This memorandum describes the current school finance system operating in Kansas, including the Kansas School Equity and Enhancement Act (KSEEA), and other school finance laws since 2017. This memorandum details the following:
Calculation of State Foundation Aid, including the various weightings used to determine a school district’s weighted enrollment;
The local option budget (LOB), including the state equalization aid (Supplemental State Aid);
Capital Outlay State Aid;
Capital Improvement State Aid;
Special Education State Aid; and
Kansas Public Employees Retirement System (KPERS) employer contributions.
Unless necessary to provide context, the history of changes to the Kansas school finance system is not discussed. The history of the School District Finance and Quality Performance Act (SDFQPA) and the Classroom Learning Assuring Student Success Act (CLASS Act) are covered in a separate memorandum, available upon request.
The Division of the Budget, Department for Children and Families (DCF), Department of Health and Environment (KDHE), Department for Aging and Disability Services (KDADS), and the Legislative Research Department (Consensus Group) met on November 8, 2024, to revise the estimates for human services consensus caseload expenditures for FY 2025 and to develop estimates for FY 2026. The caseload estimates include expenditures for Temporary Assistance for Needy Families, the Reintegration/Foster Care Contracts, KanCare Regular Medical Assistance, and KDADS Non-KanCare. A chart summarizing the estimates for FY 2025 and FY 2026 is included at the end of this memorandum.
Estimates for the State General Fund (SGF) are developed using a consensus process that involves the Legislative Research Department, Division of the Budget, Department of Revenue, and consulting economists from state universities. This estimate is the base from which the Governor and the Legislature build the annual budget. The Consensus Group met on November 15, 2024, to revise the estimates for fiscal year (FY) 2025 and to make its initial forecast for FY 2026. For FY 2025, the previous estimates were made in April 2024 and subsequently adjusted for legislation enacted during the veto session and the 2024 Special Session.
The overall estimate for FY 2025 was decreased by $59.8 million. Of this amount, the estimate for total taxes was decreased by $72.2 million, while the estimate for other revenues was increased by $12.4 million.
Table 1 compares the revised estimates for FY 2025 and the initial estimates for FY 2026 with actual receipts from FY 2024. Table 2 shows the changes to the previous FY 2025 estimate.
Stablecoins are a form of cryptocurrency. Cryptocurrencies are a digital representation of value that functions similarly to most currencies by providing a medium of exchange, unit of account, store of value, and rely on cryptography to secure transactions. Most cryptocurrencies do not require intermediaries or government backing. Stablecoins are a unique subset of cryptocurrency. Unlike Bitcoin, and other similar cryptocurrencies, stablecoins attempt to maintain a fixed, or “pegged” exchange rate, in which their value is fixed against the value of another currency or asset with the aim of maintaining stability in value.
There are four main ways in which the value of a stablecoin may be pegged to another asset:
Fiat currency-backed: A stablecoin can be pegged to fiat currency, like the U.S. Dollar (USD), when that fiat currency is held in reserve against the coin’s value at a depository institution. As the stablecoin price fluctuates, reserves are bought or sold to maintain stablecoin pegging to the reserve asset. In an effort to maintain their stability in value, large issuers sometimes over-collateralize their stablecoins by holding more fiat currency in reserve than the value of the stablecoins issued.
Commodity-backed: A stablecoin can be pegged to the value of a specific commodity, where the stablecoin issuer holds the commodity and buys or sells the commodity as needed to adjust the stablecoin price.
Cryptocurrency-backed: Some stablecoins peg their value to other cryptocurrencies. As the stablecoin price fluctuates, the issuer buys or sells the reserve cryptocurrency as needed to restore the stablecoin’s peg. These stablecoins may be overcollateralized to account for the pegged cryptocurrency’s volatility.
Algorithmic-backed: These stablecoins do not hold reserve assets. Instead, an algorithm on the stablecoin’s blockchain dynamically adjusts its supply to create or destroy stablecoins depending on the change in the stablecoin’s value. In practice, this mechanism typically fails to maintain a stable pegged value because adjustments made by the algorithm cannot keep pace with real-time changes in market conditions.
