CHAPTER 105 SENATE BILL No. 248 An Act relating to the medicaid state plan; establishing an intergovernmental transfer pro-
gram; concerning nursing facilities owned and operated by units of government; relating
to the federal medical assistance (medicaid) program; establishing an intergovernmental
transfer fund, an intergovernmental transfer administration fund, a long-term care loan
and grant fund, a senior services trust fund, a senior services fund, a state medicaid
match fund--department on aging, a state medicaid match fund--SRS and an HCBS
programs fund within the state treasury; authorizing certain participation agreements,
loans, grants and contracts; amending K.S.A. 75-5321a and repealing the existing section.
Be it enacted by the Legislature of the State of Kansas:

      Section  1. K.S.A. 75-5321a is hereby amended to read as follows: 75-
5321a. The secretary of social and rehabilitation services shall take nec-
essary actions to transfer the administration of certain long-term care
programs and services to the secretary of aging. The programs shall in-
clude the nursing facility services payment program, the home and com-
munity based nursing facility services for the frail elderly waiver program,
the case management for the frail elderly program and the income eligible
(home care) program. Excluding nursing facility programs, the programs
to be transferred shall not include long-term care programs for individuals
under the age of 65 with mental illness, mental retardation, other mental
disabilities or physical disabilities. All such transfers shall be made only
in accordance with federal grant requirements related to such programs.

      New Sec.  2. (a) The secretary of social and rehabilitation services and
the secretary of aging shall take necessary actions to establish an inter-
governmental transfer program as a part of the nursing facility services
payment program within the medicaid state plan.

      (b) In implementing the intergovernmental transfer program, the
secretary of aging shall disburse moneys received from the federal gov-
ernment for the intergovernmental transfer program and moneys trans-
ferred from the state general fund to the intergovernmental transfer fund
for the program to units of government which have entered into partic-
ipation agreements with the secretary of aging and the secretary of social
and rehabilitation services. The amount of moneys disbursed to the units
of government from moneys transferred from the state general fund to
the intergovernmental transfer fund for the program shall not exceed the
amount necessary to match federal funds available to the state under the
intergovernmental transfer program. The secretary of aging shall peri-
odically calculate the amount of federal funds available under the pro-
gram according to the methodology prescribed for the intergovernmental
transfer program in the medicaid state plan.

      (c) The secretary of social and rehabilitation services and the secre-
tary of aging are authorized to enter into intergovernmental transfer pro-
gram participation agreements with units of government which own and
operate nursing facilities. The participation agreements may permit the
units of government to retain a participation fee specified by the secretary
of aging from moneys received under the intergovernmental transfer pro-
gram which are otherwise required to be transferred back to the secretary
of aging.

      (d)  (1) There is hereby established the intergovernmental transfer
fund in the state treasury which shall be administered by the secretary of
aging in accordance with this act. All expenditures from the intergovern-
mental transfer fund shall be to disburse the state match amount under
the intergovernmental transfer program and shall be made in accordance
with appropriation acts upon warrants of the director of accounts and
reports issued pursuant to vouchers approved by the secretary of aging
or the secretary's designee. Subject to the provisions of appropriation acts,
when the secretary of aging determines that an amount of federal med-
icaid moneys is available for the intergovernmental transfer program, the
secretary of aging shall determine the amount required as the state match
and shall certify that amount to the director of accounts and reports. Upon
receipt of each such state match certification, the director of accounts
and reports shall transfer the amount certified by revenue transfer from
the state general fund to the intergovernmental transfer fund. Upon the
crediting of such state match amount in the intergovernmental transfer
fund, the secretary of aging shall disburse the amount of federal moneys
and the state match amount to the units of government that have entered
into participation agreements under the program.

      (2) Each unit of government receiving a disbursement under the in-
tergovernmental transfer program shall reimburse the amount of money
received, less the amount of the participation fee, to the secretary of
aging. Upon receipt of each amount of moneys from participating units
of government under the intergovernmental transfer program, the sec-
retary of aging shall deposit the entire amount in the state treasury to the
credit of the intergovernmental transfer fund. The secretary of aging shall
determine the amount of each such deposit that was transferred from the
state general fund to match medicaid federal funds under the intergov-
ernmental transfer program and shall certify such amount to the director
of accounts and reports. Upon receipt of each such certification, the di-
rector of accounts and reports shall retransfer the amount certified from
the intergovernmental transfer fund to the state general fund.

