2013 Newsletter Header
March 2, 2014 - In This Issue:
Denning Official Senate Photo
  • Kansas employer payroll approaching $43 billion annually
  • Home prices post largest annual gain since 2005
  • Kansas has 32 million travelers and tourists annually
    • Average tourist spends $236
  • Consumer Confidence Index shows improvement
    • Feb 2014 - 81.2
    • Feb 2013 - 77.6

Halfway Point of the 2014 Legislative Session Reached

Friday marked the official halfway point of the 2014 Legislative Session, also known as "Turnaround". By this point in the session, with a few exceptions, a bill must have passed its chamber of origin and is then sent over to the opposite chamber for consideration. If a bill has not advanced, or has not been introduced through an exempt committee, it is stalled for the remainder of the session. In other words, bills that have passed the Senate are sent over to the House for their consideration. Bills that have passed the House are sent over to the Senate for further consideration. Any differences in the bills will be sorted out in the conference committees. 

8 Months Ending February 28, 2014
$50 Million Extraordinary Personal Income Tax Deposit Received
The trends for Kansas tax receipts remain positive through the eight months ending February 28, 2014. The Kansas fiscal year runs from July 1, through June 30. For the eight month period YTD tax receipts are $119 million or 3.4% above budget estimates. It should be noted Kansas received an extraordinary $50 million personal income tax receipt in February. This extraordinary item will be broken out for analysis purposes. Excluding the extraordinary $50 million deposit, Kansas tax receipts still remain above budget by $69 million or 2% over estimates.

A couple of trends worth watching. First trend; Personal income tax receipts are above budget. This is the result of higher wages, lower unemployment and more Kansans finding work. Kansas businesses are growing and new businesses are coming. Kansas companies starting giving salary increases in 2013 following the great recession of 2008. All of these factors are producing higher tax receipts in 2014. Second trend; Sales tax receipts have consistently met or exceeded budget for fiscal year 2014. In February, sales tax receipts fell below budget for first time this year. Janet Yellen, the new Chairman of the Federal Reserve noted this softness in retail sales across the United States. Yellen's analysis ties the retail sales softness to the prolonged and extreme cold weather we are experiencing. Retail demand is projected to be postponed, not lost. With weather patterns changing to the warm side by the middle of March we will be able to see if this indeed is the case when we analyze March tax receipts.


The Kansas economy continues to grow and improve. The Kansas personal income tax cuts effective January 1, 2013 are working to help grow the economy and jobs. The personal income tax cuts add over $23 million to Kansans paychecks, every payday.



Kansas Tax Receipts



Changing to New Plan for New Hires Effective January 1, 2014

Speaker of the House, Ray Merrick, shared his Marine quote with me when I started my first term in the House in 2011. "It is our responsibility to be successful under conditions as we find them-- not as we would like them to be." This certainly applies to the KPERS issues we must deal with head on.


I have been appointed to the Senate Select Committee on KPERS. We will be working on HB 2533. The KPERS retirement plan is a Defined Benefit (DB) plan. DB plans have historically been woefully underfunded in both the public and private sectors.




The KPERS DB plan is underfunded by at least $9 billion dollars. In order to stop making the hole deeper, we need to stop digging. Current employees will stay in the existing DB plan and receive all retirement benefits as scheduled. New employees coming on board after January 1, 2015 will be part of a new plan inside KPERS. The new plan is known as a "Cash Balance" plan.


There are three types of retirement plans - defined benefit plans (DB), defined contribution plans (DC), and cash balance plans (CB). Each will be briefly discussed below.


Defined Benefit Plan (DB)

  • A specified, "defined" benefit at retirement
  • Benefit based on factors like salary, age and years of service
  • Kansas taxpayers bear all investment risk


 Defined Contribution Plan (DC)

  • Commonly known as a 401K plan
  • Provides an individual account for each participant
  • Employee bears all investment risk


Cash Balance Plan (CB)

A "cash balance" plan is a type of defined benefit plan that includes some elements of a defined contribution plan. Cash balance plans tend to share risk between employer and employee.


  • There is a guaranteed 4.0 percent interest credited to the employee's contribution account. Plus additional interest (0 to 2 percent) based on KPERS investment returns and funding.
  • At retirement, the ending account balance is annuitized to create a guaranteed monthly income.

Following the sharp stock market decline in 2009 CB plans are becoming popular in both the public and private sectors. 


Projections indicate converting new employees to the Cash Balance type of plan will result in the existing DB plan being funded to an appropriate amount by 2030 or so. A long runway for sure but it is a long term solution to a problem that cannot be postponed.


The Kansas commitment to KPERS is huge. To put it into perspective, the amount of annual funding to keep the plan actuarially sound will require $1 billion in annual state contributions. This is more than the Kansas spends on its portion of Medicaid.

Followup to Legislation Passed Last Year (HB 2105)

As a result of the great recession of 2008 the Kansas unemployment insurance fund was depleted. This fund is paid for entirely by employers. In February 2013 the account had been essentially depleted and required $45.9 million in loans from the Pooled Money Investment Board and federal government to pay unemployment benefits. Almost every state in the Union was in the same bad shape. As a result of an improved employment picture and changes made by HB 2105 the fund is in significantly better shape. The fund now has a balance of $80.2 million, with no loans. As a result of these factors we are expecting the fund to continue to recover. It is projected that the fund will have a balance approaching $232 million by July of 2014.


Below is a graph showing the consistent reduction in unemployment benefits payouts as the economy and jobs continue to improve in Kansas. This data also ties in with the February personal income tax receipts exceeding budget estimates.





At the low point in the recession Kansas paid out a high of $70 million in a single month. Now the average is $26 million and declining. Kansas is growing jobs and the economy.


Here is how Kansas compares to rest of the United States.




Following turnaround we do not return to work in Topeka until Wednesday. Monday and Tuesday is fairly full between work and meeting with constituents. I also plan to have meetings before returning to Topeka with:

  • Joe Sopcich, President of Johnson County Community College,
  • Jim Hinson, Superintendent of Shawnee Mission Schools, and
  • Tom Trigg, Superintendent of Blue Valley Schools.  


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

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