Unlike other cryptocurrencies whose current usage is mainly as an investment vehicle, stablecoins tend to be focused on facilitating transactions between parties. Currently, there are two major use cases for stablecoins:
International transfers: Stablecoin users do not need multiple bank accounts in two countries to transfer money from one country to another; they just need one cryptocurrency wallet that transfers their stablecoin to another user’s wallet.
Peer-to-peer digital transfers: Stablecoins allow users to complete digital transfers without the need for third parties to facilitate the transaction.
While stablecoin usage continues to rise, this cryptocurrency subset still presents risk to users and the finance sector.
Stablecoin Risks
Stablecoins present several risks to users, some of which include:
False claims that a stablecoin is fully backed by reserves. In 2021, the Commodity Futures Trading Commission (CFTC) fined Tether $41 million for making untrue or misleading statements and omissions of material fact related to the amount of reserves held backing their stablecoin. The CFTC found during a 26-month period that Tether only held 100 percent of reserves 27.6 percent of those days.
False claims that reserves are fully backed by a specific asset. In the 2021 Tether finding, the CFTC found that Tether was also using non-fiat financial products as part of their reserves.
Unauthorized use of consumer funds. When consumers purchase a stablecoin, the USD given to the issuer in exchange for the stablecoin should go into the reserves. As seen in the FTX collapse in 2022, issuers could take the USD and use it for personal use instead.
Volatility in the reserve asset’s price. In March 2023, the stablecoin DAI temporarily de-pegged due to a substantial portion of its reserves being tied to another cryptocurrency. While DAI tried to maintain a 1:1 peg with the USD, about 40 percent of its reserves were in another stablecoin. As cryptocurrency pricing fell, the reserve stablecoin’s price fell and DAI temporarily de-pegged.
A digital “bank run” on algorithm-backed stablecoins. For stablecoins that rely on an algorithm to create or destroy stablecoins to maintain a pegged value, the algorithm must process its orders faster than the market. In some instances, algorithmic stablecoins have been subject to large selloffs in which the algorithm could not keep up with price volatility, ultimately resulting in failure of the stablecoin to maintain its pegged value. This run is what led to Terra’s collapse in 2022.
Inability to convert reserves into liquid assets to maintain the peg. In 2024, reports surfaced that the U.S. Treasury was considering sanctions against Tether for its stablecoin’s widespread use by sanctioned entities. This possible sanction against Tether could prohibit Americans from transacting with Tether and significantly impair or wholly prevent its ability to convert its reserve of U.S. Treasury bills into liquid assets to maintain the stablecoin’s value.
Use of stablecoins for illicit activities. With stablecoin values relatively consistent compared to other cryptocurrencies like Bitcoin, criminals and scammers tend to rely on stablecoins to transfer money for illicit activities. Chainanalysis’ 2024 report on cryptocurrency crime trends shows that illicit transaction volume involving stablecoin payments continues to rise. In 2023, stablecoin payments made up around 60 percent of all illicit cryptocurrency payments. About 80 percent of all illicit transactions conducted by sanctioned entities and jurisdictions used stablecoins.
Stablecoin Legislation
Proposed Congressional Action
Currently, the United States does not have a stablecoin-specific federal law providing a comprehensive legal framework. In recent years, various legislation has been introduced in Congress providing a regulatory framework for stablecoins. Some areas that were addressed in those bills include:
Enacted in 2021, and updated in 2024, Nebraska’s Financial Innovation Act defines a stablecoin as a controllable electronic record designed to have a stable value that is backed by a reserve asset.
The Act authorizes digital asset depositories to issue stablecoins and hold deposits that serve as reserves at an FDIC-insured financial institution chartered in the state or has a branch in the state. The Act also authorizes such depositories to use stablecoins for payment activities.
