Session Law

Identifying Information:L. 2002 ch. 164
Other Identifying Information:2002 Senate Bill 664
Tax Type:Other
Brief Description:An Act reconciling amendments to certain statutes; amending K.S.A. 2001 Supp. 65-171d, 72-979, 74-3256, 74-3267a, 74-3298, 74-32,107, 74-32,138 and 74-4921 and repealing the existing sections; also repealing K.S.A. 2001 Supp. 19-2881c, 65-171z, 72-979a, 74- 3256a, 74-3267b, 74-3298a, 74-32,107a, 74-32,138a and 74-4921b.
Keywords:


Body:

CHAPTER 164

SENATE BILL No. 664


An Act reconciling amendments to certain statutes; amending K.S.A. 2001 Supp. 65-171d,

72-979, 74-3256, 74-3267a, 74-3298, 74-32,107, 74-32,138 and 74-4921 and repealing

the existing sections; also repealing K.S.A. 2001 Supp. 19-2881c, 65-171z, 72-979a, 74-


3256a, 74-3267b, 74-3298a, 74-32,107a, 74-32,138a and 74-4921b.


Be it enacted by the Legislature of the State of Kansas:

Section 1. K.S.A. 2001 Supp. 65-171d is hereby amended to read as

follows: 65-171d. (a) For the purpose of preventing surface and subsur-

face water pollution and soil pollution detrimental to public health or to

the plant, animal and aquatic life of the state, and to protect designated

uses of the waters of the state and to require the treatment of sewage

predicated upon technologically based effluent limitations, the secretary

of health and environment shall make such rules and regulations, includ-

ing registration of potential sources of pollution, as may in the secretary's

judgment be necessary to: (1) Protect the soil and waters of the state from

pollution resulting from underground storage reservoirs of hydrocarbons

and liquid petroleum of liquid petroleum gas and hydrocarbons, other

than underground porosity storage of natural gas; (2) control the disposal,

discharge or escape of sewage as defined in K.S.A. 65-164 and amend-

ments thereto, by or from municipalities, corporations, companies, insti-

tutions, state agencies, federal agencies or individuals and any plants,

works or facilities owned or operated, or both, by them; and (3) establish

water quality standards for the waters of the state to protect their desig-

nated uses. In no event shall the secretary's authority be interpreted to

include authority over the beneficial use of water, water quantity alloca-

tions, protection against water use impairment of a beneficial use, or any

other function or authority under the jurisdiction of the Kansas water

appropriation act, K.S.A. 82a-701, and amendments thereto.

(b) The secretary of health and environment may adopt by reference

any regulation relating to water quality and effluent standards promul-

gated by the federal government pursuant to the provisions of the federal

clean water act and amendments thereto, as in effect on January 1, 1989,

which the secretary is otherwise authorized by law to adopt.

(c) For the purposes of this act, including K.S.A. 65-161 through 65-

171h and K.S.A. 2001 Supp. 65-1,178 through 65-1,198, and amendments

thereto, and rules and regulations adopted pursuant thereto:

(1) ``Pollution'' means: (A) Such contamination or other alteration of

the physical, chemical or biological properties of any waters of the state

as will or is likely to create a nuisance or render such waters harmful,

detrimental or injurious to public health, safety or welfare, or to the plant,

animal or aquatic life of the state or to other designated uses; or (B) such

discharge as will or is likely to exceed state effluent standards predicated

upon technologically based effluent limitations.

(2) ``Confined feeding facility'' means any lot, pen, pool or pond: (A)

Which is used for the confined feeding of animals or fowl for food, fur

or pleasure purposes; (B) which is not normally used for raising crops;

and (C) in which no vegetation intended for animal food is growing.

(3) ``Animal unit'' means a unit of measurement calculated by adding

the following numbers: The number of beef cattle weighing more than

700 pounds multiplied by 1.0; plus the number of cattle weighing less

than 700 pounds multiplied by 0.5; plus the number of mature dairy cattle

multiplied by 1.4; plus the number of swine weighing more than 55

pounds multiplied by 0.4; plus the number of swine weighing 55 pounds

or less multiplied by 0.1; plus the number of sheep or lambs multiplied

by 0.1; plus the number of horses multiplied by 2.0; plus the number of

turkeys multiplied by 0.018; plus the number of laying hens or broilers,

if the facility has continuous overflow watering, multiplied by 0.01; plus

the number of laying hens or broilers, if the facility has a liquid manure

system, multiplied by 0.033; plus the number of ducks multiplied by 0.2.

However, each head of cattle will be counted as one full animal unit for

the purpose of determining the need for a federal permit. ``Animal unit''

also includes the number of swine weighing 55 pounds or less multiplied

by 0.1 for the purpose of determining applicable requirements for new

construction of a confined feeding facility for which a permit or registra-

tion has not been issued before January 1, 1998, and for which an appli-

cation for a permit or registration and plans have not been filed with the

secretary of health and environment before January 1, 1998, or for the

purpose of determining applicable requirements for expansion of such

facility. However, each head of swine weighing 55 pounds or less shall be

counted as 0.0 animal unit for the purpose of determining the need for

a federal permit.

