KANSAS STATE COUNCIL
SOCIETY FOR HUMAN RESOURCE MANAGEMENT
It was all taillights late Sunday night. Legislators headed home after a long, arduous week focused
on conference committee reports on a number of topics including gaming, taxes, insurance, and tort
reform. It was a politically tense week as legislators grappled with school finance. Legislators will
return on April 30 for Veto Session. They are expected to take up more issues in conference
committee at that time. Below is a breakdown of some of the issues they worked this past week.
Tort reform
Last week the House passed SB 311, the tort reform bill, amending it to not include a provision
regarding collateral source benefits. This set up a conference committee between the Senate and
House chambers to work out this one difference in the two versions of the bill. The Senate sought to
the collateral source provision which states that evidence of collateral source benefits received or
evidence of collateral source benefits which are reasonably expected to be received in the future
shall be admissible in court. The House removed that portion on the bill on a vote of 82-33. The
Senate initially offered a compromise that would redefine collateral source. However, the House
overwhelmingly rejected the new language. The conference committee then met again, and the
Senate agreed to the House version of the bill, removing the collateral source language from the bill.
The Senate approved, 38-2, the bill, and sent it to the Governor. The current bill raises the
noneconomic damages cap from the current $250,000 to $350,000 over several years.
Tax issues
Many of the tax issues still sit in conference committee, and they will not be taken up until veto
session. Those bills that the conference committee will consider to take up and put into other bills
during veto session include: SB 231, which changes the Court of Tax Appeals to the Board of Tax
Appeals; SB 298, which is the mortgage registration fee bill; and HB 2417, which adds four more
counties to the Rural Opportunity Zone program.
On Friday, the Senate took up the issue of HB 2643, which is the bill regarding appraisal for
business machinery and equipment taxes, including for those in the cement and lime industry.
Several amendments were added onto the bill by the Senate, and it is now in conference committee.
The bill would retroactively clarify legislative intent from 2006 when a property tax exemption for
certain commercial and industrial machinery and equipment was enacted by appraisers would be
required to conform to the definitions of real and personal property provided elsewhere in Kansas
law. Where the classification of property may not be otherwise clearly determined, appraisers would
be required to utilize a three-part, fixture-law test (generally involving annexation, adaption and
intention) in determining its classification as real or personal. Additional language would also clarify
that the basic factors in determining whether items would be classified as real or personal would be
their designated use and purpose and that all three parts of the three-part fixture test would have to
be satisfied for an item to be classified as real property. Taxpayers or county appraisers would be
authorized to request that the Property Valuation Division (PVD) contract with independent
appraisers to classify and appraise certain “complex” properties. Another section would define for
property tax purposes beginning in tax year 2014 commercial and industrial machinery and
equipment to include such property used directly in the manufacture of cement, lime or similar
products. Any such property valued and assessed as public utility property would not qualify for the
statutory designation as commercial and industrial machinery and equipment.
A final provision would provide a property tax exemption beginning in tax year 2015 on all property
owned and operated by a health club. The bill defines health clubs as facilities that provide cardio,
weight training, or strength and conditioning equipment for physical fitness. The exemption would
not apply to clubs that are primarily intended as weight control facilities, health spas, dance studios;
martial arts, tennis, racquet or basketball facilities; swimming pools; or golf clubs. The exemption
also would not apply within certain redevelopment districts established prior to July 1, 2014, until
such time as such districts terminate or expire.
Workers Compensation
HB 2615 is the workers compensation assigned risk pool bill. It passed the House this week and
assigned to the Senate Commerce Committee. The bill passed with agreed to language between the
business community and Kansas Association of Independent Agents. It allows for additional
members to be added to the board, but the majority of members are still insurance companies. The
bill also provides for term limits for the board as well as staggered terms and requires an audit of the
fund every four years. Since there is no time to hear or work the bill, the only way the issue will
advance is if it is inserted into a conference committee report. The conference committee has met
but has yet to discuss the issue.