Such depositories would be subject to certain licensing requirements. Nebraska’s Department of Banking and Finance issued guidance indicating the following will be among those requirements:
Issuer-provided daily reports of key general ledger and distributed ledger numbers and a quarterly call report;
Periodic examination of an issuer’s general ledger balance sheet, external audits, and compliance;
Review of policies and procedures to prevent money laundering;
Compliance with “Know Your Customer” regulatory requirements;
Appropriate federal transaction reporting and other standard banking practices;
Examiner-issued confidential report to be shared with the issuer and potentially other regulators;
Requiring certain disclosures from issuers to consumers and investors to inform them of risks, conflicts of interest, and fees; and
Requiring issuers to provide at least 10 hours of live customer phone support on weekdays to serve state residents.
Texas
Enacted in 2023, the Money Services Modernization Act updates the state’s money services statutes. The Act defined “money” or “monetary value” to include stablecoins.
The Act defines as money any stablecoin that is:
Pegged to a sovereign currency;
Fully backed by assets held in reserve; and
Grants the holder the right to redeem the stablecoin for sovereign currency from the issuer.
The Act also authorizes the Texas Department of Banking to enforce the Act.
Unlike California and Nebraska which have specific regulations related to stablecoin issuers, Texas’ Act applies to all money service providers but allows those providers to participate in stablecoin activities. The only stablecoin-specific provision in the Act permits providers to invest in stablecoins so long as those investments are in the same kind of stablecoin as those issued to consumers by the provider.
Other State Approaches to Stablecoin Regulation
New York
New York has been regulating cryptocurrencies since 2015. In 2022, the state’s Department of Financial Services (Department) issued guidance indicating it would apply certain requirements to stablecoins backed by the U.S. dollar and issued under the Department’s authorization. These stablecoin-specific regulations did not replace any other regulations related to the issuer or Department.
Key regulations from the guidance include the following:
A stablecoin must be fully backed by a reserve of assets (1:1 backing) as of the end of each business day;
Stablecoin reserves must be held with a U.S. state or federally chartered depository institution insured by the FDIC or with pre-approved custodians;
Stablecoin reserves can only be:
U.S. treasury bills with maturity dates of three months or fewer;
Reverse purchase agreements fully collateralized by U.S. treasury bills, notes, or bonds; or
Other Department-approved assets;
Reserves must be subject to an examination at least once per month by an independent Certified Public Accountant licensed in the United States who attests to certain reporting requirements; and
Stablecoin issuers must adopt clear redemption policies approved in advance by the Department allowing the user to redeem the stablecoin from the issuer at a 1:1 exchange rate for the U.S. dollar net of any fees.
The memorandum summarizes the history of legislative rule and regulation oversight in Kansas, the statutory procedures for the approval and adoption of administrative rules and regulations, current options for legislative actions to influence rules and regulations, and changes to the Rules and Regulations Filing Act since 2000.
Since 1939, Kansas statutes have provided for legislative oversight of rules and regulations filed by state officers, boards, departments, and commissions. The 1939 law declared all rules and regulations of a general or statewide character were to be filed with the Revisor of Statutes and would remain in force until and unless the Legislature disapproved or rejected the regulations. It was not until 1974 that the Legislature took steps to formalize an oversight process. In that year, all filed rules and regulations were submitted to each chamber. Within 60 days of submission, the Legislature could act to modify and approve or reject any of the regulations submitted. The 1975 interim Legislative Budget Committee, under Proposal No. 33, found it “important to maintain and even enhance legislative oversight of all regulations in order to make sure that they conform with legislative intent.” In 1976, several amendments to the Rules and Regulations Filing Act were enacted, and the Legislative Coordinating Council created the Special Committee on Administrative Rules and Regulations to review proposed administrative rules and regulations filed with the Revisor of Statutes. The law was later changed to require proposed agency rules and regulations to be reviewed as outlined below.
