February 8, 2015 - In This Issue:
Quick Facts
Moody's Affirms Bond Rating at Aa2
  • Aa = High Quality, Low Risk
  • 2 = Mid Range Ranking
Unemployment Rate Decreasing
  • U.S. - 5.5%
  • KS - 4.0%
  • JoCo - 3.5%
Consumer Confidence Improves in Johnson County
  • December 2014 - 95.0%
  • December 2013 - 80.4%

New Federal Tax on States

  • $20 million tax on Kansas Medicaid Plan
  • Used to pay expenses of Obamacare
  • Direct tax to Kansas Taxpayers. Tax payable to IRS

My committee assignments remain the same for the 2015 legislative session.


8:30 a.m.Commerce Committee
9:30 a.m.Financial Institutions and Insurance
10:30 a.m.Senate Ways & Means Committee, Vice Chair
1:30 p.m.Health Committee
2:30 p.m.On Senate Floor
3:30 p.m.Social Services Budget, Chair
This committee meets as needed.
3:30 p.m.Senate Select Committee on KPERs
This committee meets as needed.



When the State's operating account gets low the Governor has the authority, without a legislative vote, to reduce approved spending.  This is referred to as an Allotment.  Following a surprise revenue miss of $300 million at the end of FY 2014, another $300 surprise revenue miss at the beginning of FY 2015, and the latest revenue miss of $47 million in January 2015 the Governor made his second Allotment of this Fiscal Year (FY).


Governor Brownback used executive authority to order $44.5 million in budget reductions in state spending to public universities and K-12 public schools in response to an unanticipated drop in tax revenue. He reduced the Regents budget $16.2 million, about 2%, and reduced the K-12 budget $28.3 million, about 1.5%. The spending reductions will be effective March 7.


I have Shawnee Mission, Blue Valley, and Olathe schools in my Senate district.  Using the mandatory budget report referred to as "Budget at a Glance" outlined below is the effect the allocation will have on the school districts.  Budget at a Glance is compiled by the Kansas State Department of Education and is in identical format for each school district.

It should be noted that legislators appropriate the money to the school districts; the districts local board and administration determines how the money is spent at the local level.

Each school districts "Budget at a Glance" can be viewed by clicking on the links below.

Blue Valley School District

Olathe School District
Shawnee Mission School District

The Consensus Revenue Estimators continue to struggle with estimates following major state tax changes effective January 2013 and the lingering effects of the capital gains outlier related to a potential federal tax policy change back in 2012.  The capital gains phenomenon had a negative effect on estimates in April 2014 and will have a positive effect in April of 2015.




For the seven month period ending January 31, tax collections are down $50 million from the prior year period. As noted above, January tax receipts missed estimates in January alone by $47 million and $65 million for the year. Taxes collected from wage earners referred to as W-2 earners appear to be more accurate and predictable. However, the tax effect from 1099 earners and other single entity earners sheltered from tax under the small business pass through provision of the new tax policy remains puzzling and unpredictable to me.

Last week I introduced SB 162 in Senate Ways and Means Committee to postpone the Consensus Revenue estimates from April 20th to May 4th. We think this is necessary given all the recent revenue misses. Waiting until after the month of April is closed should improve the accuracy since most tax returns will be filed by the end of April.

The state is scheduled to make a $500 million pension payment this year into KPERS. However, the rescission bill will hold back $58 million of that payment. Thus, the net payment will be about $442 million. This was necessary in order to build up the operating account to pay our bills on time.

While $58 million is not an insignificant amount of money, it's important to consider the context of the system as a whole. KPERs is moving in the right direction to solve the unfunded actuarial liability as scheduled, and currently holds $16.6 billion in assets, which is a record. The previous high was set prior to the Great Recession in 2007, when the fund had $14.2 billion.  It currently sits at a 60 percent funded ratio, which places it in a more stable category than it has been for years.

Additionally, the Governor has proposed issuing up to $1.5 billion in pension obligation bonds. The proceeds would be applied to KPERS state and school unfunded liability. These bonds would immediately improve the system's funded ratio and lower the unfunded liability. The bond proceeds will also increase the investment income as more assets are available for investment. This action has not been approved, and remains under consideration in the legislature.

Returns on trust fund investments remain strong, with the fund returning at a rate of 18.4% in FY 2014, and 14% in FY 2013. Considering KPERS actuaries assume an 8% rate of return annually, we remain confident in the long term solvency of the plan and will continue working to ensure we continue to improve the stability of the plan that had been neglected for so long.
Representative Hedke's Wife
We were saddened to hear Thursday's news that Rep. Dennis Hedke's wife, Annette, died in an auto-pedestrian accident in Wichita. Rep. Hedke is chairman of the House Energy and Environment Committee. Our thoughts and prayers are with Dennis, his family and friends. 


Capitol Office
300 S. W. 10th Street, Room 541-E
Topeka, KS 66612

Overland Park
8416 W. 115th Street
Overland Park, KS 66210



Paid for by Jim Denning for Kansas Senate - Kathy Vance, Treasurer