.
Moneys credited to the senior
15 services fund from income of
investments of the moneys in the senior
16 services trust fund shall not be used
to create or fund any entitle-
17 ment program not in existence on the
effective date of this act.
18 (h) There
is hereby established the long-term care loan fund in
19 the state treasury which shall be
administered by the secretary of
20 aging in accordance with this act.
All expenditures from the long-
21 term care loan fund shall be made in
accordance with appropriation
22 acts upon warrants of the director of
accounts and reports issued
23 pursuant to vouchers approved by the
secretary of aging or the
24 secretary's designee. Moneys in the
long-term care loan fund shall
25 be used to make loans under the
long-term care loan program de-
26 veloped by the secretary of aging in
accordance with this section.
27 (i) The
secretary of aging is hereby authorized to develop and
28 implement a long-term care loan
program in accordance with this
29 section. Subject to the provisions of
this section and the provisions
30 of appropriation acts, the secretary
of aging may enter into loan
31 agreements for market-rate,
low-interest or no-interest, fully or par-
32 tially secured or unsecured loans
with repayment provisions and
33 other terms and conditions as may be
prescribed by the secretary
34 under such program. Loans under the
long-term care loan program
35 may be made for the
following:
36 (A)
(1) Converting all or parts of some types of
licensed adult care
37 homes from their existing licensure types
to different licensure types to
38 meet demonstrated changing service demands
in their communities;
39 (B)
(2) converting private residences to licensed
homes plus facilities,
40 as defined by K.S.A. 39-923 and amendments
thereto;
41 (C)
(3) converting space in rural hospitals to
hospital-based long-term
42 care facilities;
43 (D)
(4) improving [quality in]some
types of licensed adult care
6
1 homes;
2
(E) (5) rural hospitals
contracting for physician, physician assistant
3 or licensed professional nurse
services; or
4
(F) (6) building congregate
housing for seniors in Kansas cities with
5 populations of 2,500 or less.
6
(f) Subject to appropriations, from the total program
funds trans-
7 ferred into the
intergovernmental transfer fund during each fiscal
year
8 beginning on and after July
1, 2001:
9
(1) A portion, not to exceed 70%, shall be transferred to the
senior
10 services trust fund to be invested
and managed by the Kansas public
11 employment retirement system board
of trustees as described in sections
12 3 and 4 and amendments thereto.
Each calendar quarter, the board of
13 trustees shall transfer the
interest earned on the senior services trust fund
14 investments to the senior services
fund within the state treasury. Subject
15 to appropriations, the moneys in
the senior services fund shall be used
16 by the secretary of aging only for
projects intended to reduce future
17 medicaid costs to the state, to
help seniors avoid premature institution-
18 alization or to improve the quality
of care or the quality of life of seniors
19 who are customers of long-term care
programs, or for state match for
20 senior service programs authorized
by federal law.
21 (2) A
portion, not to exceed 30%, shall be transferred to the
state
22 general fund.
23 (g)
(j) The secretary of aging may consider the
following factors to
24 prioritize and select long-term
care fund loans and senior services
fund
25 projects under the
long-term care loan program and projects fi-
26 nanced from the senior services
fund:
27 (1) Type of loan
-- higher interest is preferable to lower interest and
28 more secured is preferable to less
secured;
29 (2) location --
rural is preferable to urban or suburban;
30 (3) availability
and utilization of the same type of facilities or services
31 in the proposed loan or project area;
32 (4) type of
facility owner or borrower -- unit of government, Kansas
33 not-for-profit, Kansas for-profit, foreign
not-for-profit, foreign for-profit
34 organizations, and individuals, in that
order of preference; and
35 (5) type of
research project organization -- geriatric schools or pro-
36 grams in Kansas colleges or universities,
Kansas colleges or universities,
37 educational foundations, foreign colleges
or universities, Kansas not-for-
38 profit organizations, Kansas for-profit
organizations, foreign not-for-profit
39 organizations, foreign for-profit
organizations, and individuals, in that or-
40 der of preference.
41
(h) The (k) All moneys received
from repayments of principal
42 and interest of any loan made under this
act shall be repaid deposited
43 in the state treasury and
credited to the long-term care loan fund
7
1 within the state treasury and used to
make new loans. Idle funds within
2 the long-term care loan fund
shall be invested as required by law and the
3 interest may be used as part
of the state general fund match required for
4 the intergovernmental
transfer program. The repayment of a loan or of
5 a senior services fund project
contract or grant may not be forgiven, in
6 whole or in part, except by an act of
the legislature.
7
(i) (l) For purposes of this
section, ``units of government'' and ``units
8 of government which own and operate
nursing facilities'' which are eli-
9 gible to enter into intergovernmental
transfer program participation
10 agreements shall be limited to cities of
the first class, cities of the second
11 class, counties, hospital districts, or
health care facilities and services hos-
12 pital districts which hold legal title to
and are actively involved in the day-
13 to-day operations of any of the
following:
14
(1) Medicaid-certified nursing facilities and nursing
facilities for men-
15 tal health, as defined in K.S.A. 39-923 and
amendments thereto;
16
(2) medicaid-certified long-term care facilities which are
operated in
17 connection with city hospitals established
under K.S.A. 13-14b01 et seq.