In 1984, the Kansas Supreme Court, in State ex rel. Stephan v. Kansas House of Representatives, 236 Kan. 45, 687 P.2d 622 (1984), held a procedure adopted in 1979, which authorized the use of concurrent resolutions to modify or revoke administrative rules and regulations, violated the doctrine of separation of powers under the Kansas Constitution. The opinion notes, “Like the Constitution of the United States, the Kansas Constitution contains no express provision establishing the doctrine of separation of powers. However, it has been recognized that the very structure of the three-branch system of government gives rise to the doctrine Generally speaking, the legislative power is the power to make, amend, or repeal laws; the executive power is the power to enforce the laws; and the judicial power is the power to interpret and apply the laws in actual controversies. . . . This is not to say the legislature cannot modify the statute which grants an agency the authority to adopt regulations.” A constitutional amendment placed on the November 2022 general election ballot by the passage of 2022 HCR 5014 would have authorized the Legislature to provide by law for the revocation or suspension of any rule and regulation that has the force and effect of law, by a majority vote of the members of each house; the amendment was not approved by voters.
A 1977 law created the Joint Committee on Administrative Rules and Regulations (Joint Committee). In 1988, responsibility for filing and publishing all rules and regulations was statutorily assigned to the Secretary of State.
The Rule and Regulation Adoption Process
Administrative rules and regulations may be temporary or permanent. The Rules and Regulations Filing Act (KSA 77-415 through 77-441, and amendments thereto) outlines the statutory requirements for the filing of regulations by most executive branch agencies and for the review of the agency regulations. The Policy and Procedure Manual for the Filing of Kansas Administrative Regulations of the Kansas Department of Administration (available here) and Administrative Regulations Agency Resources (both Changes to the Regulation Process Effective July 1, 2024, and the Policy and Procedure Manual for Filing Administrative Rules and Regulations) from the Office of the Secretary of State provide guidance to agencies on the development of and procedures for promulgating rules and regulations.
Temporary Rules and Regulations Adoption Process
A temporary rule and regulation, as defined in KSA 2024 Supp. 77-422, may be adopted by an agency if the State Rules and Regulations Board (Board) finds preservation of the public peace, health, safety, or welfare makes it necessary or desirable to put the regulation into effect before a permanent regulation would take effect. Temporary rules and regulations take effect after approval by the Director of the Budget, the Secretary of Administration, the Attorney General, and the Board and may remain effective for no more than 120 days, beginning with the date of approval by the Board and filing with the Secretary of State. A state agency, for good cause, may request a temporary rule and regulation be renewed one time for an additional period not to exceed 120 days. Temporary rules and regulations of the Kansas Lottery are exempt from the requirements of the Rules and Regulations Filing Act (KSA 2024 Supp. 74- 8710).
Permanent Rules and Regulations Adoption Process
KSA 2024 Supp. 77-420 and KSA 2024 Supp. 77-421 outline the process for an agency’s adoption of permanent Kansas Administrative Regulations (KARs) or changes to KARs in the following steps, which are to be followed in consecutive order:
Obtain approval of the organization, style, orthography, and grammar of the proposed rules and regulations from the Secretary of Administration;
Obtain approval of the proposed rules and regulations from the Attorney General, who must promptly provide an opinion as to the legality of any proposed rule and regulation, including whether the making of the rule and regulation is within the authority conferred by law on the state agency;
Obtain approval of the proposed rules and regulations from the Director of the Budget (Director). KSA 2024 Supp. 77-420 requires the Director to review the economic impact statement submitted with the rules and regulations and conduct an independent analysis of whether the agency has complied with all economic impact statement requirements;
The Director must approve the rule and regulation if the Director independently determines that the economic impact statement is complete and the Director concurs with the statement. However, if the implementation and compliance costs incurred by businesses, local government, or individuals over the initial five-year period following adoption of the rule and regulation would exceed $1.0 million, the agency may not adopt the rule and regulation until a ratifying bill is enacted, except when the rule and regulation is proposed because of a federal mandate;
The Director must disapprove the proposed rule and regulation if the economic impact statement is incomplete or contains substantive inaccuracies;
The agency may modify the proposed rule and regulation and resubmit it;
Submit the notice of hearing, copies of the proposed rules and regulations as approved, the economic impact statement, and the environmental benefit statement (if required by KSA 2024 Supp. 77-416) to the Secretary of State, and submit a copy of the notice of hearing to the chairperson, vice-chairperson, and ranking minority member of the Joint Committee and to the Kansas Legislative Research Department (KLRD); the notice also must be published in the Kansas Register;