(4) ``Animal unit capacity'' means the maximum number of animal

units which a confined feeding facility is designed to accommodate at any

one time.

(5) ``Habitable structure'' means any of the following structures which

is occupied or maintained in a condition which may be occupied and

which, in the case of a confined feeding facility for swine, is owned by a

person other than the operator of such facility: A dwelling, church, school,

adult care home, medical care facility, child care facility, library, com-

munity center, public building, office building or licensed food service or

lodging establishment.

(6) ``Wildlife refuge'' means Cheyenne Bottoms wildlife management

area, Cheyenne Bottoms preserve and Flint Hills, Quivera, Marais des

Cygnes and Kirwin national wildlife refuges.

(d) In adopting rules and regulations, the secretary of health and en-

vironment, taking into account the varying conditions that are probable

for each source of sewage and its possible place of disposal, discharge or

escape, may provide for varying the control measures required in each

case to those the secretary finds to be necessary to prevent pollution. If

a freshwater reservoir or farm pond is privately owned and where com-

plete ownership of land bordering the reservoir or pond is under common

private ownership, such freshwater reservoir or farm pond shall be ex-

empt from water quality standards except as it relates to water discharge

or seepage from the reservoir or pond to waters of the state, either surface

or groundwater, or as it relates to the public health of persons using the

reservoir or pond or waters therefrom.

(e) (1) Whenever the secretary of health and environment or the

secretary's duly authorized agents find that the soil or waters of the state

are not being protected from pollution resulting from underground stor-

age reservoirs of hydrocarbons and liquid petroleum gas or that storage

or disposal of salt water not regulated by the state corporation commission

or refuse in any surface pond not regulated by the state corporation com-

mission is causing or is likely to cause pollution of soil or waters of the

state, the secretary or the secretary's duly authorized agents shall issue

an order prohibiting such underground storage reservoir or surface pond

storage or disposal of salt water or refuse. Any person aggrieved by such

order may within 15 days of service of the order request in writing a

hearing on the order.

(2) Upon receipt of a timely request, a hearing shall be conducted in

accordance with the provisions of the Kansas administrative procedure

act.

(3) Any action of the secretary pursuant to this subsection is subject

to review in accordance with the act for judicial review and civil enforce-

ment of agency actions.

(f) The secretary may adopt rules and regulations establishing fees

for the following services:

(1) plan approval, monitoring and inspecting underground or buried

petroleum products storage tanks, for which the annual fee shall not ex-

ceed $5 for each tank in place;

(2) permitting, monitoring and inspecting salt solution mining oper-

ators, for which the annual fee shall not exceed $1,950 per company; and

(3) permitting, monitoring and inspecting hydrocarbon storage wells

and well systems, for which the annual fee shall not exceed $1,875 per

company.

(g) Prior to any new construction of a confined feeding facility with

an animal unit capacity of 300 to 999, such facility shall register with the

secretary of health and environment. Facilities with a capacity of less than

300 animal units may register with the secretary. Any such registration

shall be accompanied by a $25 fee. Within 30 days of receipt of such

registration, the department of health and environment shall identify any

significant water pollution potential or separation distance violations pur-

suant to subsection (h). If there is identified a significant water pollution

potential, such facility shall be required to obtain a permit from the sec-

retary. If there is no water pollution potential posed by a facility with an

animal unit capacity of less than 300, the secretary may certify that no

permit is required. If there is no water pollution potential nor any viola-

tion of separation distances posed by a facility with an animal unit capacity

of 300 to 999, the secretary shall certify that no permit is required and

that there are no certification conditions pertaining to separation dis-

tances. If a separation distance violation is identified, the secretary may

reduce the separation distance in accordance with subsection (i) and shall

certify any such reduction of separation distances.

(h) (1) Any new construction or new expansion of a confined feeding

facility, other than a confined feeding facility for swine, shall meet or

exceed the following requirements in separation distances from any hab-

itable structure in existence when the application for a permit is submit-

ted:

(A) 1,320 feet for facilities with an animal unit capacity of 300 to 999;

and

(B) 4,000 feet for facilities with an animal unit capacity of 1,000 or

more.

(2) A confined feeding facility for swine shall meet or exceed the

following requirements in separation distances from any habitable struc-

ture or city, county, state or federal park in existence when the application

for a permit is submitted:

(A) 1,320 feet for facilities with an animal unit capacity of 300 to 999;

(B) 4,000 feet for facilities with an animal unit capacity of 1,000 to

3,724;

(C) 4,000 feet for expansion of existing facilities to an animal unit

capacity of 3,725 or more if such expansion is within the perimeter from

which separation distances are determined pursuant to subsection (k) for

the existing facility; and

(D) 5,000 feet for: (i) Construction of new facilities with an animal

unit capacity of 3,725 or more; or (ii) expansion of existing facilities to an

animal unit capacity of 3,725 or more if such expansion extends outside

the perimeter from which separation distances are determined pursuant

to subsection (k) for the existing facility.