      (e) There is hereby established the intergovernmental transfer ad-
ministration fund in the state treasury which shall be administered by the
secretary of aging in accordance with this act. All expenditures from the
intergovernmental transfer administration fund shall be to pay the costs
of administering the intergovernmental transfer program and shall be
made in accordance with appropriation acts upon warrants of the director
of accounts and reports issued pursuant to vouchers approved by the
secretary of aging or the secretary's designee. The secretary of aging shall
recover the costs of administering the intergovernmental transfer pro-
gram from the intergovernmental transfer fund by certifying the amount
of such costs to the director of accounts and reports each calendar quar-
ter. Upon receipt of each certification of costs from the secretary of aging
under this subsection, the director of accounts and reports shall transfer
the amount certified from the intergovernmental transfer fund to the
intergovernmental transfer administration fund.

      (f) After each amount of moneys is credited to the intergovernmental
transfer fund and the amount of the state match that had been transferred
from the state general fund has been transferred back to the state general
fund pursuant to subsection (d)(2), and after the transfer of the amount
certified by the secretary of aging to the intergovernmental transfer ad-
ministration fund pursuant to subsection (e), if any, the director of ac-
counts and reports shall transfer the remaining amount in the intergov-
ernmental transfer fund as follows:

      (1) During the period from the effective date of this act through June
30, 2001, 60% of such amount shall be transferred to the senior services
trust fund established by section 3 and amendments thereto, 9.7% of such
amount shall be transferred to the state medicaid match fund--depart-
ment on aging established by subsection (o)(1), 15.3% of such amount
shall be transferred to the state medicaid match fund--SRS established
by subsection (o)(2), 10% of such amount shall be transferred to the long-
term care loan and grant fund established by subsection (h) and 5% of
such amount shall be transferred to the HCBS programs fund established
by subsection (p); and

      (2) after June 30, 2001, 70% of such amount shall be transferred to
the senior services trust fund, 5% of such amount shall be transferred to
the long-term care loan and grant fund and 25% of such amount shall be
transferred to the following special revenue funds in an amount specified
by appropriation acts of the legislature for each such fund: State medicaid
match fund--department on aging and the state medicaid match fund--
SRS.

      (g) There is hereby established the senior services fund in the state
treasury which shall be administered by the secretary of aging in accord-
ance with this act. All expenditures from the senior services fund shall be
made in accordance with appropriation acts upon warrants of the director
of accounts and reports issued pursuant to vouchers approved by the
secretary of aging or the secretary's designee. Moneys in the senior serv-
ices fund shall be used by the secretary of aging only for projects intended
(1) to reduce future medicaid costs to the state, (2) to help seniors avoid
premature institutionalization, (3) to improve the quality of care or the
quality of life of seniors who are customers of long-term care programs,
(4) to satisfy state matching requirements for senior service programs
authorized by federal law, or (5) to provide financial assistance under the
senior pharmacy assistance program. Moneys credited to the senior serv-
ices fund from income of investments of the moneys in the senior services
trust fund shall not be used to create or fund any entitlement program
not in existence on the effective date of this act.

      (h) There is hereby established the long-term care loan and grant
fund in the state treasury which shall be administered by the secretary of
aging in accordance with this act. All expenditures from the long-term
care loan and grant fund shall be made in accordance with appropriation
acts upon warrants of the director of accounts and reports issued pursuant
to vouchers approved by the secretary of aging or the secretary's designee.
Moneys in the long-term care loan and grant fund shall be used to make
loans under the long-term care loan program developed by the secretary
of aging in accordance with this section and grants under the long-term
grant program developed by the secretary of aging in accordance with
this section.