Promoting Employment Across Kansas (PEAK) Act
The PEAK bill, HB 2430, remains in conference committee. The bill is aimed at cleaning up the
program after criticism of its management in a post audit study. Specifically, the bill tightens up
reporting requirements and clarifies that the Department of Commerce may authorize up to $6M
annually. The most contentious piece of the bill has become whether to extend the authorization of
the retention program (allows the program to be used to keep existing companies in Kansas), which
is set to expire at the end of 2014. Senate President Susan Wagle, who is a conference committee
member, has taken a strong stand that the program should not be renewed, and that the recent
income tax policy passed should be enough reason for Kansas companies to remain in Kansas. She
is also critical the program disproportionately benefits Johnson County. Chairman Marvin Kleeb and
Chairman Julia Lynn feel strongly the retention piece should be renewed, because it is a valuable
tool and has a great ROI.
The conference committee had hoped to wrap their work up on HB 2430, but could not reach an
agreement before legislators adjourned. When they last met on Wednesday, the House offered to
allow the retention program to expire in exchange for eliminating a Senate amendment that would
require the Sect. of Revenue to co-approve all PEAK deals. In addition, the House requested that the
program cap remain at $48M and that any unused portion of the annual $6M allocation could be
carry-forward for the next year. The Senate also requested that the bill clarify that no legislator may
benefit from the PEAK program. The conference committee will continue their work when they return
for the veto session.
Gaming
The House debated two gaming bills this week. The first, HB 2272, was supported overwhelmingly
by legislators on a vote of 84-36. This bill would allow a low-cost casino to be built in southeast
Kansas. It is the first expansion of gaming in the state in several years, and key to the bill is that it
lowers the initial capital investment from $225 million to $50 million and the pay-in-cash privilege
fee for the casino from $25 million to $5.5 million. Those are the same investment levels required
of the now-operating Dodge City casino. The bill was supported by virtually everyone from southeast
Kansas, a jobs and economic development issue, and if one is built in the southeast Kansas gaming
zone, it would be within driving distance of more than a dozen Indian tribal casinos in neighboring
Oklahoma. HB 2272 now heads to the Governor’s desk for his consideration and signature.
On the other hand, HB 2125, which would block Sedgwick County residents from voting on slots at a
Wichita racetrack, was rejected by the House. Supporters say the bill was vital to keep slots away
from the tracks because it could violate agreements with casino developers signed after the state
legalized gambling in 2007. Opponents of the bill prevailed with a 55-67 vote, arguing the slots
wouldn’t necessarily violate those agreements, banning a local vote would be undemocratic, and
adding slots at Wichita Greyhound Park and elsewhere could spur economic growth. The bill now
goes back to conference committee.
Health insurance
Below is a brief explanation of where important health insurance legislation currently stands:
 HB 2552 is the prompt pay bill that would require managed care organizations (MCOs) that
are contracted with KanCare to pay for medical care costs for beneficiaries within the first 30
days or 90 days if it’s a disputed medical care cost. The bill also contains a provision that
was added by the Senate that will prohibit the expansion of Medicaid without legislative
approval. The House concurred on the Senate’s amendments and adopted the Senate
version of the bill on a vote of 68-54. The bill now heads to the Governor’s desk.
 SB 362 is the Navigator Registration Act. The bill was tabled in the House Health Committee,
but since it passed the Senate it can be inserted in a conference committee report. The
conference committee has not yet met, but will do so during Veto Session.
 HB 2744 is on its way to the Governor for his consideration. This is the agreed upon autism
bill. It passed the Senate on Thursday without amendments. The bill provides coverage up
to age 12 1300 hours per year for the first four years after diagnosis between birth and 5
years of age, and 520 hours per year up to age 12.
 SB 285 is the optometric non-covered services bill. It has passed both the House and
Senate, and the Senate concurred with the House amendments. The bill is now on its way to
the Governor for his consideration. The bill would allow for use of patients choice of
materials and processing and prohibits insurance companies from requiring a discount plan
unless the services/materials are reimbursed as covered services under the contract.
