Brief⁽¹⁾

Sub. for S.B. 156 concerns the disposition of tobacco litigation settlement proceeds.

Children's Trust Fund Established

Section 1 establishes the Children's Trust Fund, to be invested, managed, and administered by the Children's Trust Fund Board of Trustees created in the bill. All moneys received by the state pursuant to the tobacco litigation settlement agreements entered into by the Attorney General on behalf of the state, or pursuant to any other judgment rendered regarding the litigation against the tobacco industry, would be credited to the Children's Trust Fund. The moneys would constitute an endowment and remain credited to the Trust Fund except for transfers authorized by the bill. The bill requires that moneys in the Trust Fund be invested to provide an ongoing source of investment earnings available for periodic transfers to the Children's Initiatives Fund, which is also created in the bill. On the effective date of the act, all amounts credited to the Children's Health Care Fund would be transferred to the Children's Trust Fund and the Children's Health Care Fund would be abolished.

Children's Initiatives Fund Created

Section 2 creates the Children's Initiatives Fund and defines the uses authorized for amounts credited to the Fund. Those funds are to be used for the purposes of providing additional funding for programs, projects, improvements, services, and other purposes directly or indirectly beneficial to physical and mental health, welfare, safety, and overall well-being of children in Kansas. The bill directs that the Legislature, in allocating or appropriating moneys in the Fund, emphasize programs and services that are data-driven and outcomes based and that are designed to prevent or stop children from being involved in or with tobacco, drugs, alcohol, juvenile delinquency, or violence. The bill prohibits using the funds to supplant State General Fund or Special Revenue Fund moneys in existing programs.

The bill provides that on July 1, 1999, or as soon as funds are available, the Director of Accounts and Reports shall transfer $45.0 million from the Children's Trust Fund to the Children's Initiatives Fund. In each ensuing fiscal year, the amount transferred would represent 102.5 percent of the amount transferred in the preceding fiscal year. In the event that the amount received from the tobacco settlement in any fiscal year would represent an increase or a reduction from the amount anticipated, the Legislature would be authorized to proportionately adjust the amounts transferred.

Kansas Children's Authority Established

Section 3 establishes the Kansas Children's Authority, which is charged with advising and providing recommendations to the Governor and the Legislature regarding the use of moneys credited to the Children's Initiatives Fund. The Kansas Children's Authority would be composed of 11 members who are children's advocates, members of organizations with experience in programs that benefit children, or other individuals who have experience with children's programs and services. Seven members of the Authority would be appointed by the Governor, and one would be appointed by each of the following: President and Minority Leader of the Senate and Speaker and Minority Leader of the House. The Governor would select the Chair of the Authority. No more than six members could be from the same political party and members would serve two-year terms. No member of the Authority could be a member of the Legislature. For purposes of budgeting, purchasing, and other administrative functions, the Authority would be attached to the Office of the State Treasurer.

Children's Trust Fund Board of Trustees Established

Section 4 establishes the nine-member Children's Trust Fund Board of Trustees. The Board is composed of the State Treasurer and eight members (four appointed by the Governor and one each by the House Speaker, Senate President, House Minority Leader, and Senate Minority Leader) who have backgrounds in finance or investments or experience working for a foundation or as a trust officer. The appointed members would serve two-year terms and would be subject to confirmation by the Senate. The State Treasurer would serve as the Chair. No member of the Board could be a member of the Kansas Legislature. The Board would be attached to the State Treasurer's office for purposes of budgeting, purchasing, and other administrative functions.

Section 5 defines the Board's responsibilities. The Board would be responsible for the management and investment of the Children's Trust Fund and would be directed to invest and reinvest the moneys credited to the Fund to provide investment earnings for the Children's Initiatives Fund. The Board would be authorized to contract for the services of one or more professional investment managers and to utilize the services of the professional investment staff of the Board of Trustees of the Kansas Public Employees Retirement System.

Section 6 requires the Board to report to the Governor and the Legislature on the amounts credited to the Children's Trust Fund and investment earnings to the Fund at least once each calendar quarter and monthly on the request of the Governor, the President of the Senate, or the Speaker of the House. In addition, the Board would submit a report on or before October 1 of each year to the Director of the Budget, the Director of the Legislative Research Department, and the Chairs of the Senate Ways and Means Committee and the House Appropriations Committee.

Section 7 directs the Board of Trustees of the Kansas Public Employees Retirement System to make the services and assistance of its professional investment staff available to the Children's Trust Fund Board for assistance regarding the Trust Fund, and directs the State Treasurer, in accordance with the provisions of appropriations acts, to provide staff assistance to the Children's Trust Fund Board.

Background

The House Committee substituted the provisions of 1999 H.B. 2558 into Sub. for S.B. 156. As originally approved by the Senate, S.B. 156 concerned authorization for the Department of Wildlife and Parks to exceed its expenditure limitation on certain fee funds.

Conferees representing several groups appeared before the House Committee to discuss appropriate disposition of the tobacco litigation settlement proceeds. The conferees included the Chancellor of the University of Kansas and representatives of: Kansas Action for Children; the Tobacco Free Kansas Coalition; the American Cancer Society; the American Lung Association; KanFocus; the Kansas Public Health Association; the Kansas Children's Service League; and the Salina-Saline County Health Department.

No fiscal note was available on the bill.

1. *Supplemental notes are prepared by the Legislative Research Department and do not express legislative intent. The supplemental note and fiscal note for this bill may be accessed on the Internet at http://www.ink.org/public/legislative/bill_search.html