      (i) The secretary of aging is hereby authorized to develop and imple-
ment a long-term care loan program in accordance with this section. Sub-
ject to the provisions of this section and the provisions of appropriation
acts, the secretary of aging may enter into loan agreements for market-
rate, low-interest or no-interest, fully or partially secured or unsecured
loans with repayment provisions and other terms and conditions as may
be prescribed by the secretary under such program. Loans under the
long-term care loan program may be made for the following:

      (1) Converting all or parts of some types of licensed adult care homes
from their existing licensure types to different licensure types to meet
demonstrated changing service demands in their communities;

      (2) converting private residences to licensed homes plus facilities, as
defined by K.S.A. 39-923 and amendments thereto;

      (3) converting space in rural hospitals to hospital-based long-term
care facilities;

      (4) improving quality in some types of licensed adult care homes;

      (5) rural hospitals contracting for physician, physician assistant or li-
censed professional nurse services; or

      (6) building congregate housing for seniors in Kansas cities with pop-
ulations of 2,500 or less.

      (j) The secretary of aging may consider the following factors to pri-
oritize and select loans under the long-term care loan program, grants
under the long-term care grant program and projects financed from the
senior services fund:

      (1) Type of loan--higher interest is preferable to lower interest and
more secured is preferable to less secured;

      (2) size of facility--facilities having less than 60 beds are preferable
to facilities having 60 beds or more;

      (3) availability and utilization of the same type of facilities or services
in the proposed loan or project area;

      (4) type of facility owner or borrower--unit of government, not-for-
profit organizations, for-profit organizations, and individuals, in that order
of preference; and

      (5) type of research project organization--geriatric schools or pro-
grams in Kansas colleges or universities, Kansas colleges or universities,
educational foundations, foreign colleges or universities, Kansas not-for-
profit organizations, Kansas for-profit organizations, foreign not-for-profit
organizations, foreign for-profit organizations, and individuals, in that or-
der of preference.

      (k) All moneys received from repayments of principal and interest of
any loan made under this act shall be deposited in the state treasury and
credited to the long-term care loan and grant fund within the state treas-
ury and used to make new loans or grants under this section. The repay-
ment of a loan or of a senior services fund project contract or grant may
not be forgiven, in whole or in part, except as authorized by law.

      (l) The secretary of aging is hereby authorized to develop and imple-
ment a long-term care grant program in accordance with this section.
Subject to the provisions of this section and the provisions of appropria-
tion acts, the secretary of aging may make competitive matching grants
under such terms and conditions as may be prescribed by the secretary
under such program. Grants under the long-term care grant program may
be made only from the amount of moneys received for interest payments
under loan agreements under the long-term care loan program and cred-
ited to the long-term care loan and grant fund. Grants under the long-
term care grant program may be made for the following:

      (1) Grants for improvements in the quality of case management serv-
ices under home and community-based services (HCBS) programs and
for improvements for adult care homes; and

      (2) financial assurance grants for community service providers under
home and community-based services (HCBS) programs.

      (m) For purposes of this section, ``units of government'' and ``units
of government which own and operate nursing facilities'' which are eli-
gible to enter into intergovernmental transfer program participation
agreements shall be limited to cities of the first class, cities of the second
class, counties, hospital districts, or health care facilities and services hos-
pital districts which hold legal title to and are actively involved in the day-
to-day operations of any of the following:

      (1) Medicaid-certified nursing facilities and nursing facilities for men-
tal health, as defined in K.S.A. 39-923 and amendments thereto;

      (2) medicaid-certified long-term care facilities which are operated in
connection with city hospitals established under K.S.A. 13-14b01 et seq.
and amendments thereto or K.S.A. 14-601 et seq. and amendments
thereto, county hospitals established under K.S.A. 19-4601 et seq. and
amendments thereto, or district hospitals established under K.S.A. 80-
2501 et seq. and amendments thereto; or

      (3) medicaid-certified long-term care facilities operated under au-
thority of K.S.A. 80-2550 et seq. and amendments thereto.

