Bill Summary – FastDemocracy

Division of the Budget
Landon State Office Building                                                                         Phone: (785) 296-2436
900 SW Jackson Street, Room 504                                                                      larry.campbell@ks.gov
Topeka, KS 66612                               Division of the Budget                               http://budget.kansas.gov
Larry L. Campbell, Director                                                                        Laura Kelly, Governor


                                                  February 6, 2019


         The Honorable Jim Kelly, Chairperson
         House Committee on Financial Institutions & Pensions
         Statehouse, Room 581-W
         Topeka, Kansas 66612
         Dear Representative Kelly:
                   SUBJECT:       Fiscal Note for HB 2100 by House Committee on Financial Institutions &
                                  Pensions
                 In accordance with KSA 75-3715a, the following fiscal note concerning HB 2100 is
         respectfully submitted to your committee.
                 HB 2100 would provide a cost of living adjustment (COLA) beginning July 1, 2019, for
         certain retirees who have been retired at least five years. The COLA would be applicable to all
         Kansas Public Employee Retirement System (KPERS) groups. The structure of the COLA would
         be the following: retirees who retired on or before July 1, 2014, would receive a 1.0 percent
         increase; retirees who retired on or before July 1, 2009, would receive a 2.0 percent increase; and,
         retirees who retired on or before July 1, 2004, would receive a 3.0 percent increase. However, any
         increase in the monthly benefit from the COLA could not exceed $150.

                                            Estimated State Fiscal Effect
                                       FY 2019         FY 2019            FY 2020            FY 2020
                                        SGF            All Funds           SGF               All Funds
            Revenue                             --                 --             --         $17,310,000
            Expenditure                          --                --      $10,730,000       $13,140,000
            FTE Pos.                             --                --                --                --
                 According to KPERS, it is estimated that HB 2100 would increase the total unfunded
         actuarial liability (UAL) for all groups (including KPERS Local and KP&F Local groups) by
         $185.7 million. While the bill does not specify the length of the amortization period to fund the
         COLA, KPERS’ consulting actuary assumed amortizing the increase to the UAL over 15 years.
The Honorable Jim Kelly, Chairperson
Page 2—HB 2100

Under a 15-year amortization period, it is estimated that the bill would require additional employer
contributions from all groups totaling $17.3 million in FY 2020. When local groups are excluded,
the state’s portion of the cost would be $13.1 million in FY 2020. Based on information from the
FY 2020 Governor’s Budget Report, the Division of the Budget estimates that approximately 82.0
percent of FY 2020 expenditures for state and school district employer contributions are from the
State General Fund. If this percentage is used to estimate the approximate fiscal effect to the State
General Fund, it is estimated that $10.7 million would be needed from the State General Fund in
FY 2020.
        The additional employer contributions to pay for the COLA would result in $17.3 million
being remitted to the KPERS Trust Fund. Any fiscal effect associated with HB 2100 is not
reflected in The FY 2020 Governor’s Budget Report.


                                                      Sincerely,

                                                      Larry L. Campbell
                                                      Director of the Budget


cc: Jarod Waltner, KPERS