Designated illegal acts; transfer of prisoners convicted of acts.

2025 Regular Session Introduced by Mark Earley and 6 co-sponsors

Creates the KPERS Liability Reduction Fund with a $1B transfer from the BSF to fund a one-time 2% COLA for eligible retirees, financed by the fund's earnings.

Left in Public Safety

Purpose

HB 2298 creates a new KPERS Liability Reduction Fund, transfers $1,000,000,000 from the State Budget Stabilization Fund (BSF) into that fund, provides a 2.0% cost‑of‑living adjustment (COLA) for certain KPERS retirants using interest earnings of the new fund, and establishes annual transfer and spending rules for the BSF to capture employer contribution savings.

Key provisions

Creates the KPERS Liability Reduction Fund (LRF) administered by the KPERS Board; initial transfer of $1.0 billion from the BSF to the LRF on July 1, 2025.

Grants KPERS authority and fiduciary duties to manage and invest LRF assets (investment objectives, advisor contracting, custody, insurance/fidelity bond requirements).

Establishes a COLA: a one‑time 2.0% increase to retirement benefits effective July 1, 2025 for retirants whose retirement date is on or before July 1, 2020 and who are receiving benefits on July 1, 2025. COLA payments are to be financed from the LRF’s interest earnings.

Annual adjustment/transfers: beginning July 1, 2026, the Director of the Budget (in consultation with KPERS) will determine an annual amount to transfer from the State General Fund (SGF) to the BSF equal to the SGF employer contribution savings produced by inclusion of the LRF in KPERS asset valuations, minus the annual COLA cost. The December 31, 2024 actuarial valuation is the baseline for calculations.

Changes BSF policy: Legislature should strive to maintain BSF between 15%–20% of prior‑year SGF expenditures; restricts BSF expenditures/transfers (other than the $1.0B transfer) to three “extraordinary” conditions: (1) natural‑disaster financial emergencies; (2) state revenue downturns >10% year‑over‑year; or (3) crippling healthcare emergencies.

Fiscal impacts (estimates from fiscal note / KPERS actuary)

$1.0 billion initial transfer on July 1, 2025.

COLA actuarial cost to fully fund: ~$272.1 million. First‑year amortization payment (FY2026): estimated $32.5 million.

Employer contribution rate reductions (State/School group) estimated: from 12.07% → 10.82% (FY2026) and 11.71% → 10.48% (FY2027); resulting dollar savings from which annual transfers to the BSF are calculated.

KPERS administrative work (system changes to calculate COLAs for ~114,000 affected retirants) to be absorbed within existing resources; expenses for managing the LRF charged to the LRF.

Who is affected

KPERS retirants and beneficiaries: ~114,000 retirees who retired on or before July 1, 2020 and receiving benefits on July 1, 2025 (eligible for the 2% COLA).

KPERS employers and the State General Fund: lower certified employer contribution rates initially, with annual SGF transfers to the BSF reflecting realized savings.

Budget Stabilization Fund governance and future availability for emergencies.

Timeline / procedural notes

COLA effective July 1, 2025; $1.0B transfer executed July 1, 2025.

Annual SGF→BSF transfer determinations begin July 1, 2026 (Director of Budget in consultation with KPERS) using the December 31, 2024 valuation as baseline.

LRF monies may be credited back to the BSF to respond to extraordinary occasions only after all other BSF moneys have been expended/transferred, and subject to appropriation or State Finance Council action per statute.

(Prepared from the bill text and April 11, 2025 fiscal note by the Kansas Division of the Budget.)

Bill