18 and amendments thereto or K.S.A. 14-601
et seq. and amendments
19 thereto, county hospitals established under
K.S.A. 19-4601 et seq. and
20 amendments thereto, or district hospitals
established under K.S.A. 80-
21 2501 et seq. and amendments thereto;
or
22
(3) medicaid-certified long-term care facilities operated
under au-
23 thority of K.S.A. 80-2550 et seq.
and amendments thereto.
24 (j)
(m) Entities eligible to apply for loans under
the long-term care
25 loan program under this
section shall be limited to the owners of:
26 (1) Licensed
adult care homes, excluding nursing facilities for mental
27 health and intermediate care facilities for
the mentally retarded, as de-
28 fined in K.S.A. 39-923 and amendments
thereto;
29
(2) medicaid-certified licensed hospitals and
medicaid-certified long-
30 term care facilities based in or operated
in connection with licensed hos-
31 pitals as defined in K.S.A. 65-425 and
amendments thereto;
32 (3) private
residences which the owners will contract to convert into
33 licensed homes plus facilities, as defined
in K.S.A. 39-923 and amend-
34 ments thereto, and in which the owners will
reside after the conversion
35 and licensure; or
36 (4) congregate
senior housing projects being built with loans in Kan-
37 sas cities with a population of 2,500 or
less.
38 [(n) (1) There is
hereby established the state medicaid match
39 fund--department on aging in the
state treasury which shall be ad-
40 ministered by the secretary of aging
in accordance with this act. All
41 expenditures from the state medicaid
match fund--department on
42 aging shall be made in accordance
with appropriation acts upon
43 warrants of the director of accounts
and reports issued pursuant to
8
1 vouchers approved by the
secretary of aging or the secretary's des-
2 ignee. Moneys in the state
medicaid match fund--department on
3 aging shall be used to match
moneys for federal medicaid programs
4 which are the most cost
efficient in providing services.
5
[(2) There is hereby established the state medicaid
match
6 fund--SRS in the state treasury
which shall be administered by the
7 secretary of social and
rehabilitation services in accordance with
8 this act. All expenditures from
the state medicaid match fund--SRS
9 shall be made in accordance
with appropriation acts upon warrants
10 of the director of accounts and
reports issued pursuant to vouchers
11 approved by the secretary of social
and rehabilitation services or
12 the secretary's designee. Moneys in
the state medicaid match fund--
13 SRS shall be used to match moneys for
federal medicaid programs
14 which are the most cost efficient in
providing services.]
15 New Sec.
3. (a) The board of trustees of the Kansas public
employees
16 retirement is responsible
for the management and investment of the sen-
17 ior services trust fund
and which is hereby established in the
state
18 treasury. The board of
trustees shall discharge the board's duties rel-
19 ative to the fund for the exclusive purpose
of providing investment rev-
20 enue for the purposes for which the fund
moneys may be used and de-
21 fraying reasonable expenses of
administering the fund. The board shall
22 invest and reinvest moneys in the fund and
acquire, retain, manage, in-
23 cluding the exercise of any voting rights,
and dispose of investments of
24 the fund within the limitations and
according to the powers, duties and
25 purposes as prescribed by this section.
26 (b) Moneys in the
fund shall be invested and reinvested to achieve
27 the investment objective which is
preservation of the fund to provide
28 income and accordingly providing that the
moneys are as productive as
29 possible, subject to the standards set
forth in this act. No moneys in the
30 fund shall be invested or reinvested if the
sole or primary investment
31 objective is for economic development or
social purposes or objectives.
32 (c) In investing
and reinvesting moneys in the fund and in acquiring,
33 retaining, managing and disposing of
investments of the fund, the board
34 of trustees shall exercise the judgment,
care, skill, prudence and diligence
35 under the circumstances then prevailing,
which persons of prudence, dis-
36 cretion and intelligence acting in a like
capacity and familiar with such
37 matters would use in the conduct of an
enterprise of like character and
38 with like aims by diversifying the
investments of the fund so as to mini-
39 mize the risk of large losses, unless under
the circumstances it is clearly
40 prudent not to do so, and not in regard to
speculation but in regard to
41 the permanent disposition of similar funds,
considering the probable in-
42 come as well as the probable safety of
their capital.
43 (d) In the
discharge of such management and investment responsi-
9
1 bilities the board of trustees may
contract for services of one or more
2 professional investment advisors or
other consultants in the management
3 and investment of moneys in the fund
and otherwise in the performance
4 of the duties of the board of
trustees under this act.
