Kansas House Bill HB2298

Kansas 2025-2026 Regular Session

• Introduced: 2/5/25
• Refer: 2/5/25

Caption

Transferring $1,000,000,000 from the budget stabilization fund to the liability reduction fund of KPERS, using a portion of the interest earnings of the liability reduction fund to provide a 2% COLA for retirants who have been retired for more than 5 years, transferring annually certain amounts from the state general fund to the budget stabilization fund and establishing requirements for the expenditure or transfer of moneys from the budget stabilization fund.

Summary

HB 2298 would create a new liability reduction fund within the Kansas Public Employees Retirement System (KPERS) and move $1 billion from the state budget stabilization fund into that new fund. The bill directs the KPERS board of trustees to invest and manage the fund, with the goal of reducing KPERS’s unfunded actuarial liability, and requires the interest earnings from the fund to be used to finance a 2% cost-of-living adjustment (COLA) for certain retirees and beneficiaries. The COLA would apply to retirants whose retirement date was on or before July 1, 2020, including certain joint annuitants, beneficiaries, and insured disability benefit recipients. The bill also amends the budget stabilization fund statute. It tightens the circumstances under which money in that fund may be spent or transferred, and it changes the timing and amount of the transfer to the liability reduction fund to July 1, 2025. In addition, beginning in 2026, it requires the director of the budget to calculate annual employer contribution savings to KPERS attributable to the $1 billion transfer, net of the cost of the COLA, and transfer that amount from the state general fund back into the budget stabilization fund. The bill also sets out reporting, investment, custody, insurance, and fiduciary requirements for the new fund and its managers. The bill’s main fiscal effect is to redirect a large reserve balance into a pension-liability-reduction vehicle, while using investment earnings to provide a targeted benefit increase to long-term retirees. It would affect the state treasury, the budget stabilization fund, KPERS, and the state general fund, and it would amend and repeal portions of K.S.A. 2024 Supp. 75-6706 governing the budget stabilization fund. It also makes the liability reduction fund’s earnings part of KPERS’s actuarial valuation, which could influence future contribution calculations and pension funding policy. No committee transcripts or recorded votes were provided, so there is no documented debate history in the materials supplied. Based on the bill text and caption, the measure appears designed to balance pension funding relief with retiree benefit enhancement, suggesting a policy mix that could appeal to both pension advocates and fiscal managers. The absence of recorded discussion leaves any opposition or support unconfirmed, but likely points of contention would include the $1 billion transfer from reserves, the use of investment earnings for ongoing COLA payments, and the long-term impact on the state’s budget stabilization capacity.

Impact

HB 2298 would amend Kansas law governing the budget stabilization fund and create a new liability reduction fund for KPERS. It would transfer $1 billion from the budget stabilization fund to the new fund, authorize the KPERS board to manage and invest those assets, and require annual reporting and actuarial treatment of the earnings. It would also establish a new mechanism for moving certain employer contribution savings from the state general fund back into the budget stabilization fund beginning in 2026, while narrowing when budget stabilization fund money may be spent or transferred.

Sentiment

No votes or committee testimony were provided, so the official sentiment cannot be measured from the record supplied. From the bill’s structure, the measure appears to have a mixed policy appeal: it offers a retiree COLA and pension liability reduction, which are typically viewed positively by retirees and pension stakeholders, while also preserving some budget discipline through reserve-fund rules and a repayment mechanism. The bill’s overall tone is fiscally structured and targeted rather than expansive.

Contention

The most likely points of contention are the large $1 billion transfer out of the budget stabilization fund, the decision to use investment earnings to fund a COLA for only certain retirees, and the effect on the state’s fiscal cushion in future emergencies. Supporters would likely emphasize pension liability reduction and retiree relief, while critics may question whether the reserve transfer weakens the state’s rainy-day fund or whether the COLA is too narrow or too costly over time. Another possible issue is the complexity of the annual savings calculation and the reliance on actuarial assumptions to determine future transfers.