(3) Any construction of new confined feeding facilities for swine shall

meet or exceed the following requirements in separation distances from

any wildlife refuge:

(A) 10,000 feet for facilities with an animal unit capacity of 1,000 to

3,724; and

(B) 16,000 feet for facilities with an animal unit capacity of 3,725 or

more.

(i) (1) The separation distance requirements of subsections (h)(1)

and (2) shall not apply if the applicant for a permit obtains a written

agreement from all owners of habitable structures which are within the

separation distance stating such owners are aware of the construction or

expansion and have no objections to such construction or expansion. The

written agreement shall be filed in the register of deeds office of the

county in which the habitable structure is located.

(2) (A) The secretary may reduce the separation distance require-

ments of subsection (h)(1) if: (i) No substantial objection from owners of

habitable structures within the separation distance is received in response

to public notice; or (ii) the board of county commissioners of the county

where the confined feeding facility is located submits a written request

seeking a reduction of separation distances.

(B) The secretary may reduce the separation distance requirements

of subsection (h)(2)(A) or (B) if: (i) No substantial objection from owners

of habitable structures within the separation distance is received in re-

sponse to notice given in accordance with subsection (l); (ii) the board of

county commissioners of the county where the confined feeding facility

is located submits a written request seeking a reduction of separation

distances; or (iii) the secretary determines that technology exists that

meets or exceeds the effect of the required separation distance and the

facility will be using such technology.

(C) The secretary may reduce the separation distance requirements

of subsection (h)(2)(C) or (D) if: (i) No substantial objection from owners

of habitable structures within the separation distance is received in re-

sponse to notice given in accordance with subsection (l); or (ii) the sec-

retary determines that technology exists that meets or exceeds the effect

of the required separation distance and the facility will be using such

technology.

(j) (1) The separation distances required pursuant to subsection

(h)(1) shall not apply to:

(A) Confined feeding facilities which were permitted or certified by

the secretary on July 1, 1994;

(B) confined feeding facilities which existed on July 1, 1994, and reg-

istered with the secretary before July 1, 1996; or

(C) expansion of a confined feeding facility, including any expansion

for which an application was pending on July 1, 1994, if: (i) In the case

of a facility with an animal unit capacity of 1,000 or more prior to July 1,

1994, the expansion is located at a distance not less than the distance

between the facility and the nearest habitable structure prior to the ex-

pansion; or (ii) in the case of a facility with an animal unit capacity of less

than 1,000 prior to July 1, 1994, the expansion is located at a distance not

less than the distance between the facility and the nearest habitable struc-

ture prior to the expansion and the animal unit capacity of the facility

after expansion does not exceed 2,000.

(2) The separation distances required pursuant to subsections

(h)(2)(A) and (B) shall not apply to:

(A) Confined feeding facilities for swine which were permitted or

certified by the secretary on July 1, 1994;

(B) confined feeding facilities for swine which existed on July 1, 1994,

and registered with the secretary before July 1, 1996; or

(C) expansion of a confined feeding facility which existed on July 1,

1994, if: (i) In the case of a facility with an animal unit capacity of 1,000

or more prior to July 1, 1994, the expansion is located at a distance not

less than the distance between the facility and the nearest habitable struc-

ture prior to the expansion; or (ii) in the case of a facility with an animal

unit capacity of less than 1,000 prior to July 1, 1994, the expansion is

located at a distance not less than the distance between the facility and

the nearest habitable structure prior to the expansion and the animal unit

capacity of the facility after expansion does not exceed 2,000.

(3) The separation distances required pursuant to subsections

(h)(2)(C) and (D) and (h)(3) shall not apply to the following, as deter-

mined in accordance with subsections (a), (e) and (f) of K.S.A. 2001 Supp.

65-1,178 and amendments thereto:

(A) Expansion of an existing confined feeding facility for swine if an

application for such expansion has been received by the department be-

fore March 1, 1998; and

(B) construction of a new confined feeding facility for swine if an

application for such facility has been received by the department before

March 1, 1998.

(k) The separation distances required by this section for confined

feeding facilities for swine shall be determined from the exterior perim-

eter of any buildings utilized for housing swine, any lots containing swine,

any swine waste retention lagoons or ponds or other manure or waste-

water storage structures and any additional areas designated by the ap-

plicant for future expansion. Such separation distances shall not apply to

offices, dwellings and feed production facilities of a confined feeding fa-

cility for swine.

(l) The applicant shall give the notice required by subsections

(i)(2)(B) and (C) by certified mail, return receipt requested, to all owners

of habitable structures within the separation distance. The applicant shall

submit to the department evidence, satisfactory to the department, that

such notice has been given.

