Division of the Budget
Landon State Office Building Phone: (785) 296-2436
900 SW Jackson Street, Room 504 adam.c.proffitt@ks.gov
Topeka, KS 66612 Division of the Budget http://budget.kansas.gov
Adam Proffitt, Director Laura Kelly, Governor


March 31, 2021


The Honorable Steven Johnson, Chairperson
House Committee on Insurance and Pensions
Statehouse, Room 276A-W
Topeka, Kansas 66612
Dear Representative Johnson:
SUBJECT: Fiscal Note for HB 2378 by House Committee on Insurance and Pensions
In accordance with KSA 75-3715a, the following fiscal note concerning HB 2378 is
respectfully submitted to your committee.
HB 2378 would create the Kansas Work and Save Program Act. The bill would authorize
the State Treasurer to design and implement a program to allow Kansans in the private sector to
save for retirement through an individual retirement account (IRA). The bill would make the State
Treasurer the trustee of the Work and Save Program assets and would specify the powers and
duties of the State Treasurer to carry out the provisions of the bill, which would include developing
an investment policy and arranging for the pooled investment of assets in the program. The State
Treasurer could establish rules and regulations to administer the program. The bill would also
authorize the State Treasurer to contract with a third party to administer the program and would
allow the costs of administration to be paid by contributions.
The bill would allow eligible individuals to voluntarily choose whether to contribute to an
IRA under the program and would require contributions be made on a Roth basis, except that the
State Treasurer could offer an optional traditional IRA. The bill would allow the State Treasurer
to increase each participant’s contribution rate annually, with certain restrictions. In addition, the
bill would allow for the direct deposit of contributions, prohibit employer contributions by covered
employers, and keep total fees under 0.75 percent of the total assets of the program after the start-
up period of three years.
The bill establishes penalties for failure by covered employers to enroll covered employees
or transmit payroll deductions. The bill would also specify the information required in disclosures
to participants, would prohibit the liability of an employer for the program’s performance, and
would specify the employer is not a fiduciary. The bill would exclude the State of Kansas, the
State Treasurer, and other state entities from liabilities and would prohibit the debts, contracts, and
obligations of the program from being backed by the faith and credit or the taxing power of the
state. Individual account information would be required to be kept confidential, and the bill would
outline cases for exceptions to this confidentiality, such as to administer the program according to
tax laws or if the individual agrees to disclose the information.
The Honorable Steven Johnson, Chairperson
Page 2—HB 2378

HB 2378 would establish the Kansas Work and Save Administrative Fund in the State
Treasury to be administered by the State Treasurer and would specify the monies to be contained
within the fund and restrictions on unexpended or unencumbered balances. In order to enable the
start-up and continuing operation of the program until sufficient balances are accumulated for the
program to become self-sustaining, the State Treasurer would be allowed to borrow funds but must
pay such debts using revenues of the program. The State Treasurer would also be able to enter
into long-term procurement contracts with financial providers to assist in avoiding or minimizing
borrowing. The bill would require an annual audit of the books and accounts and would require
the State Treasurer to submit an audited financial report to the Governor and the Legislature by
August 1 of each year.
HB 2378 would require the Treasurer to implement the program so that individuals can
begin contributing by July 1, 2023. However, the State Treasurer would be allowed to phase in
the program for different classes of individuals and employers of different sizes or types. Any
such phased-in implementation would be required to be completed by July 1, 2025. The State
Treasurer would be prohibited from implementing any portion of the program that is preempted
by the Employee Retirement Income Security Act. The provisions of the bill would be severable
and would take effect in publication in the statute book.
The State Treasurer’s Office indicates that much of the program would be managed by a
third party, similar to the Learning Quest 529 program. The agency states that enactment of the
bill would require expenditures of $71,500 from the Work and Save Administration Fund
beginning in FY 2022 for 1.00 Program Administrator FTE position. Based on similar programs
in other states, the agency estimates the program would require a $2.0 million loan from the State
General Fund in FY 2022 for initial implementation until it would become self-sufficient at which
time it would establish repayment terms for the loan. The agency also indicates that it could use a
third-party vendor to offer options to assist with the initial start-up costs until enough accounts are
established to make the program self-sufficient. However, the agency cannot estimate the fiscal
effect of using a third party at this time.
The Department of Revenue indicates that enactment of the bill would have no fiscal effect
on the agency or State General Fund revenues. Any fiscal effect associated with HB 2378 is not
reflected in The FY 2022 Governor’s Budget Report.


Sincerely,

Adam Proffitt
Director of the Budget

cc: Lynn Robinson, Department of Revenue
Ben Cleeves, Transportation