SESSION OF 2024
SUPPLEMENTAL NOTE ON HOUSE BILL NO. 2711
As Amended by Senate Committee of the Whole
Brief*
HB 2711, as amended, would amend the Kansas Public
Employees Retirement System (KPERS or Retirement
System) working-after-retirement provisions and increase the
lump-sum death benefit for a KPERS retiree.
Amendments to working-after-retirement provisions
would:
● Add a new category of positions exempt from
working-after-retirement employer contributions;
● Increase a retirant threshold amount from $25,000
to $40,000 for the specified 30.0 percent employer
contribution; and
● Increase the earnings limit from $25,000 to
$40,000 for retired Kansas Police and Firemen’s
Retirement System (KP&F) members returning to
employment with a previous employer.
The bill would also make a clarifying amendment to law
governing Retirement System membership waiting periods for
the entities exempted from working-after-retirement rules in
the bill.
____________________
*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
Exemption from Working-after-retirement Rules;
Membership Waiting Period
The bill would create a new category of positions
exempt from working-after-retirement employer contributions
by adding licensed nurses and direct support workers at a
KPERS-affiliated community developmental disability
organization (CDDO) or a community service provider
affiliated with a CDDO to the list of exempted positions.
[Note: If exempted from the requirements, the
participating employer (CDDO) would not have to enroll
retirees into KPERS or report compensation to the
Retirement System. The participating employer would not
make contributions to KPERS. However, retirees would still
be required to serve their 60- or 180-day waiting period, as
applicable before returning to covered employment, provided
there is no prearranged agreement for employment.]
The bill would also make a clarifying amendment to law
governing Retirement System membership waiting periods to
provide the waiting period applies to the KPERS-affiliated
CDDOs or a community service provider affiliated with a
CDDO.
Contribution Rates Paid for Covered Positions;
Threshold on Retirant Compensation
Under current law, when a KPERS retirant (“retiree”)
returns to work for a KPERS-affiliated employer in a covered
position, the participating employer is required to pay a 30.0
percent “assessment” on compensation paid to the retiree
that exceeds the $25,000 threshold amount. The bill would
increase this threshold from $25,000 to $40,000 per calendar
year.
[Note: Participating employers are required to make
contributions to KPERS to help finance the Retirement
System. The working-after-retirement law requires employers
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to pay the statutory contribution rate for the first $25,000 of
the retirant’s salary and a 30.0 percent contribution rate
(“assessment”) on earnings over the $25,000 threshold.]
Earnings Limit—KP&F Members, Returning to Work with
Previous Employer
The bill would increase from $25,000 to $40,000 the
earnings limit on KP&F members who have retired and return
to work for a previous employer.
Lump-Sum Death Benefit for KPERS Retirees
The bill would also increase the lump-sum death benefit
for a KPERS retiree from $4,000 to $6,000, beginning on July
1, 2024.
Technical Changes
The bill would also make technical updates to remove
working-after-retirement exceptions that expired January 1,
2018.
Background
HB 2711 was introduced by the House Committee on
Financial Institutions and Pensions at the request of
Representative Hoye.
[Note: The Senate Committee of the Whole inserted
provisions pertaining to the KPERS lump-sum death benefit
(SB 172, as recommended by the Senate Committee on
Ways and Means).]
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HB 2711 (Working After Retirement)
House Committee on Financial Institutions and Pensions
In the House Committee hearing on February 19, 2024,
a representative of the Kansas Association of Chiefs of
Police, Kansas Peace Officers Association, and Kansas
Sheriffs Association and a representative of Big Lakes
Developmental Center, Inc., provided proponent testimony,
generally stating HB 2711 would assist agencies and
organizations in hiring retired persons into certain positions to
help address staff shortages and improve recruitment efforts.
The law enforcement organization representative requested
consideration of an amendment to a similar limitation in
statutes governing KP&F members returning to work after
retirement. The Big Lakes representative requested
consideration for a working-after-retirement rules exemption
that had been discussed in the 2023 Session.
Written-only proponent testimony was submitted by
representatives of the Kansas Association of School Boards,
Kansas National Education Association (KNEA), and Starkey,
Inc. These representatives indicated the increased threshold
amount would help employers address staff shortages and
recruitment, without the additional cost of the 30.0 percent
assessment.
Neutral information provided by a representative of
KPERS outlined the working-after-retirement experience in
the Retirement System and the working-after-retirement rules
(e.g., specified waiting periods, no permitted
prearrangements between retirees and employers, and
employer contributions). The information highlighted the
current employer contribution rates for a retiree returning to
work in a KPERS-covered position, which are based on the
retiree’s salary: employers pay the statutory contribution rate
(currently 12.57 percent for the State/School Group) for the
first $25,000 of the retiree’s salary and a 30.0 contribution
rate on earnings over $25,000.