(m) All plans and specifications submitted to the department for new

construction or new expansion of confined feeding facilities may be, but

are not required to be, prepared by a professional engineer or a consult-

ant, as approved by the department. Before approval by the department,

any consultant preparing such plans and specifications shall submit to the

department evidence, satisfactory to the department, of adequate general

commercial liability insurance coverage.

Sec. 2. K.S.A. 2001 Supp. 72-979 is hereby amended to read as fol-

lows: 72-979. (a) Payments under this act shall be made in the manner

and at such times during each school year as are determined by the state

board. All amounts received by a district under this section shall be de-

posited in the general fund of the district and transferred to its special

education fund. If any district is paid more than it is entitled to receive

under any distribution made under this act, the state board shall notify

the district of the amount of such overpayment, and such district shall

remit the same to the state board. The state board shall remit any moneys

so received to the state treasurer, and in accordance with the provisions

of K.S.A. 75-4215, and amendments thereto. Upon receipt of each such

remittance, the state treasurer shall deposit the same entire amount in

the state treasury to the credit of the state general fund. If any such

district fails so to remit, the state board shall deduct the excess amounts

so paid from future payments becoming due to such district. If any district

is paid less than the amount to which it is entitled under any distribution

made under this act, the state board shall pay the additional amount due

at any time within the school year in which the underpayment was made

or within 60 days after the end of such school year.

(b) The state board shall prescribe all forms necessary for reporting

under this act.

(c) Every board shall make such periodic and special reports of in-

formation to the state board as it may request in order to carry out its

responsibilities under this act.

Sec. 3. K.S.A. 2001 Supp. 74-3256 is hereby amended to read as

follows: 74-3256. (a) The state board of regents shall:

(1) Adopt rules and regulations for the administration of this act;

(2) provide for the award of ROTC service scholarships to eligible

students who qualify therefor, as determined by the selection committee,

not to exceed in any academic year a total of 40 eligible students at each

ROTC institution. This provision is subject to the provisions of subsection

(c);

(3) provide information regarding application procedures;

(4) require any ROTC institution to promptly furnish upon request

any information which relates to the administration or effect of this act.

(b) If the ROTC institution at which an eligible student who qualifies

for an ROTC service scholarship is enrolled is a state educational insti-

tution, the scholarship shall provide to the student an amount not to

exceed 70% of the cost of attendance at the institution for an academic

year. If the ROTC institution at which an eligible student who qualifies

for an ROTC service scholarship is enrolled is a municipal university, the

scholarship shall provide to the student an amount not to exceed 70% of

the average amount of the cost of attendance at the state educational

institutions for an academic year. Payments of ROTC service scholarships

shall be made pursuant to vouchers approved by the state board of regents

and upon warrants of the director of accounts and reports. Payments may

be made by issuance of a single warrant to each ROTC institution at which

one or more eligible students are enrolled for the total amount of schol-

arships for all eligible students enrolled at that institution. The director

of accounts and reports shall cause such warrant to be delivered to the

ROTC institution at which such eligible student or students are enrolled.

If an eligible student discontinues attendance before the end of any ac-

ademic year, after the ROTC institution has received payment under this

subsection, the institution shall pay to the state the entire amount which

such eligible student would otherwise qualify to have refunded, not to

exceed the amount of the payment made under the ROTC service schol-

arship for the academic year. All amounts paid to the state by ROTC

institutions under this subsection shall be deposited in the state treasury

and credited to remitted to the state treasurer in accordance with the

provisions of K.S.A. 75-4215, and amendments thereto. Upon receipt of

each such remittance, the state treasurer shall deposit the entire amount

in the state treasury to the credit of the ROTC service scholarship pro-

gram fund.

(c) If all ROTC service scholarships authorized to be awarded to el-

igible students at each ROTC institution have not been awarded by a date

established by the state board of regents, the scholarships that have not

been awarded by that date may be awarded to eligible students at any

ROTC institution if such students are qualified for such scholarships as

determined by the appropriate selection committee. The determination

to award ROTC service scholarships under this subsection to eligible stu-

dents who are qualified for such scholarships shall be made by the state

board of regents after consultation with the adjutant general.

Sec. 4. K.S.A. 2001 Supp. 74-3267a is hereby amended to read as

follows: 74-3267a. There is hereby created in the state treasury the os-

teopathic medical service scholarship repayment fund. The state board

of regents shall remit all moneys received under K.S.A. 74-3267, and

amendments thereto, to the state treasurer at least monthly in accordance

with the provisions of K.S.A. 75-4215, and amendments thereto. Upon

receipt of each such remittance, the state treasurer shall deposit the entire

amount thereof in the state treasury, and such amount shall be credited

to the credit of the osteopathic medical service scholarship repayment

fund. All expenditures from the osteopathic medical service scholarship

repayment fund shall be for osteopathic medical service scholarships and

shall be made in accordance with appropriation acts upon warrants of the

director of accounts and reports issued pursuant to vouchers approved

by the executive officer of the state board of regents or a person desig-

nated by the executive officer.

