SESSION OF 2024
SUPPLEMENTAL NOTE ON SUBSTITUTE FOR HOUSE
BILL NO. 2103
As Recommended by House Committee on
Financial Institutions and Pensions

Brief*
Sub. for HB 2103 would amend law governing the
Kansas Public Employees Retirement Trust Fund and
investment standards to remove a statutory limitation (“cap”)
on alternative investments and instead delegate the selection
of the overall cap to the Kansas Public Employees
Retirement System (KPERS or Retirement System) Board of
Trustees.
Under current law, enacted in 2012, the investment of
alternative assets by the Board is limited to 15.0 percent of
the total investment assets of the fund as a percentage of the
Retirement System’s total investments. “Alternative
investment” is defined in trust fund law to include a broad
group of investments that are not one of the traditional asset
types of public equities, fixed income, cash, or real estate
(e.g., private equity, private credit, hedge funds,
infrastructure, and commodities).
The bill would be in effect upon publication in the
Kansas Register.

Background
The bill was introduced by the House Committee on
Financial Institutions and Pensions at the request of
____________________
*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.kslegislature.org
Representative Hoheisel. A companion bill, SB 23, has been
introduced in the Senate.
[Note: SB 23 was introduced by the Joint Committee on
Pensions, Investments and Benefits, which met in December
2022 and reviewed a request from the KPERS Board of
Trustees to remove the alternative investments cap, while
maintaining other statutory criteria placed on the investment
of alternative assets. The Joint Committee recommended the
introduction of this legislation. In its November 2023 meeting,
the Joint Committee again considered the topic of SB 23 and
HB 2103 and recommended passage of legislation
addressing the statutory alternative investment cap and that
such legislation be amended to make the change in Board
authority effective on publication in the Kansas Register.]

House Committee on Financial Institutions and Pensions
In the House Committee hearing on February 8, 2023,
the Executive Director and the Chief Investment Officer,
KPERS, provided proponent testimony on behalf of the
KPERS Board of Trustees, stating if KPERS were to reach
the 15.0 percent alternative investments cap, new
investments in private equity and infrastructure would stop
and could not be resumed until exposure fell below the cap.
The representatives indicated this restriction would limit
KPERS’ ability to diversify these investments across
economic cycles, increasing risk, and could result in KPERS
losing access to top-tier investment managers, potentially
reducing return. No other testimony was provided.
The House Committee held a second hearing on the bill
on January 22, 2024, where the KPERS Executive Director
provided proponent testimony. The Executive Director
indicated, with recent investment market volatility, the KPERS
alternative investment portfolio reached 13.8 percent and, at
the time of the hearing, is currently at 12.9 percent. No other
testimony was provided.

2- 2103
 The House Committee amended the bill to update
statutory references to incorporate 2023 changes to pensions
investment law and to change its effective date to be upon
publication in the Kansas Register. The House Committee
recommended a substitute bill.

Fiscal Information
According to the fiscal note prepared by the Division of
the Budget on the bill, as introduced, KPERS indicates
enactment of the bill would have no fiscal effect.
Retirement System; KPERS Board of Trustees; investment policy; alternative
investments


3- 2103


Statutes affected:
As introduced: 74-4921
Sub: 74-4921, 74-49
Version 2: 74-4921, 74-49