5 (e) The
board of trustees shall require that each person contracted
6 with under subsection (d) to provide
services shall obtain commercial
7 insurance which provides for errors
and omissions coverage for such per-
8 son in an amount to be specified by
the board of trustees. The amount
9 of such coverage specified by the
board of trustees shall be at least the
10 greater of $500,000 or 1% of the funds
entrusted to such person up to a
11 maximum of $10,000,000. The board of
trustees shall require a person
12 contracted with under subsection (d) to
provide services give a fidelity
13 bond in a penal sum as may be fixed by law
or, if not so fixed, as may be
14 fixed by the board of trustees, with
corporate surety authorized to do
15 business in this state. Such persons
contracted with the board of trustees
16 pursuant to subsection (d) and any persons
contracted with such persons
17 to perform the functions specified in
subsection (b) shall be deemed to
18 be fiduciary agents of the board of
trustees in the performance of con-
19 tractual obligations.
20 (f)
(1) Subject to the objective set forth in subsection (b) and
the
21 standards set forth in subsection (c), the
board of trustees shall formulate
22 and adopt policies and objectives for the
investment and reinvestment of
23 moneys in the fund and the acquisition,
retention, management and dis-
24 position of investments of the fund. Such
policies and objectives shall be
25 in writing and shall include:
26 (A) Specific
asset allocation standards and objectives;
27 (B) establishment
of criteria for evaluating the risk versus the poten-
28 tial return on a particular investment;
and
29 (C) a requirement
that all investment advisors, and any managers or
30 others with similar duties and
responsibilities as investment advisors, shall
31 immediately report all instances of default
on investments to the board
32 of trustees and provide such board of
trustees with recommendations and
33 options, including, but not limited to,
curing the default or withdrawal
34 from the investment.
35 (2) The board of
trustees shall review such policies and objectives,
36 make changes considered necessary or
desirable and readopt such policies
37 and objectives on an annual basis.
38 (g)
(1) Except as provided in subsection (d) and this subsection,
the
39 custody of money and securities of the fund
shall remain in the custody
40 of the state treasurer, except that the
board of trustees may arrange for
41 the custody of such money and securities as
it considers advisable with
42 one or more member banks or trust companies
of the federal reserve
43 system or with one or more banks in the
state of Kansas, or both, to be
10
1 held in safekeeping by the banks or
trust companies for the collection of
2 the principal and interest or other
income or of the proceeds of sale.
3 (2) The
state treasurer and the board of trustees shall collect the
4 principal and interest or other
income of investments or the proceeds of
5 sale of securities of the
fund in the custody of the state treasurer and
6 shall pay such moneys when so
collected into the state treasury to the
7 credit of the fund.
8 (3) The
principal and interest or other income or the proceeds of sale
9 of securities of the
fund as provided in paragraph (1) of this subsection
10 shall be reported to the state
treasurer, the director of accounts and
11 reports and the board of
trustees and credited to the fund.
12 (h) All interest
or other income of the investments of the moneys in
13 the fund, after payment of any management
fees, shall be considered
14 income of the fund and shall be withdrawn
and deposited quarterly in
15 the state treasury to the credit of the
senior services fund to be used by
16 the secretary of aging for the purposes
permitted by section 2 of this act
17 and amendments thereto.
18 (i) As used in
this section:
19 (1) ``Board of
trustees'' means the board of trustees of the Kansas
20 public employees retirement system
established by K.S.A. 74-4905 and
21 amendments thereto.
22 (2) ``Fiduciary''
means a person who, with respect to the fund, is a
23 person who:
24 (A) Exercises any
discretionary authority with respect to administra-
25 tion of the fund;
26 (B) exercises any
authority to invest or manage assets of the fund or
27 has any authority or responsibility to do
so;
28 (C) provides
investment advice for a fee or other direct or indirect
29 compensation with respect to the assets of
the fund or has any authority
30 or responsibility to do so;
31 (D) provides
actuarial, accounting, auditing, consulting, legal or other
32 professional services for a fee or other
direct or indirect compensation
33 with respect to the fund or has any
authority or responsibility to do so;
34 or
35 (E) is a member
of the board of trustees or of the staff of the board
36 of trustees.
37 (3) ``Fund''
means the senior services trust fund.
38 (4) With respect
to the investment of moneys in the senior services
39 trust fund, ``purposes for which the moneys
may be used'' means the
40 purposes for which the moneys in the senior
services trust fund may be
41 used, as provided in section 2 and
amendments thereto.
42 New Sec.
4. The board of trustees of the Kansas public employees
43 retirement system shall report to the
governor and to the legislature on
11
1 the moneys credited to the senior
services trust fund and investment
2 earnings thereon at
lease least once each calendar
quarter and on a
3 monthly basis upon request of the
governor, the president of the senate
4 or the speaker of the house of
representatives. The director of the budget
5 and the governor shall use the
information in such reports in the prepa-
6 ration of the governor's budget
report under K.S.A. 75-3721 and amend-
7 ments thereto.
8 Sec. 5. K.S.A. 75-5321a is
hereby repealed.
9 Sec. 6. This act
shall take effect and be in force from and after its
10 publication in the Kansas register.