Sec. 5. K.S.A. 2001 Supp. 74-3298 is hereby amended to read as

follows: 74-3298. (a) There is hereby created in the state treasury the

nursing service scholarship program fund. The executive officer shall re-

mit all moneys received from sponsors, which are paid under K.S.A. 74-

3294, and amendments thereto, pursuant to scholarship awards, or from

a school of nursing, which are paid because of nonattendance or discon-

tinued attendance by scholarship recipients, to the state treasurer at least

monthly in accordance with the provisions of K.S.A. 75-4215, and amend-

ments thereto. Upon receipt of each such remittance, the state treasurer

shall deposit the entire amount thereof in the state treasury and such

amount shall be credited to the credit of the nursing service scholarship

program fund. All expenditures from the nursing service scholarship pro-

gram fund shall be for scholarships awarded under the nursing service

scholarship program or refunds to sponsors and shall be made in accord-

ance with appropriation acts upon warrants of the director of accounts

and reports issued pursuant to vouchers approved by the executive officer

or by a person designated by the executive officer.

(b) The nursing student scholarship discontinued attendance fund is

hereby abolished. On the effective date of this act, the director of ac-

counts and reports shall transfer all moneys remaining in the nursing

student scholarship discontinued attendance fund to the nursing service

scholarship program fund.

(c) There is hereby created in the state treasury the nursing service

scholarship repayment fund. The executive officer shall remit all moneys

received for amounts paid under K.S.A. 74-3295, and amendments

thereto, to the state treasurer at least monthly in accordance with the

provisions of K.S.A. 75-4215, and amendments thereto. Upon receipt of

each such remittance the state treasurer shall deposit the entire amount

thereof in the state treasury, and such amount shall be credited to the

credit of the nursing service scholarship repayment fund. All expenditures

from the nursing service scholarship repayment fund shall be for schol-

arships awarded under the nursing service scholarship program and shall

be made in accordance with appropriation acts upon warrants of the di-

rector of accounts and reports issued pursuant to vouchers approved by

the executive officer or by a person designated by the executive officer.

Sec. 6. K.S.A. 2001 Supp. 74-32,107 is hereby amended to read as

follows: 74-32,107. (a) There is hereby created in the state treasury the

teacher service scholarship program fund. The executive officer shall re-

mit all moneys received under the teacher service scholarship program,

which are paid because of nonattendance or discontinuance by scholar-

ship recipients, to the state treasurer at least monthly in accordance with

the provisions of K.S.A. 75-4215, and amendments thereto. Upon receipt

of each such remittance, the state treasurer shall deposit the entire

amount thereof in the state treasury, and such amount shall be credited

to the credit of the teacher service scholarship program fund. All expend-

itures from the teacher service scholarship program fund shall be for

scholarships awarded under the teacher service scholarship program and

shall be made in accordance with appropriation acts upon warrants of the

director of accounts and reports issued pursuant to vouchers approved

by the executive officer or by a person designated by the executive officer.

(b) There is hereby created in the state treasury the teacher service

scholarship repayment fund. The executive officer shall remit all moneys

received under the teacher service scholarship program, which are for

payment of amounts pursuant to K.S.A. 74-32,104, and amendments

thereto, to the state treasurer at least monthly in accordance with the

provisions of K.S.A. 75-4215, and amendments thereto. Upon receipt of

each such remittance, the state treasurer shall deposit the entire amount

thereof in the state treasury, and such amount shall be credited to the

credit of the teacher service scholarship repayment fund. All expenditures

from the teacher service scholarship repayment fund shall be for schol-

arships awarded under the teacher service scholarship program and shall

be made in accordance with appropriation acts upon warrants of the di-

rector of accounts and reports issued pursuant to vouchers approved by

the executive officer or by a person designated by the executive officer.

Sec. 7. K.S.A. 2001 Supp. 74-32,138 is hereby amended to read as

follows: 74-32,138. There is hereby created in the state treasury the ad-

vanced registered nurse practitioner service scholarship program fund.

The executive officer shall remit all moneys received under this act to the

state treasurer at least monthly in accordance with the provisions of K.S.A.

75-4215, and amendments thereto. Upon receipt of each such remittance

the state treasurer shall deposit the entire amount thereof in the state

treasury, and such amount shall be credited to the credit of the advanced

registered nurse practitioner service scholarship program fund. All ex-

penditures from the advanced registered nurse practitioner service schol-

arship program fund shall be for scholarships awarded under this act and

shall be made in accordance with appropriation acts upon warrants of the

director of accounts and reports issued pursuant to vouchers approved

by the executive officer or by a person designated by the executive officer.

