Brief ⁽¹⁾

HB 2034, as amended, would address three items affecting some state employees and financing of retirement benefits. The bill would modify the existing calculation of overtime compensation by defining holiday hours as time worked for state employees performing essential services; would require that the actuarial cost of any cost-of-living or postretirement benefit adjustment passed by the Legislature shall be included in the employer contribution rate in the fiscal year immediately following an enactment; and would authorize Regents institutions to pay from private funds for moving expenses of personnel hired to fill unclassified positions.

The bill's original provisions that were retained by the Senate would apply to overtime calculation and would define those state employees eligible for overtime compensation as:

• officers and employees of state agencies who are law enforcement officers;
• officers and employees of the Department of Corrections or any state correctional institution or facility who are directly engaged in the daily operation of any such institution or facility or who are corrections officers or parole officers;
• officers and employees of the Department of Transportation who perform highway maintenance duties;

• officers and employees of the Department of Social and Rehabilitation Services or any institution who are directly engaged in the daily operation of any such institution, including security police officers; and
• such other officers or employees of any state agency either who are determined by the chief administrative officer of the agency to be performing services that are essential to permit the mission-critical activities of the state agency to be accomplished, or who are determined by the Secretary of Administration to be performing services that are essential to the public safety and welfare of the people of Kansas.

A provision added by the Senate Committee on Ways and Means would apply to the Kansas Public Employees Retirement System (KPERS) and the different public plans administered, including the Kansas Retirement System for Judges, the Kansas Police and Fireman's Retirement System, and the KPERS plan that covers most state, school, and local public employees. The bill would require that any future retirement benefit enhancements passed by the Legislature would be funded immediately after enactment, unless otherwise provided by law.

A third provision added by the Senate on Final Action would apply to Regents institutions and the reimbursement of moving expenses for unclassified employees.

Background

Current law requires state employees who qualify for overtime compensation to work, as opposed to being in "pay status," 40 hours in a week before being eligible for overtime. HB 2034 as passed by the House would reverse legislation enacted during the 1994 Session that requires only hours actually worked be counted for overtime calculation purposes.

Representative Tom Sloan, a co-sponsor of the bill, testified in support of the bill. Also supporting the bill were representatives of the Kansas State Troopers Association, representatives of the Wichita State University Classified Senate, the Director of Human Resources from the University of Kansas, employees of the Department of Student Housing at the University of Kansas, and the Secretary of Transportation.

The fiscal note submitted by the Division of the Budget indicates that by changing the method of calculating overtime, the bill could potentially increase costs for numerous state agencies. At most, the bill could cost these agencies $615,668, including $447,505 from the State General Fund. The fiscal note indicates, however, that because many agencies make other arrangements for compensating overtime, it is likely that agencies could absorb the additional costs.

The Senate Committee on Ways and Means amended the bill to include recommendations of a Senate subcommittee on the KPERS budget in its report to the Senate Ways and Means Committee. After review of the fiscal impact of 1998 SB 11 which granted a COLA on July 1, 1998, the subcommittee expressed concern about the $88 million actuarial liability to be paid over 15 years and the fact that the initial employer contributions to pay for the 1998 COLA will not be collected until FY 2001 when the first employer remittances are required under current law. The 1998 Legislature prefunded $20 million of the COLA cost from the State General Fund in FY 1999. KPERS indicates that the estimated cost of the delay in collecting the state's employer contributions of the state and school payments for the 1998 COLA is $17.8 million of unrealized income for the System. The estimate assumes an 8.0 percent annual investment rate of return which the KPERS Board of Trustees uses in other actuarial projections.

Provisions of SB 342 were amended into HB 2034 on final action by the Senate. SB 342 was requested by the Board of Regents. The Regents institutions historically have paid with private moneys provided by the institution's endowment association for the moving expenses of certain professional personnel recruited to the institution. A representative of the Board testified

that recent Internal Revenue Service rulings require that such moving expenses be included on the employee's W-2 form to be a nontaxable reimbursement. The conferee reported that the Department of Administration is reluctant to include the reimbursement on the W-2 forms absent statutory authority for the institution to make such payments. The Senate Ways and Means Committee amended the bill to clarify that such payments are compensation and not a gift. The Committee also changed the effective date of the bill from upon publication in the statute book to publication in the Kansas Register.

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