CHAPTER 110 SENATE BILL No. 660 An Act concerning the capitol; relating to the construction, equipping, furnishing, reno-
vation, reconstruction and repair of the state capitol; financing; amending K.S.A. 1999
Supp. 75-4234 and repealing the existing section.
Be it enacted by the Legislature of the State of Kansas:

      New Section  1. (a) The secretary of administration jointly with the
legislative coordinating council may make expenditures from money avail-
able therefor for the construction, equipping, furnishing, renovation, re-
construction and repair of the state capitol. The capital improvement
project for the construction, equipping, furnishing, renovation, recon-
struction and repair of the state capitol is hereby approved for the sec-
retary of administration jointly with the legislative coordinating council
for the purpose of subsection (b) of K.S.A. 74-8905 and amendments
thereto and the authorization of the issuance of bonds by the Kansas
development finance authority in accordance with the statute. Expendi-
tures authorized by this section for this capital improvement project shall
not exceed $40,000,000 plus all amounts required for costs of any bond
issuance, costs of interest on any bond issued or obtained for such capital
improvement project and any required reserves for payment of principal
and interest on any bond. Bonds issued under this section shall be fi-
nanced by appropriations from the state general fund.

      (b) In addition to other renovations, reconstructions, repairs or im-
provements and within the funds appropriated and available therefor, the
capital improvement project approved by this section may include por-
tions that (1) address issues of health and safety, (2) modernize building
systems, including the technology infrastructure, (3) preserve the artistic
and historic integrity of the state capitol, specifically regarding works of
art, public spaces, building materials, light wells and skylights and the
exterior, and (4) utilize and improve space available, including the base-
ment, to increase the functionality of the state capitol as a working capitol.

      New Sec.  2. (a) On and after the effective date of this act, the board
of trustees is responsible for the management and investment of that
portion of state moneys available for investment by the pooled money
investment board that is certified by the state treasurer to the board of
trustees as being equivalent to the aggregate net amount received for
unclaimed property and shall discharge the board's duties with respect to
such moneys solely in the interests of the state general fund and shall
invest and reinvest such moneys and acquire, retain, manage, including
the exercise of any voting rights and disposal of investments of such mon-
eys within the limitations and according to the powers, duties and pur-
poses as prescribed by this section.

      (b) Moneys specified in subsection (a) shall be invested and rein-
vested to achieve the investment objective which is preservation of such
moneys and accordingly providing that the moneys are as productive as
possible, subject to the standards set forth in this act. No such moneys
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 specified in subsection (a)
and in acquiring, retaining, managing and disposing of investments of the
moneys, the board of trustees shall exercise the judgment, care, skill,
prudence and diligence under the circumstances then prevailing, which
persons of prudence, discretion 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
moneys so as to minimize the risk of large losses, unless under the cir-
cumstances it is clearly prudent not to do so, and not in regard to spec-
ulation but in regard to the permanent disposition of similar moneys,
considering the probable income 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 the services of one or more
professional investment advisors or other consultants in the management
and investment of such moneys 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 to 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
such moneys and the acquisition, retention, management and disposition
of investments of the moneys. 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) Except as provided in subsection (d) and this subsection, the cus-
tody of such moneys shall remain in the custody of the state treasurer,
except that the board of trustees may arrange for the custody of such
moneys 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. All such moneys shall be considered
moneys in the state treasury for purposes of K.S.A. 75-6704 and amend-
ments thereto.

      (h) All interest or other income of the investments of the moneys
invested under this section, after payment of any management fees, shall
be deposited in the state treasury to the credit of the state general fund.

      (i) On or after the effective date of this act and periodically thereafter,
the state treasurer shall certify to the board of trustees a portion of state
moneys available for investment by the pooled money investment board
that is equivalent to the aggregate net amount received for unclaimed
property. The state treasurer shall transfer the amount certified to the
board of trustees.

      (j) 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 moneys in-
vested under this section, is a person who:

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

      (B) exercises any authority to invest or manage such moneys 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 such moneys or has any authority or re-
sponsibility 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 such moneys 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.

      Sec.  3. K.S.A. 1999 Supp. 75-4234 is hereby amended to read as
follows: 75-4234. (a) Except as provided in subsection (c) and in sub-
section (f), all moneys in the state treasury shall be invested as a single
portfolio which is hereby designated as the pooled money investment
portfolio. The portfolio shall be invested in accordance with article 42 of
chapter 75 of the Kansas Statutes Annotated, and amendments thereto.
The director of investments shall compute daily the earnings of the port-
folio, including realized gains and losses. The pooled money investment
board by written policy may provide for allocation of unrealized gains or
losses. The director of investments shall calculate on a daily basis and
shall deduct from earnings an administrative fee which shall be set by the
board and applied as a fixed percentage of moneys in the pooled money
investment portfolio. The administrative fee shall not exceed .25% an-
nually on moneys deposited in the municipal investment pool and .10%
annually on other moneys in the pooled money investment portfolio. The
director of investments shall deposit the administrative fee in accordance
with K.S.A. 75-4235, and amendments thereto. The gross earnings, after
deduction of the administrative fee, shall be designated as the net earn-
ings of the pooled money investment portfolio.

      (b) The pooled money investment board may contract for the services
of an external investment advisor to provide advisory services concerning
the investment policies and practices of the pooled money investment
portfolio. Such investment advisor shall not be the person or firm con-
tracted with under K.S.A. 1999 Supp. 75-4264.

      (c) Moneys in the employment security fund established by K.S.A.
44-712, and amendments thereto, shall not be invested in the pooled
money investment portfolio except as may be authorized by the secretary
of human resources pursuant to subsection (e) of K.S.A. 44-712, and
amendments thereto.

      (d) For moneys in funds designated in this subsection that are in the
pooled money investment portfolio and which are not invested in the
municipal investment pool, interest is to be paid on such moneys based
on the average daily balance in the fund for each month and the net
earnings rate of the pooled money investment portfolio for such month.
This subsection shall apply to the state highway fund and funds for bonds
and other debt instruments of state agencies and authorities.

      (e) Moneys in funds designated in this subsection shall not be in-
vested in investment options of the municipal investment pool fund for
which the minimum term of such investment is less than 21 days. This
subsection shall apply to state moneys, other than moneys of municipal-
ities as described in subsection (a) of K.S.A. 12-1675, and amendments
thereto.

      (f) The amount of state moneys certified by the state treasurer as
equivalent to the aggregate net amount received for unclaimed property
under section 2, and amendments thereto, shall be managed and invested
as provided in section 2, and amendments thereto.

      New Sec.  4. (a) The Kansas state historical society and the depart-
ment of administration shall develop plans to place a mural in the capitol
honoring the 1st Kansas (Colored) Voluntary Infantry regiment. Such
plans shall be developed in consultation with the joint committee on arts
and cultural resources.

      (b) On or before January 1, 2002, the plans developed pursuant to
subsection (a) shall be submitted to the joint committee on arts and cul-
tural resources.

      Sec.  5. K.S.A. 1999 Supp. 75-4234 is hereby repealed.

      Sec.  6. This act shall take effect and be in force from and after its
publication in the statute book.

Approved April 19, 2000.
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