 The Health Care Compact Act, HB 2553, passed the Senate on Friday on a vote of 29-11,
and it is now on its way to the Governor’s desk. The bill has not been amended and it is
anticipated to go directly to the Governor for his signature upon its passage. The bill would
allow for funding for federal programs that are received to be put into a block grant.
 HB 2668 currently sits in conference committee. The bill would require health plans that
receive an electronic health predetermination request to provide to the requesting health
care provider the amounts of expected benefits coverage on the procedures specified in the
request that is accurate at the time of the health plan’s response.
Politics & School finance
Both chambers worked late into the night on school finance, crafting education budget bills that met
the Kansas Supreme Court’s requirement of funding inequities among rich and poor public school
districts by July 1. Moderates and Democrats wanted a “clean bill”—one that simply spends $129
million to fund the funding inequities. Conservatives wanted education policy reform included in the
bill. Over the week it became clear that Republicans were fractured on this issue. The debate and
wrangling over the House’s education plan led to the House Appropriations Committee Chairman
Marc Rhoades, R-Newton, to resign his position on the Appropriations Committee, because he
believed the bill the House would eventually pass and he would have to champion on the floor and in
conference committee was without measurable educational outcomes to show for funding. Rep.
Gene Suellentrop was named House Appropriations Committee Chairman, and Rep. Marvin Kleeb
was named vice chair of the committee.
The Senate worked their school finance bill late Thursday and passed out a bill 23-17 that included
property tax credits for parents who home school or send their children to private schools, prohibited
spending tax dollars of any sort on Common Core education and ended due process for teachers. It
spent roughly $130 million in spending on Local Option Budget (LOB) and capital outlay funds but
also made sharper cuts to spending for school transportation and funds for at-risk weighting to
provide more money for teaching children who are at-risk to succeed in school. The House
overwhelmingly passed bipartisan support a “clean bill.” It financed much of the estimated $130
million cost of equalizing Local Option Budget (LOB) and capital outlay funds for the state’s school
districts. It didn’t include any policy reforms. The House bill was more politically moderate, while the
Senate bill was politically conservative.
The conference committee met throughout the weekend to negotiate the two school bills. The goal
was to craft a majority coalition for a bill blending budget realignment and policy evolution.
Democrats insisted on money, while Republicans demanded policy. The first negotiated conference
committee report, which was mainly the Senate’s bill, was rejected by the House in the early morning
hours of Sunday on a vote of 55-67, killing the bill. The conference committee met again early
Sunday to craft another conference committee report which passed both chambers late Sunday.
The conference committee report that has now been sent to the Governor for his consideration links
a $129 million increase in K-12 education spending with policy reforms that the Senate wanted. The
Senate voted 22-16 to approve the bill. The House got enough of the conservatives and some
moderates to vote for the bill and passed it 63-57 (63 votes are required to move it to the Governor’s
desk).
The bill:
 does not include property tax breaks to parents educating their children in private or home
schools (the Senate originally included this in their bill);
 repeals employment due process procedures in place for public school teachers, librarians
and counselors. This is commonly referred to as tenure for K-12 teachers, and this provision
was sought by conservatives;
 increases base state aid per pupil by $14 in the upcoming school year, shifting the amount
to $3,833;
 responds to the Supreme Court ruling by adding $129 million to equalize specialized
categories of funding to public schools;
 exempts from public school teacher license requirements individuals with college degrees in
science, technology, math, finance and accounting;
 creates a tax credit for companies donating to private school scholarship funds, which would
be earmarked for low-income students. Credits would be available in tax year 2014 in an
amount equal to 70 percent of contributions, with the statewide program capped at $10
million annually; and
 authorizes local school districts to increase property tax collections through the "local-option
budget," which could provide millions of dollars in cash for districts.
Upcoming
Legislators headed home late Sunday night, adjourning the regular session. Legislators will return
April 30 for Veto Session. Conference committees will meet again at that point to continue ironing
out differences between bills.