Brief (1)
SB 660 authorizes the issuance of up to $40.0 million in bonds for renovations and improvements to the State Capitol. The bill specifies that the bonds are to be repaid by appropriations from the State General Fund. Expenditure of the bond proceeds would be determined jointly by the Secretary of Administration and the Legislative Coordinating Council for projects in the State Capitol which address issues of health and safety; modernize building systems; preserve the artistic and historic integrity of the building; and increase the functionality of the Statehouse as a working capitol.
In addition, the bill authorizes a different investment alternative for unclaimed property receipts. Unclaimed property receipts are credited to the State General Fund. SB 660 would permit the investment of idle state funds in an amount equal to the net aggregate amount of unclaimed property credited to the State General Fund through the Kansas Public Employees Retirement System (KPERS) instead of through the Pooled Money Investment Board (PMIB). The interest earnings would continue to be credited to the State General Fund.
The bill also requires the Department of Administration and the State Historical Society, in consultation with the Joint Committee on Arts and Cultural Resources, to develop plans for a mural honoring the 1st Kansas (Colored) Voluntary Infantry to be placed in the Capitol. The plans are to be submitted to the Joint Committee on Arts and Cultural Resources by January 1, 2002.
Background
SB 660 was introduced at the request of the Capitol Restoration Commission. Preliminary estimates of the cost for renovation and restoration of the State Capitol range from $90 million to $120 million over several years, depending on the scope and depth of renovation and restoration.
The provisions on investing the portion of state idle funds attributable to unclaimed property receipts through KPERS is designed to minimize the long term impact on the State General Fund of debt service payments. State idle funds (those funds not needed immediately for expenditures) are invested through the PMIB in relatively short term instruments, producing a rate of return ranging from 4 to 6 percent. Investments through KPERS produce an average annual rate of return in the 8 to 10 percent range over the long term. Interest earnings on idle state funds are credited to the State General Fund unless otherwise directed by state law.
Unclaimed property is deposited to the State General Fund until claimed by the rightful owner or heirs. The net aggregate amount of unclaimed property held by the state is currently estimated to be $75.0 million. This amount has been growing at the rate of $5.0 million or more per year for the last several years.
The Kansas Development Finance Authority estimates that the annual debt service payment required to retire a $35.7 million to $40.0 million bond issue over a 20-year term to be between $3,250,000 and $3,500,000 per year. A 4.5 percent increase in the interest earnings on a base of $75.0 million would increase State General Fund earnings by $3.4 million per year.
As introduced, the bill would have only granted expanded investment authority over moneys in the Unclaimed Property Claims Fund, which is used as a clearing fund for the return of unclaimed property. The Senate Committee amendments are to implement the intent of the Capitol Restoration Commission.
The House Committee amended the bill to provide that the investment is to be made from idle state funds held by the PMIB instead of the State General Fund in order to avoid adversely impacting the cashflow of the State General Fund. The House Committee also added language outlining the general scope of projects to be undertaken in the State Capitol.
The House Committee of the Whole amended the bill to add the provisions for a mural honoring the 1st Kansas (Colored) Voluntary Infantry.
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