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The KPERS conferee’s testimony also addressed the
working-after-retirement experience, noting in the December
31, 2022, KPERS actuarial valuation, there were about 4,500
retirees with reported compensation during the calendar year,
with about 1,900 in exempt positions and about 2,600 in
covered positions. The conferee also explained actuarial cost
implications (further noted in the bill’s fiscal note), explaining
actuarial cost is based on two factors: the loss of expected
employer contributions due to the proposed change (retirant
compensation threshold amount increase) and the potential
change in the pattern of retirement or hiring behavior by
changing the working-after-retirement rules. Based on data
for calendar year 2022, employer contributions for working
after retirement based on the existing $25,000 threshold were
estimated to be about $13.1 million. If the compensation limit
had been $50,000 (as in the bill as introduced), total
contributions would be reduced by $2.7 million—about 20
percent lower. This difference would directly reduce the
assets (to the Trust Fund) and, therefore, increase the
unfunded actuarial liability.
No other testimony was presented.
The House Committee amended the bill to:
● Reduce the retirant threshold amount on a KPERS
retiree working after retirement in a covered
position with a participating employer to $40,000
(the amount in the bill, as introduced, increased the
threshold from $25,000 to $50,000);
● Insert provisions adding an exemption for retirants
employed by a CDDO to working-after-retirement
rules (this language was also included in HB 2272,
as recommended by this House Committee); and
● Insert provisions pertaining to an earnings
limitation on retired KP&F members returning to
work with a previous employer, in the same amount
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as specified for other KPERS members by the bill,
as amended.
Senate Committee on Financial Institutions and Insurance
In the Senate Committee hearing on March 13, 2024,
Representatives Hoye and Clifford and representatives of Big
Lakes Developmental Center, Inc., and the Kansas
Association of Chiefs of Police, the Kansas Peace Officers
Association, and the Kansas Sheriffs Association provided
proponent testimony generally stating support for the various
working-after-retirement provisions included in the bill and the
contributions retirees make to various state and local KPERS
employers, including the impact in addressing staff shortages
and recruitment challenges.
Written-only proponent testimony was submitted by
representatives of the KNEA and MCDS (Multi Community
Diversified Services, McPherson).
Neutral information was provided by a representative of
KPERS. The conferee reviewed KPERS working-after-
retirement rules including the waiting period, prohibition on
prearrangements, and employer contributions when a retiree
returns to work in a covered position. Addressing the House
Committee amendments, the KPERS conferee indicated the
existing rules prohibiting prearrangements to return to work
and the waiting period would remain the same (increasing the
statutory threshold for the 30 percent employer contribution
from $25,000 to $40,000). The conferee indicated the
increase in the KP&F retiree earnings limit would impact five
or fewer KP&F retirees each year. The conferee indicated the
exemption for CDDOs would impact 27 to 54 retirees
annually.
No other testimony was presented.
The Senate Committee amended the bill to modify the
working-after-retirement exemption for CDDOs to also include
community service providers affiliated with a CDDO. The
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amendment also inserted existing law that prescribes KPERS
membership waiting periods. Under current law, employees
employed in direct support positions of an affiliated employer
under KSA 19-4001 and as defined under KSA 39-1803 may
become members of the Retirement System following the
completion of a two-year training period. The Senate
Committee modified references in both the working-after-
retirement exemption created by the bill and in the
membership waiting period law to provide the exemption and
waiting period would apply to either the CDDO or the affiliated
provider.
Senate Committee of the Whole
The Senate Committee of the Whole amended the bill to
add provisions pertaining to the increase of the KPERS lump-
sum death benefit for KPERS retirees (SB 172, as
recommended by the Senate Committee on Ways and
Means).
SB 172 (Lump-Sum Death Benefit)
In the Senate Committee hearing on February 15, 2023,
Senator McGinn testified as a proponent, stating the current
death benefit amount has remained unchanged for 30 years.
Additionally, Senator McGinn indicated the minimum costs for
cremations and burials currently average around $7,000 and
$11,000 respectively.
Representatives from the Kansas Funeral Directors
Association (KFDA) and the Kansas National Education
Association also provided proponent testimony, generally
emphasizing the last increase in death benefits occurred in
1993. Additionally, the KFDA representative indicated the
national median cost of an adult funeral with viewing and
burial for calendar year 2021 was $7,848.