      (n) Entities eligible to apply for loans under the long-term care loan
program under this section shall be limited to the owners of:

      (1) Licensed adult care homes, excluding nursing facilities for mental
health and intermediate care facilities for the mentally retarded, as de-
fined in K.S.A. 39-923 and amendments thereto;

      (2) medicaid-certified licensed hospitals and medicaid-certified long-
term care facilities based in or operated in connection with licensed hos-
pitals as defined in K.S.A. 65-425 and amendments thereto;

      (3) private residences which the owners will contract to convert into
licensed homes plus facilities, as defined in K.S.A. 39-923 and amend-
ments thereto, and in which the owners will reside after the conversion
and licensure; or

      (4) congregate senior housing projects being built with loans in Kan-
sas cities with a population of 2,500 or less.

      (o)  (1) There is hereby established the state medicaid match fund--
department on aging in the state treasury which shall be administered by
the secretary of aging in accordance with this act. All expenditures from
the state medicaid match fund--department on aging shall be made in
accordance with appropriation acts upon warrants of the director of ac-
counts and reports issued pursuant to vouchers approved by the secretary
of aging or the secretary's designee. Moneys in the state medicaid match
fund--department on aging shall be used to match moneys for federal
medicaid programs which are the most cost efficient in providing services.

      (2) There is hereby established the state medicaid match fund--SRS
in the state treasury which shall be administered as provided by law and
in accordance with this act. All expenditures from the state medicaid
match fund--SRS shall be made in accordance with appropriation acts
upon warrants of the director of accounts and reports issued pursuant to
vouchers approved as provided by law. Moneys in the state medicaid
match fund--SRS shall be used to match moneys for federal medicaid
programs which are the most cost efficient in providing services.

      (p) There is hereby established the HCBS programs fund in the state
treasury which shall be administered by the secretary of social and re-
habilitation services. All moneys in the HCBS programs fund shall be
used for programs and services under the home and community-based
services (HCBS) programs and as otherwise provided by law. All expend-
itures from the HCBS programs fund shall be made in accordance with
appropriation acts upon warrants of the director of accounts and reports
issued pursuant to vouchers approved by the secretary of social and re-
habilitation services or the secretary's designee.

      New Sec.  3. (a) The board of trustees is responsible for the manage-
ment and investment of the senior services trust fund which is hereby
established in the state treasury. The board of trustees shall discharge the
board's duties relative to the fund for the exclusive purpose of providing
investment revenue for the purposes for which the fund moneys may be
used and defraying reasonable expenses of administering the fund. The
board shall invest and reinvest moneys in the fund and acquire, retain,
manage, including the exercise of any voting rights, and dispose of in-
vestments of the fund within the limitations and according to the powers,
duties and purposes as prescribed by this section.

      (b) Moneys in the fund shall be invested and reinvested to achieve
the investment objective which is preservation of the fund to provide
income and accordingly providing that the moneys are as productive as
possible, subject to the standards set forth in this act. No moneys in the
fund shall be invested or reinvested if the sole or primary investment
objective is for economic development or social purposes or objectives.

      (c) In investing and reinvesting moneys in the fund and in acquiring,
retaining, managing and disposing of investments of the fund, the board
of trustees shall exercise the judgment, care, skill, prudence and diligence
under the circumstances then prevailing, which persons of prudence, dis-
cretion and intelligence acting in a like capacity and familiar with such
matters would use in the conduct of an enterprise of like character and
with like aims by diversifying the investments of the fund so as to mini-
mize the risk of large losses, unless under the circumstances it is clearly
prudent not to do so, and not in regard to speculation but in regard to
the permanent disposition of similar funds, considering the probable in-
come as well as the probable safety of their capital.

      (d) In the discharge of such management and investment responsi-
bilities the board of trustees may contract for services of one or more
professional investment advisors or other consultants in the management
and investment of moneys in the fund and otherwise in the performance
of the duties of the board of trustees under this act.

      (e) The board of trustees shall require that each person contracted
with under subsection (d) to provide services shall obtain commercial
insurance which provides for errors and omissions coverage for such per-
son in an amount to be specified by the board of trustees. The amount
of such coverage specified by the board of trustees shall be at least the
greater of $500,000 or 1% of the funds entrusted to such person up to a
maximum of $10,000,000. The board of trustees shall require a person
contracted with under subsection (d) to provide services give a fidelity
bond in a penal sum as may be fixed by law or, if not so fixed, as may be
fixed by the board of trustees, with corporate surety authorized to do
business in this state. Such persons contracted with the board of trustees
pursuant to subsection (d) and any persons contracted with such persons
to perform the functions specified in subsection (b) shall be deemed to
be fiduciary agents of the board of trustees in the performance of con-
tractual obligations.

