Brief ⁽¹⁾

SB 462 amends the Campaign Finance Act, the state governmental ethics law, addresses conflict of interest laws and competitive bids, and creates the Private Attorney Retention Sunshine Act.

SB 462 amends the Campaign Finance Act by prohibiting anyone other than an individual from contributing campaign contributions, after January 1 and prior to adjournment sine die of the Legislature, to any recognized political party committee in the House and Senate or any political party committee established to support or oppose candidates of a single party in either the Senate or the House. These political party committees would be prohibited from accepting or soliciting contributions from anyone other than individuals during this time period. Current law prohibits contributions to, and solicitations by, legislators, candidates for the Legislature, state officer elected on a statewide basis, or candidate committees of these entities during this same period.

The bill clarifies that a political committee would not include a candidate committee or a party committee.

The bill prohibits any lobbyist from giving anything of value to any legislator, legislative candidate, or legislator-elect. The bill prohibits a legislator, legislator-elect, and a legislative candidate from serving as an officer or director of a political committee which expressly advocates or makes contributions or expenditures for the nomination, election, or defeat of a candidate.

The bill requires a House or Senate political committees to return any contribution received after January 1, 1999, to the contributor. These political committees and political committees established to support or oppose a single-party candidate in the Senate or House would be prohibited from receiving or soliciting contributions from any individual during the legislative session.

SB 462 amends the State Governmental Ethics Laws to prohibit all officers and employees of the Executive Branch of state government from soliciting or accepting anything of value in their official position. Current law imposes that prohibition on most, but not all, officers and employees of the Executive Branch. State officers who would be covered by the bill, but who are not covered under current law, are the Attorney General, Insurance Commissioner, Treasurer, Secretary of State, and most unclassified employees. The prohibition would not apply to the Legislative or Judicial Branches of state government.

The bill also deletes language in current law that specifies that transportation or lodging is not considered part of recreation.

In addition to the current disclosure reporting requirements, the bill requires lobbyists who expend an aggregate $100 or more in a reporting period, to disclose the name of the legislator, member of the Judicial Branch of state government, and their employees who receive any gift, entertainment, or hospitality. The amount expended for any gift, entertainment, or hospitality also would have to be reported. Disclosure would not be required for meals if they are provided: from motivation by personal friends or family relations; at events to which all members of the Legislature or all members of the House or Senate are invited; at public events attended as part of official business; or to a person for a reason other than that person's official position. Food such as soft drinks, coffee, and snack foods which are not part of a meal also would be excluded from the new reporting requirement.

SB 462 amends the conflict of interest laws and competitive bids as outlined below.

Compensation to State Officers--Restrictions

Section 3 would amend existing law pertaining to restrictions on the compensation of state officers and employees to prohibit legislators, state officers elected on a statewide basis, full-time state officers subject to Senate confirmation, or their spouses, from accepting any money, including promised or contingent money, compensation, expenses, or other allowance or economic opportunity derived from: (1) the funding of a state agency or other entity created by state law (excluding compensation and allowances to which such individuals are entitled for performance of their respective jobs); (2) any contract, bond, or debt instrument issued by a state agency or other entity created by state law; or (3) any contract issued by a unit of local government which derives an amount equal to 10 percent or more from a state agency's expenditures in any fiscal year.

Section 3 would exempt from the above prohibition: (1) any contract awarded or bond issued by a state agency or other entity created by state law, if the contract or bid is subject to competitive bid procedures or adheres to an established fee schedule; (2) any moneys, compensation, allowances, or economic opportunities received from a state agency or other entity created by state law, if the benefit accrues to the general public or a specific class of individuals, excluding legislators; (3) a state or local tax refund; (4) benefits received pursuant to a court order or an action brought in accordance with the Kansas Administrative Procedure Act; (5) compensation, expenses, or other allowances for service provided to any Regents' institution, Washburn University, community college, or unified school district in Kansas; or (6) compensation, expenses, or other allowances for a state officer's spouse who is a classified and unclassified state employee. Violation of these provisions would be a Class A misdemeanor.

Section 3 also would prohibit any person (business as well as individuals), in which a legislator, state officer elected on a statewide basis, full-time state officer subject to Senate confirmation, or spouse, has a substantial interest or ownership interest, from accepting any compensation or economic opportunity from any state agency or unit of local government that receives an amount equal to 10 percent or more of its budget from the state agency in any fiscal year. This prohibition would not extend to ownership or a substantial interest consisting of publicly traded stocks or bonds or bonds issued by state agencies or statutorily created entities.