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Neutral testimony provided by a representative of the
Kansas Coalition of Public Retirees noted the rising funeral
costs, but requested consideration for a cost-of-living
adjustment for current KPERS retirees.
The Executive Director of KPERS provided neutral
information, indicating there are approximately 4,000 KPERS
retiree deaths each year, and the cost of paying those
benefits totals about $14.0 million per year. Speaking to
actuarial costs, the Executive Director explained the bill would
increase the KPERS unfunded actuarial liability (UAL), which
could be offset by a one-time appropriation or amortized over
a 20-year period.
On January 9, 2024, the bill was withdrawn from the
Senate Calendar and re-referred to the Senate Committee on
Ways and Means. Following discussion on January 30, 2024,
the Senate Committee again recommended the bill be
passed.
[Note: House Sub. for SB 172 would create the Kansas
Land and Military Installation Protection Act.]
Fiscal Information
HB 2711 (Working After Retirement)
According to the fiscal note prepared by the Division of
the Budget on HB 2711, as introduced, KPERS indicates
provisions from enactment of the bill could be implemented
within its existing staffing levels and any costs would be
negligible. [Note: Additional information from this fiscal
estimate is noted above in the KPERS neutral testimony.]
KPERS provided additional information following the
House Committee action on the bill to address provisions
modified by or added to the bill.
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● Increasing the employer contribution rate
threshold. KPERS indicates the bill, as amended,
would reduce the employer contribution by
approximately $2.0 million, assuming similar
working-after-retirement experience in the future.
This amount represents about 0.2 percent of total
employer contribution for the State/School Group;
● Working-after-retirement contribution exemption.
Similar to prior analysis provided on HB 2272,
KPERS indicates the estimated number of direct
care support positions was one to two positions per
facility at the 27 CDDOs. Using the higher end of
the estimate, these 54 retirees represent about 1.0
percent of all retirees returning to work and do not
represent a large enough group to present a
meaningful impact on cost estimates; and
● Increasing the KP&F retiree earnings limitation.
KP&F retirees remain under a structure that
existed prior to 2017, when KPERS working after
retirement was changed to include employer
contributions but no retiree earnings limit. KP&F
employers therefore only report when a KP&F
retiree has reached the earnings limitation. In
2023, five KP&F retirees exceeded the limitation
during the calendar year. Increasing this limitation
to $40,000 is not expected to have a meaningful
impact on KP&F funding.
SB 172 (Lump-Sum Death Benefit)
According to updated fiscal information provided by
KPERS, the KPERS actuary indicates SB 172 would increase
the total UAL by approximately $106.1 million, including $76.6
million for the State/School Group. This actuarial cost could
be funded with either a one-time payment for State employers
of $77.5 million or amortized over a 20-year period. If funded
with a one-time payment in full, the increase in employer
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contribution rate would be approximately 0.1 percent
depending on the group. If amortized, the employer
contribution for the State/School Group would increase by
about 0.10 percent, totaling about $9.66 million in additional
contributions for FY 2025.
SB 172–Estimated Fiscal Effect
(Dollars in Millions)
UAL Est. Additional Contributions
KPERS Group Increase FY 2024 FY 2025
State/School $ 76.60 $ 6.76 $ 6.90
KP&F–State 0.60 0.05 0.05
Judges 0.30 0.03 0.03
Subtotal–State $ 77.50 $ 6.84 $ 6.98
Local $ 24.90 $ 2.24 $ 2.33
KP&F–Local 3.70 0.33 0.35
Subtotal–Local $ 28.60 $ 2.57 $ 2.68
TOTAL $ 106.10 $ 9.41 $ 9.66
The KPERS actuary also notes the UAL increase for
local employers is about $28.6 million.
Retirement System; KPERS; working after retirement; employer contributions;
retirant compensation threshold; exemption from working-after-retirement rules;
community developmental disability organizations; affiliated community service
providers; KP&F; earnings limitation; lump-sum death benefit
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Statutes affected: As introduced: 74-4937, 74-4914
As Amended by House Committee: 74-4914, 74-4937, 74-4957, 74-4957a
As Amended by Senate Committee: 74-4911, 74-4914, 74-4937, 74-4957, 74-4957a
{As Amended by Senate Committee of the Whole}: 74-4911, 74-4914, 74-4937, 74-4957, 74-4957a, 74-4955a, 74-4989, 74-49
Enrolled - Law effective July 1, 2024: 74-4911, 74-4914, 74-4921, 74-4937, 74-4957, 74-4957a, 74-4955a, 74-4989, 74-49