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


February 16, 2021


The Honorable Jim Kelly, Chairperson
House Committee on Financial Institutions and Rural Development
Statehouse, Room 581A-W
Topeka, Kansas 66612
Dear Representative Kelly:
SUBJECT: Fiscal Note for HB 2282 by House Committee on Financial Institutions and
Rural Development
In accordance with KSA 75-3715a, the following fiscal note concerning HB 2282 is
respectfully submitted to your committee.
HB 2282 would create the Kansas Agricultural Loan Guarantee Program to facilitate loan
guarantees for proposed or current farming operations. The program would be administered by
the State Treasurer. The bill establishes the Agricultural Loan Guarantee Review Committee to
review and approve applications for agricultural loan guarantees and to advise the State Treasurer
regarding the administration of this program. The five voting members would be appointed by the
State Treasurer, and the State Treasurer or their designee would serve as the nonvoting chairperson
of the committee. With approval from the committee, the State Treasurer would enter into an
agricultural loan guarantee plan with an eligible applicant to guarantee a loan made by a financial
institution. The aggregate principal amounts of outstanding loan guarantees for an eligible
applicant would not exceed $250,000, and the aggregate outstanding amount of all loan guarantees
would not exceed $10.0 million. Conventional loans may be guaranteed up to 80.0 percent of the
value of the loans under the program.
The bill creates the Agricultural Loan Guarantee Fund that would be used to provide
guarantees against loans and to pay for administrative costs associated with the program. The bill
does not include funding for this new program; however, the bill indicates that the program would
be funded by an appropriation of the Legislature. If the balance in the Agricultural Loan Guarantee
Fund is insufficient to pay an amount for an agricultural loan guarantee, then the bill would allow
a transfer from the State General Fund to make the fund solvent. The State Treasurer would have
the authority to write rules and regulations to implement the program. The bill allows the State
Treasurer to impose fees and charges to recover costs incurred for the implementation and
The Honorable Jim Kelly, Chairperson
Page 2—HB 2282

administration of this program. The State Treasurer would be allowed to enter into any contract
for the implementation or administration of the program. The State Treasurer would be required
to prepare an annual report of the loan guarantee activity under the program, including new loans,
loan repayment status and other relevant information to the Senate Committee on Way and Means
and the House Committee on Appropriations by February 1st of each year. The bill would take
effect upon its publication in the Kansas Register.
The Office of the State Treasurer estimates enactment of the bill would increase
expenditures by $149,500 in FY 2022 and the agency would request that amount come from the
State General Fund. The Office estimates enactment of the bill would require the agency to hire
at least 1.00 new FTE position to manage this new program. In addition, there may be the need to
hire a Credit Analyst position depending on how many applications for agricultural loan guarantees
are received. Over time, the program would become self-supporting by assessing fees. The agency
did not estimate when the program would become self-sustaining. The bill includes language that
allows the State General Fund to transfer monies to the Agricultural Loan Guarantee Fund if a loan
is defaulted that requires the State of Kansas to pay the agricultural loan guarantee. The State
Treasurer does not have data on agricultural loan default rates to make a precise estimate of any
future State General Fund transfers that would be used to guarantee loans. Any fiscal effect
associated with HB 2282 is not reflected in The FY 2022 Governor’s Budget Report.


Sincerely,

Adam Proffitt
Director of the Budget

cc: Lauren Tice Miller, Office of the Treasurer
Scott Miller, PMIB