Acceptance of Representation Cases--Restrictions

Section 4 would amend the law that restricts acceptance by state officers or employees of representation cases. Any legislator or any firm of which the legislator is a member or employee would be prohibited from representing any person in any representation case before a state agency. Exceptions to this prohibition include legislators representing: (1) their personal interests; (2) interests of immediate family members; or (3) entities in which they have a substantial interest. This prohibition would not apply to representation in workers compensation cases, matters before the Board of Tax Appeals, and proceedings in accordance with the Kansas Administrative Procedure Act.

A "representation case" is defined in existing law as "the representation of any person, client, principal, or third person, with compensation, in any matter before any state agency where the action or nonaction of the state agency involves the exercise of substantial discretion" in specific circumstances.

Professional Services Contracts

Section 5 would amend existing law pertaining to the general powers and authority of the Kansas Development Finance Authority (KDFA). The amendment would require KDFA to adopt rules and regulations establishing guidelines for the awarding of professional services contracts for state agencies on the basis of competitive bids.

Section 6 would provide an exception to the competitive bid requirement when the KDFA Board determines that an agency emergency necessitates immediate performance of services. All bid notifications would have to be published in the Kansas Register. Moreover, notice would have to be published at least once in a journal of the profession the services of which are sought. The Director of Purchases and other state agency officers and employees would have to provide the KDFA with information, records, and assistance needed by the Board to make contract award determinations.

In Section 6 (b), the term "professional services" is defined as all services provided under contract to agencies of the state by any member of a profession licensed or regulated by the state. In New Section 39 (b), the term "professional services" is defined as all services provided under contract to any political or taxing subdivision of the state by any member of a profession licensed or regulated by the state. (Examples of such services include: ancillary technical, architectural, engineering, actuarial, auditing, accounting, or legal services.)

Sections 8, 9, 10, and 11 would exempt the final determination and award of professional services contracts from existing law pertaining to: the state competitive bid process, as outlined in statutes governing the Division of Purchases; contracts for ancillary technical services for state agency building projects; and contracts negotiated to obtain financial services for state agencies.

Section 7 would make a conforming amendment to existing law pertaining to the general powers of the Director of Purchases to exempt professional services contracts from the requirement that the Director prescribe the details regarding performance bonds submitted with bids or contracts.

Section 12 amends existing laws pertaining to negotiation procedures to exclude professional services contracts for state agencies from those procedures and subject them to KDFA's guidelines for competitive bids. Conforming amendments are made to several statutes in Sections 13-31 that relate to: (1) publication of notice of negotiations for certain professional services contracts; (2) architectural services contracts; (3) construction management services contracts; (4) contracts for independent counsel to represent the interest of the Health Care Stabilization Fund in settlement negotiations between a claimant and the Board of Governors responsible for the administration of the Fund and in actions against health care providers (active or inactive) covered by the Fund (however, the Board of Governors may directly employ the attorney retained by the primary carrier or self-insurer whenever the Fund becomes responsible for defense of a primary carrier or self-insurer; (5) legal services contracts for the Commissioner of Insurance to administer the Workers Compensation Fund; (6) contracts for attorneys or debt collection agencies to assist in the collection of amounts owed to support patients in a state institution under the purview of the Secretary of Social and Rehabilitation Services; (7) contracts for professional services, such as the services of engineers, accountants, attorneys, and economists, to assist in investigations and appraisals, possibly including the preparation and presentation of expert testimony; (8) contracts involving the use of professional services to assist the Secretary of Social and Rehabilitation Services in the preparation of expert testimony for litigation and to act as expert witnesses in litigation; (9) contracts involving professional services for collecting moneys owed to the Regents institutions; and (10) contracts for state agency procurement of engineering or land surveying services.

Sections 37 and 38 (b) provide that all contracts awarded for professional services for municipalities, state agencies, or other entities created by state law, involved in general obligation bond and revenue bond issuances adhere to KDFA's guidelines for competitive bids. Examples of such services listed in the bill include: the preparation of transcripts; the employment of bond counsel; financial services; and bond underwriting.

Section 39 would require that, unless a specific law requires another purchase, all professional services contracts for local units of government be awarded through a competitive bid process. The bill would require all bids to be solicited by notice published in a newspaper of general circulation in the locality issuing the bonds.

Bond Sales

Section 5 (x) would amend existing law to require KDFA to adopt rules and regulations establishing guidelines for bonds issued by a state agency or other entity created by state law.