Sec. 8. K.S.A. 2001 Supp. 74-4921 is hereby amended to read as

follows: 74-4921. (1) There is hereby created in the state treasury the

Kansas public employees retirement fund. All employee and employer

contributions shall be deposited in the state treasury to be credited to the

Kansas public employees retirement fund. The fund is a trust fund and

shall be used solely for the exclusive purpose of providing benefits to

members and member beneficiaries and defraying reasonable expenses

of administering the fund. Investment income of the fund shall be added

or credited to the fund as provided by law. All benefits payable under the

system, refund of contributions and overpayments, purchases or invest-

ments under the law and expenses in connection with the system unless

otherwise provided by law shall be paid from the fund. The director of

accounts and reports is authorized to draw warrants on the state treasurer

and against such fund upon the filing in the director's office of proper

vouchers executed by the chairperson or the executive secretary director

of the board. As an alternative, payments from the fund may be made by

credits to the accounts of recipients of payments in banks, savings and

loan associations and credit unions. A payment shall be so made only upon

the written authorization and direction of the recipient of payment and

upon receipt of such authorization such payments shall be made in ac-

cordance therewith. Orders for payment of such claims may be contained

on (a) a letter, memorandum, telegram, computer printout or similar

writing, or (b) any form of communication, other than voice, which is

registered upon magnetic tape, disc or any other medium designed to

capture and contain in durable form conventional signals used for the

electronic communication of messages.

(2) The board shall have the responsibility for the management of

the fund and shall discharge the board's duties with respect to the fund

solely in the interests of the members and beneficiaries of the system for

the exclusive purpose of providing benefits to members and such mem-

ber's beneficiaries and defraying reasonable expenses of administering

the fund and shall invest and reinvest moneys in the fund and acquire,

retain, manage, including the exercise of any voting rights and disposal of

investments of the fund within the limitations and according to the pow-

ers, duties and purposes as prescribed by this section.

(3) Moneys in the fund shall be invested and reinvested to achieve

the investment objective which is preservation of the fund to provide

benefits to members and member beneficiaries, as provided by law and

accordingly providing that the moneys are as productive as possible, sub-

ject to the standards set forth in this act. No moneys in the fund shall be

invested or reinvested if the sole or primary investment objective is for

economic development or social purposes or objectives.

(4) In investing and reinvesting moneys in the fund and in acquiring,

retaining, managing and disposing of investments of the fund, the board

shall exercise the judgment, care, skill, prudence and diligence under the

circumstances then prevailing, which persons of prudence, discretion and

intelligence acting in a like capacity and familiar with such matters would

use in the conduct of an enterprise of like character and with like aims

by diversifying the investments of the fund so as to minimize the risk of

large losses, unless under the circumstances it is clearly prudent not to

do so, and not in regard to speculation but in regard to the permanent

disposition of similar funds, considering the probable income as well as

the probable safety of their capital.

(5) Notwithstanding subsection (4): (a) Total investments in common

stock may be made in the amount of up to 60% of the total book value

of the fund;

(b) the board may invest or reinvest moneys of the fund in alternative

investments if the following conditions are satisfied:

(i) The total of such alternative investments does not exceed more

than 5% of the total investment assets of the fund. If the total of such

alternative investments exceeds more than 5% of the total investment

assets of the fund on the effective date of this act, the board shall not

invest or reinvest any moneys of the fund in alternative investments until

the total of such alternative investments is less the 5% of the total in-

vestment assets of the fund subject to the 5% limitation contained in this

subsection. Nothing in this subsection requires the board to liquidate or

sell the system's holdings in any alternative investment held by the system

on the effective date of this act, unless such liquidation or sale would be

in the best interest of the members and beneficiaries of the system and

be prudent under the standards contained in this section. The 5% limi-

tation contained in this section shall not have been violated if the total of

such alternative investments exceeds 5% of the total investment assets of

the fund as a result of market forces acting to increase the value of such

alternative investments relative to the rest of the system's investments;

however, the board shall not invest or reinvest any moneys of the fund

in alternative investments until the total of such alternative investments

is less than 5% of the total investment assets of the fund subject to the

5% limitation contained in this subsection;

(ii) if in addition to the system, there are at least two other sophisti-

cated investors, as defined by section 301 of the securities and exchange

act of 1933;

(iii) the system's share in any individual alternative investment is lim-

ited to an investment representing not more than 20% of any such indi-

vidual alternative investment;

(iv) the system has received a favorable and appropriate recommen-

dation from a qualified, independent expert in investment management

or analysis in that particular type of alternative investment;

(v) the alternative investment is consistent with the system's invest-

ment policies and objectives as provided in subsection (6);

(vi) the individual alternative investment does not exceed more than

2.5% of the total alternative investments made under this subsection. If

the alternative investment is made pursuant to participation by the system

in a multi-investor pool, the 2.5% limitation contained in this subsection

is applied to the underlying individual assets of such pool and not to

investment in the pool itself. The total of such alternative investments

made pursuant to participation by the system in any one individual multi-

investor pool shall not exceed more than 20% of the total of alternative

investments made by the system pursuant to this subsection. Nothing in

this subsection requires the board to liquidate or sell the system's holdings

in any alternative investments made pursuant to participation by the sys-

tem in any one individual multi-investor pool held by the system on the

effective date of this act, unless such liquidation or sale would be in the

best interest of the members and beneficiaries of the system and be pru-

dent under the standards contained in this section. The 20% limitation

contained in this subsection shall not have been violated if the total of

such investment in any one individual multi-investor pool exceeds 20%

of the total alternative investments of the fund as a result of market forces

acting to increase the value of such a multi-investor pool relative to the

rest of the system's alternative investments; however, the board shall not

invest or reinvest any moneys of the fund in any such individual multi-

investor pool until the value of such individual multi-investor pool is less

than 20% of the total alternative investments of the fund;

(vii) the board has received and considered the investment manager's

due diligence findings submitted to the board as required by subsection

(6)(c); and

(viii) prior to the time the alternative investment is made, the system

has in place procedures and systems to ensure that the investment is

properly monitored and investment performance is accurately measured.