      (f)  (1) Subject to the objective set forth in subsection (b) and the
standards set forth in subsection (c), the board of trustees shall formulate
and adopt policies and objectives for the investment and reinvestment of
moneys in the fund and the acquisition, retention, management and dis-
position of investments of the fund. Such policies and objectives shall be
in writing and shall include:

      (A) Specific asset allocation standards and objectives;

      (B) establishment of criteria for evaluating the risk versus the poten-
tial return on a particular investment; and

      (C) a requirement that all investment advisors, and any managers or
others with similar duties and responsibilities as investment advisors, shall
immediately report all instances of default on investments to the board
of trustees and provide such board of trustees with recommendations and
options, including, but not limited to, curing the default or withdrawal
from the investment.

      (2) The board of trustees shall review such policies and objectives,
make changes considered necessary or desirable and readopt such policies
and objectives on an annual basis.

      (g)  (1) Except as provided in subsection (d) and this subsection, the
custody of money and securities of the fund shall remain in the custody
of the state treasurer, except that the board of trustees may arrange for
the custody of such money and securities as it considers advisable with
one or more member banks or trust companies of the federal reserve
system or with one or more banks in the state of Kansas, or both, to be
held in safekeeping by the banks or trust companies for the collection of
the principal and interest or other income or of the proceeds of sale.

      (2) The state treasurer and the board of trustees shall collect the
principal and interest or other income of investments or the proceeds of
sale of securities of the fund in the custody of the state treasurer and shall
pay such moneys when so collected into the state treasury to the credit
of the fund.

      (3) The principal and interest or other income or the proceeds of sale
of securities of the fund as provided in paragraph (1) of this subsection
shall be reported to the state treasurer, the director of accounts and re-
ports and the board of trustees and credited to the fund.

      (h) All interest or other income of the investments of the moneys in
the fund, after payment of any management fees, shall be considered
income of the fund and shall be withdrawn and deposited quarterly in
the state treasury to the credit of the senior services fund to be used by
the secretary of aging for the purposes permitted by section 2 and amend-
ments thereto.

      (i) As used in this section:

      (1) ``Board of trustees'' means the board of trustees of the Kansas
public employees retirement system established by K.S.A. 74-4905 and
amendments thereto.

      (2) ``Fiduciary'' means a person who, with respect to the fund, is a
person who:

      (A) Exercises any discretionary authority with respect to administra-
tion of the fund;

      (B) exercises any authority to invest or manage assets of the fund or
has any authority or responsibility to do so;

      (C) provides investment advice for a fee or other direct or indirect
compensation with respect to the assets of the fund or has any authority
or responsibility to do so;

      (D) provides actuarial, accounting, auditing, consulting, legal or other
professional services for a fee or other direct or indirect compensation
with respect to the fund or has any authority or responsibility to do so;
or

      (E) is a member of the board of trustees or of the staff of the board
of trustees.

      (3) ``Fund'' means the senior services trust fund.

      (4) With respect to the investment of moneys in the senior services
trust fund, ``purposes for which the moneys may be used'' means the
purposes for which the moneys in the senior services fund may be used,
as provided in section 2 and amendments thereto.

      New Sec.  4. The board of trustees of the Kansas public employees
retirement system shall report to the governor and to the legislature on
the moneys credited to the senior services trust fund and investment
earnings thereon at least once each calendar quarter and on a monthly
basis upon request of the governor, the president of the senate or the
speaker of the house of representatives. The director of the budget and
the governor shall use the information in such reports in the preparation
of the governor's budget report under K.S.A. 75-3721 and amendments
thereto.

      Sec.  5. K.S.A. 75-5321a is hereby repealed.
      Sec.  6. This act shall take effect and be in force from and after its
publication in the Kansas register.

Approved April 19, 2000.
 Published in the Kansas Register April 27, 2000.
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