Section 32 would amend existing law pertaining to the public sale of municipal bonds to require that all municipal bonds, with the possible exception of revenue bonds and bonds sold to the federal government, be sold at a public sale with closed bids. (There appears to be a further amendment needed to require the public sale of all revenue bonds given the exceptions still retained in this section.) Under existing law, the option exists for the following bonds to be sold on a negotiated basis: revenue bonds; bonds sold to the federal government; refunding revenue bonds; and bonds sold at an amount not to exceed $100,000. The bill also would delete an alternative method of notice requirements for sealed bids.

Sections 33 and 34 would amend existing law pertaining to refunding revenue bonds, including (Section 32) bonds issued simultaneously with such bonds, to require that such bonds be sold at a public sale through a competitive bid process. The bill would provide that notice of such sale be given, and the conditions and procedures for the receipt and acceptance of bids apply to refunding revenue bonds in the same manner as they would to general obligation bonds.

Section 35 would amend existing law pertaining to revenue bonds to require that such bonds be sold at a public sale through a competitive bid process. The bill would provide that notice of such sale be given, and the conditions and procedures for the receipt and acceptance of bids apply to refunding revenue bonds in the same manner as they would to general obligation bonds. The effect of this amendment would appear to be the imposition of additional restrictions on the exception allowing revenue bonds to be issued on a negotiated basis in Section 32.

Section 38 would provide that all bonds and other forms of indebtedness issued by KDFA adhere to KDFA's guidelines for competitive bids and be sold at a public sale.

The bill creates the private attorney retention sunshine act which requires any contract of $7,500 or more between a state agency and an attorney or firm, to be conducted under the competitive bid process. The bill requires a state agency, under the competitive bid process, to select at least two qualified attorneys or firms based upon the attorneys' or firms' litigation experience, general expertise, and other relevant factors established by rules and regulations by the Secretary of Administration. The state agency would be required to select an attorney or firm which submits the lowest hourly rate bid or the total cost to provide such services.

The bill requires a state agency to submit a proposed contract greater than $1,000,000 to the Legislative Budget Committee prior to entering such contract. The Committee may hold public hearings concerning a proposed contract and then submit any proposed changes to the state agency. The state agency would be required to file a final contract with the Committee, taking into consideration the proposed changes. If the agency does not adopt the changes, then it would be required to submit a letter to the Committee explaining the reason for nonadoption of those changes. The state agency would be prohibited from entering into a contract until at least 45 days after its final contract submission to the Committee. If the Committee makes no changes or fails to report within 60 days after receiving the contract, then the state agency may enter into the contract.

The bill requires an attorney or firm working on a contract involving a contingency fee basis, to disclose the hours worked, expenses incurred, the aggregate fee amount, and an hourly rate.

The bill prohibits a state agency to pay fees or expenses in excess of $1,000 per hour for legal services unless contracts for legal services are paid on a contingency fee basis.

The bill allows a district court to grant a continuance in any action where any state agency is a defendant and a contract for legal services is going to be entered into. The purpose of the continuance would allow the agency to comply with the provisions of the act. If the request is not granted, the agency and the contract would not be subject to a time period prescribed by this section.

Background

SB 462 as introduced was sponsored by the Governor's Office. A representative of the Governor testified that the bill extends the contribution ban to recognized party committees in the House and Senate and individual leadership political committees. The Kansas Society of Association Executives testified as a proponent. A representative of the Governmental Ethics Commission testified on the bill. She said that during the 1999 Legislative Session, approximately $122,000 was raised by the four recognized party committees. She testified that enactment of SB 462 would prohibit such activities.

The Senate Committee on Elections and Local Government amended the bill by making the effective date upon publication in the Kansas Register.

The House Committee on Governmental Organization and Elections amended the bill to clarify the definition of a political committee.

The House Committee of the Whole amended the bill to insert most of the provisions of 1997 SB 18 dealing with conflict of interest and competitive bids. The Committee also amended the provisions of HB 2627 into the bill except for the prohibition of legislators, candidates for state office, or state officer-elect from accepting hospitality in the form of recreation having a value greater than $100. The House Committee of the Whole prohibited legislators from serving as an officer or director of a political party. The Committee also required the House and Senate political parties to return campaign contributions and prohibited leadership political action committees and House and Senate political action committees from receiving or soliciting contributions from individuals during the legislative session. Finally, the Committee amended the bill to create the Private Attorney Retention Sunshine Act.

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