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 C. Proffitt, Director Laura Kelly, Governor


February 14, 2024


The Honorable Renee Erickson, Chairperson
Senate Committee on Commerce
300 SW 10th Avenue, Room 546-S
Topeka, Kansas 66612
Dear Senator Erickson:
SUBJECT: Fiscal Note for SB 478 by Senate Committee on Commerce
In accordance with KSA 75-3715a, the following fiscal note concerning SB 478 is
respectfully submitted to your committee.
SB 478 would amend the Kansas Employment Security Law, making several changes,
including updates to definitions, new definitions, and deletion of provisions no longer applicable.
The bill would state that the benefit year for unemployment benefits would begin on Sunday of
the first week, rather than the first day of the first week. The bill would also change the required
rate notices for employer taxes from annually to quarterly and would remove the exemption for
benefit charges less than $100. The mid-year combination of tax rates when a business acquires
another business would be moved to the year following the acquisition.
Employers would be required to file wage reports electronically when there are 25 or more
employees, currently this is only required when there are 50 or more. In addition, the bill would
change the calculation for average weekly wages and the maximum weekly benefit. In calendar
year 2026, the taxable wage base of $14,000 would be increased by 30.0 percent and would
continue to increase annually to a maximum 60.0 percent in 2032. The bill would also increase
the unemployment tax liability for negative balance employers and decrease the unemployment
tax liability for positive balance employers during the same timeframe based on the statewide
average annual wage.
SB 478 would make new definitions for statewide average weekly and annual wages and
would revise the calculation. The Secretary of Labor would be required to develop an audit process
for unemployment claimants to be audited for activities related to the work search requirement or
my reemployment plan. The audit process would be integrated into the modernized unemployment
technology system. The Secretary would also be required to include notices to all active employers
regarding work search noncompliance reporting options in the annual summary of benefit charges
and in rate notices to employers. The Secretary would be required to post additional
unemployment calculations and data on the Kansas Department of Labor’s website.
The Honorable Renee Erickson, Chairperson
Page 2—SB 478

The bill would specify that the Legislative Coordinating Council has the authority to
retroactively extend the new unemployment insurance information technology system’s
implementation date and as often as deemed appropriate by the Council. The Secretary would be
required to notify the Council of the need for an extension. The bill would also establish minimum
qualifications for qualified candidates for appointment to the Employment Security Board of
Review. The Secretary would be required to prepare and publish contribution rates for employers
each calendar year no less than 120 days prior to the end of that calendar year. The Kansas
Department of Labor would be required to review benefit claims at the time a claim is made and
determine if the claimant is eligible for any federal unemployment benefits and suspend state
unemployment payments in lieu of federal benefits paid if that claimant was eligible. The bill
would also add a definition for “temporary unemployment” and standardize the allowable weeks
of temporary unemployment to four weeks, although the Secretary would be allowed to extend
temporary unemployment on a case-by-case basis for certain industries. Additional reporting on
shared work requests and temporary weeks requested by employers would be required.

Estimated State Fiscal Effect
FY 2024 FY 2025 FY 2026
Expenditures
State General Fund -- $3,543,121 $1,320,121
Fee Fund(s) -- -- --
Federal Fund -- -- --
Total Expenditures -- $3,543,121 $1,320,121
Revenues
State General Fund -- -- --
Fee Fund(s) -- -- --
Federal Fund -- -- --
Total Revenues -- -- --
FTE Positions -- 18.00 18.00
According to the Kansas Department of Labor, enactment of SB 478 could require new
State General Fund appropriations of approximately $3.5 million in FY 2025 and $1.3 million in
FY 2026, as well as an additional 18.00 FTE positions. The break-down of costs are described
below, other than the staff expenditures, all estimates for programing and system implementation
would be one-time expenditures. The agency would need to increase staffing to create the audit
process required by the bill and carry out the workload plus any additional requirements developed
to incorporate the process into the new unemployment insurance (UI) system. The estimate for
system configuration is $449,000. The agency is estimating 10.00 additional FTEs with salaries
and benefits of $526,795 annually and overhead costs totaling $158,040. Implementing the
suspension of state program benefits in lieu of federal program benefits would require a system
development estimated at $200,000. Adding reporting options to the modernized UI system would
require additional system developments. Based on the requirements available, the high-level
estimate to implement this solution is $449,000. Further automation to process email from
employers using robotic process automation technology is estimated to be an additional $140,000.
An additional 1.00 FTE position is anticipated as staff time would be needed to prepare, review,
The Honorable Renee Erickson, Chairperson
Page 3—SB 478

and reconcile reports. The salary for this position with benefits is estimated at $78,351 annually
with overhead costs of $23,505. Extending temporary unemployment on a case-by-case basis
would require additional reviews and the agency estimates this provision would require 7.00
additional FTE positions with salaries and benefits estimated at $410,330 annually and overhead
costs of $123,100 annually. This would also have an impact on the Unemployment Trust Fund by
reducing benefits paid, although the total impact is unable to be estimated at this time. The
estimate for system required enhancements to implement this program is $475,000 and additional
reporting requirements is estimated to cost $510,000.
The agency reports that setting the benefit year to start on a Sunday, is anticipated that it
would save the agency time, effort, and money by eliminating the need for additional customized
programming in the new UI system. Changing employer rate calculations from annual to
quarterly, as well as changing the rules following an acquisition would also save additional
customization of the modernized UI system. While the changes would save money, the agency is
not anticipating any related expenditures based on a change in statute to allow for the new UI
system to not require customization. Increasing the taxable wage base would increase
contributions to the Unemployment Trust Fund. However, adjusting the tax tables so negative
employers pay more, while positive employers pay less unemployment tax is expected to offset
increased contributions to the trust fund, essentially having a net zero impact to agency revenue.
The agency anticipates that the new requirement for employers to file wage reports
electronically when there are 25 or more employees would save staff time to focus on other duties
but would not have a fiscal effect on the agency. The new definitions for statewide average weekly
and annual wages and the revision of the calculation would not result in a fiscal effect since the
agency currently has a process in place to calculate the statewide average annually wage and
statewide average weekly wage that would simply require a process change. The agency also notes
that the bill would affect all employers who pay unemployment taxes, and the impact would be
based on the industry and experience rating for placement in the new tax tables.
The Department of Commerce notes that enactment SB 478 would not modify any current
processes and would not have a fiscal effect on agency operations. The Kansas Department of
Revenue indicates that enactment of the bill would not impact State General Fund receipts and
would not have a fiscal effect on agency operations. Any fiscal effect associated with SB 478 is
not reflected in The FY 2025 Governor’s Budget Report.

Sincerely,

Adam C. Proffitt
Director of the Budget

cc: Dawn Palmberg, Department of Labor
Sherry Rentfro, Department of Commerce
Lynn Robinson, Department of Revenue


Statutes affected:
As introduced: 44-703, 44-704, 44-705, 44-709, 44-710, 44-710a, 44-710b, 44-717, 44-771, 44-772, 44-774, 44-775