For purposes of this act, ``alternative investment'' means nontraditional

investments outside the established nationally recognized public stock

exchanges and government securities market. Alternative investments

shall include, but not be limited to, private placements, venture capital,

partnerships, limited partnerships and leveraged buyout partnerships; and

(c) except as otherwise provided, the board may invest or reinvest

moneys of the fund in real estate investments if the following conditions

are satisfied:

(i) The system has received a favorable and appropriate recom-

mendation from a qualified, independent expert in investment manage-

ment or analysis in that particular type of real estate investment;

(ii) the real estate investment is consistent with the system's invest-

ment policies and objectives as provided in subsection (6); and

(iii) the board has received and considered the investment manager's

due diligence findings submitted to the board as required by subsection

(6)(c).

(6) Subject to the objective set forth in subsection (3) and the stan-

dards set forth in subsections (4) and (5) the board shall formulate policies

and objectives for the investment and reinvestment of moneys in the fund

and the acquisition, retention, management and disposition of invest-

ments of the fund. Such policies and objectives shall include:

(a) Specific asset allocation standards and objectives;

(b) establishment of criteria for evaluating the risk versus the poten-

tial return on a particular investment;

(c) a requirement that all investment managers submit such man-

ager's due diligence findings on each investment to the board or invest-

ment advisory committee for approval or rejection prior to making any

alternative investment;

(d) a requirement that all investment managers shall immediately re-

port all instances of default on investments to the board and provide the

board with recommendations and options, including, but not limited to,

curing the default or withdrawal from the investment; and

(e) establishment of criteria that would be used as a guideline for

determining when no additional add-on investments or reinvestments

would be made and when the investment would be liquidated.

The board shall review such policies and objectives, make changes con-

sidered necessary or desirable and readopt such policies and objectives

on an annual basis.

(7) The board may enter into contracts with one or more persons whom

the board determines to be qualified, whereby the persons undertake to

perform the functions specified in subsection (2) to the extent provided in

the contract. Performance of functions under contract so entered into shall

be paid pursuant to rates fixed by the board subject to provisions of appro-

priation acts and shall be based on specific contractual fee arrangements.

The system shall not pay or reimburse any expenses of persons contracted

with pursuant to this subsection, except that after approval of the board,

the system may pay approved investment related expenses subject to pro-

visions of appropriation acts. The board shall require that a person con-

tracted with to obtain commercial insurance which provides for errors and

omissions coverage for such person in an amount to be specified by the

board, provided that such coverage shall be at least the greater of $500,000

or 1% of the funds entrusted to such person up to a maximum of

$10,000,000. The board shall require a person contracted with to give a

fidelity bond in a penal sum as may be fixed by law or, if not so fixed, as

may be fixed by the board, with corporate surety authorized to do business

in this state. Such persons contracted with the board pursuant to this sub-

section and any persons contracted with such persons to perform the func-

tions specified in subsection (2) shall be deemed to be agents of the board

and the system in the performance of contractual obligations.

(8) (a) In the acquisition or disposition of securities, the board may

rely on the written legal opinion of a reputable bond attorney or attorneys,

the written opinion of the attorney of the investment counselor or man-

agers, or the written opinion of the attorney general certifying the legality

of the securities.

(b) The board shall employ or retain qualified investment counsel or

counselors or may negotiate with a trust company to assist and advise in

the judicious investment of funds as herein provided.

(9) (a) Except as provided in subsection (7) and this subsection, the

custody of money and securities of the fund shall remain in the custody

of the state treasurer, except that the board may arrange for the custody

of such money and securities as it considers advisable with one or more

member banks or trust companies of the federal reserve system or with

one or more banks in the state of Kansas, or both, to be held in safe-

keeping by the banks or trust companies for the collection of the principal

and interest or other income or of the proceeds of sale. The services

provided by the banks or trust companies shall be paid pursuant to rates

fixed by the board subject to provisions of appropriation acts.

(b) The state treasurer and the board shall collect the principal and

interest or other income of investments or the proceeds of sale of secu-

rities in the custody of the state treasurer and pay same when so collected

into the fund.

(c) The principal and interest or other income or the proceeds of sale

of securities as provided in clause (a) of this subsection (9) shall be re-

ported to the state treasurer and the board and credited to the fund.

(10) The board shall with the advice of the director of accounts and

reports establish the requirements and procedure for reporting any and

all activity relating to investment functions provided for in this act in order

to prepare a record monthly of the investment income and changes made

during the preceding month. The record will reflect a detailed summary

of investment, reinvestment, purchase, sale and exchange transactions

and such other information as the board may consider advisable to reflect

a true accounting of the investment activity of the fund.

(11) The board shall provide for an examination of the investment

program annually. The examination shall include an evaluation of current

investment policies and practices and of specific investments of the fund

in relation to the objective set forth in subsection (3), the standard set

forth in subsection (4) and other criteria as may be appropriate, and rec-

ommendations relating to the fund investment policies and practices and

to specific investments of the fund as are considered necessary or desir-

able. The board shall include in its annual report to the governor as pro-

vided in K.S.A. 74-4907, and amendments thereto, a report or a summary

thereof covering the investments of the fund.

(12) (a) An annual financial-compliance audit of the system, includ-

ing any performance audit subjects which are directed to be included in

such annual audit by the legislative post audit committee, performance

audits of the system as prescribed under the Kansas governmental op-

erations law, and such other audits as are directed by the legislative post

audit committee under the Kansas legislative post audit act shall be con-

ducted. The annual financial-compliance audit shall include, but not be

limited to, a review of alternative investments of the system with any

estimates of permanent impairments to the value of such alternative in-

vestments reported by the system pursuant to K.S.A. 74-4907, and

amendments thereto.

(b) In accordance with this subsection (12), the annual financial-com-

pliance audit may include one or more performance audit subjects as di-

rected by the legislative post audit committee. In considering performance

audit subjects to be included in any financial-compliance audit conducted

pursuant to this subsection (12), the legislative post audit committee shall

consider recommendations and requests for performance audits, relating to

the system or the management thereof, by the joint committee on pensions,

investments and benefits or by any other committee or individual member

of the legislature. Commencing with the financial-compliance audit for the

fiscal year ending June 30, 1998, the legislative post audit committee shall

specify if one or more performance audit subjects shall be included in the

financial-compliance audit conducted pursuant to this subsection (12), in

addition to such other subjects as may be directed to be included in the

financial-compliance audit by the legislative post audit committee. Except

as otherwise determined by the legislative post audit committee pursuant

to this subsection (12), commencing with the financial-compliance audit for

the fiscal year ending June 30, 1998, one or more performance audit sub-

jects specified by the legislative post audit committee shall be included at

least once every two fiscal years in a financial-compliance audit conducted

pursuant to this subsection (12). The legislative post audit committee may

direct that one or more performance audit subjects are to be included in a

financial-compliance audit conducted pursuant to this subsection (12) not

more than once during a specific period of three fiscal years, in lieu of once

every two fiscal years.

(c) The auditor to conduct the financial-compliance audit required pur-

suant to this subsection (12) shall be specified in accordance with K.S.A.

46-1122, and amendments thereto. If the legislative post audit committee

specifies under such statute that a firm, as defined by K.S.A. 46-1112, and

amendments thereto, is to perform all or part of the audit work of such

audit, such firm shall be selected and shall perform such audit work as

provided in K.S.A. 46-1123, and amendments thereto, and K.S.A. 46-1125

through 46-1127, and amendments thereto. The audits required pursuant

to this subsection (12) shall be conducted in accordance with generally ac-

cepted governmental auditing standards. The financial-compliance audit re-

quired pursuant to this subsection (12) shall be conducted as soon after the

close of the fiscal year as practicable, but shall be completed no later than

six months after the close of the fiscal year. The post auditor shall annually

compute the reasonably anticipated cost of providing the financial-compli-

ance audit pursuant to this subsection (12), subject to review and approval

by the contract audit committee established by K.S.A. 46-1120, and amend-

ments thereto. Upon such approval, the system shall reimburse the division

of post audit for the amount approved by the contract audit committee.

The furnishing of the financial-compliance audit pursuant to this subsection

(12) shall be a transaction between the legislative post auditor and the sys-

tem and shall be settled in accordance with the provisions of K.S.A. 75-

5516, and amendments thereto.

(d) Any internal assessment or examination of alternative investments

of the system performed by any person or entity employed or retained

by the board which evaluates or monitors the performance of alternative

investments shall be reported to the legislative post auditor so that such

report may be reviewed in accordance with the annual financial-compli-

ance audits conducted pursuant to this subsection (12).

Sec. 9. K.S.A. 2001 Supp. 19-2881c, 65-171d, 65-171z, 72-979, 72-

979a, 74-3256, 74-3256a, 74-3267a, 74-3267b, 74-3298, 74-3298a, 74-

32,107, 74-32,107a, 74-32,138, 74-32,138a, 74-4921 and 74-4921b are

hereby repealed.

Sec. 10. This act shall take effect and be in force from and after its

publication in the statute book.

Approved May 29, 2002.


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Date Composed: 10/10/2002 Date Modified: 10/10/2002