Review the proposed rules and regulations with the Joint Committee. KSA 2024 Supp. 77-436 requires the Joint Committee to review all proposed rules and regulations during the public comment period, which is at least 60 days for all rules and regulations, except for those rules and regulations concerning certain hunting and fishing activities and for permanent prior authorization on a prescription-only drug (KSA 39-7,120), for which the public comment period is at least 30 days;
The Joint Committee is required to issue a report to the Legislature following each meeting making comments and recommendations and indicating concerns about any proposed rule and regulation. The reports are posted on the KLRD webpage for the Joint Committee. Agencies are asked to respond to any and all comments and questions; those responses are included in Joint Committee records and summarized in its annual report;
The Joint Committee may introduce such legislation as it deems necessary in performing its functions of reviewing administrative rules and regulations;
Hold the public hearing and cause minutes or other records of the meeting to be made;
Initiate new rulemaking proceedings if the final rule and regulation would differ in subject matter or effect in any material respect from the rule and regulation as originally proposed or the rule and regulation is not the logical outgrowth of the rule and regulation as originally proposed;
Adopt the rules and regulations. At the time it adopts or amends a rule and regulation, the state agency is required to prepare a concise statement of the principal reasons for adopting the rule and regulation or amendment thereto, including:
The agency’s reasons for not accepting substantial arguments made in testimony and comments; and
The reasons for any substantial change between the text of the proposed adopted or amended rule and regulation contained in the published notice of the proposed adoption or amendment of the rule and regulation and the text of the rule and regulation as finally adopted; and
File the final, adopted rules and regulations and associated documents with the Secretary of State.
A permanent rule and regulation takes effect 15 days after publication in the Kansas Register, or on a later date if that is clearly specified (KSA 2024 Supp. 77-426). The Secretary of State, as directed by KSA 2024 Supp. 77-417, endorses on each rule and regulation its date of filing, maintains a file of rules and regulations for public inspection, keeps a complete record of all amendments and revocations, indexes the filed rules and regulations, and publishes the rules and regulations. The Office of the Secretary of State publishes new, amended, or revoked regulations in the Kansas Register and compiles the adopted regulations on the Office’s website. The Secretary of State is authorized to return to the state agency or otherwise dispose of any document that had been adopted previously by reference and filed with the Secretary of State.
Review of Adopted Rules and Regulations
KSA 2024 Supp. 77-440, added by 2022 HB 2087, requires each agency that has promulgated administrative rules and regulations to review, on a five-year cycle, each of its adopted rules and regulations and provide the Joint Committee a statement for each rule and regulation as to whether the rule and regulation is necessary for the implementation and administration of state law, or whether it may be revoked. The bill also amended law to provide a streamlined revocation procedure for any rule and regulation found through this review to be revocable. KSA 2024 Supp. 77-440 specifies review years for each agency, starting in 2023; the statute places the agencies in order using the number assigned to the agency for rule and regulation purposes, as reflected in the KAR Volumes. Agency reports on those reviews are published on the KLRD webpage for the Joint Committee.
Legislative Review and Statutory Legislative Actions
The 12-member Joint Committee is required by KSA 2024 Supp. 77-436 to review proposed rules and regulations during the public comment period prior to the required public hearing on the proposed regulations, as noted above. Recent legislative changes to the Rules and Regulations Filing Act have not changed this review and comment process or opportunities for legislation.
Committee comments and reports. The Joint Committee provides comments reflecting its concerns or recommendations to the agency for consideration at the time of the agency’s public hearing on the proposed rules and regulations. The Joint Committee requests the agency reply to it in writing to respond directly to each comment made. It also requests information on any amendments to the proposed rules and regulations made after the Joint Committee hearing, any delays in their adoption, or the withdrawal of the rules and regulations.
Since 2018, KSA 2024 Supp. 77-436 has required the Joint Committee to issue a report to the Legislature of its comments to the agencies following each meeting; these reports are posted on the Joint Committee’s webpage within the KLRD website and are distributed to the agencies. KLRD maintains a database of responses to Joint Committee comments, reports on those responses to the Joint Committee, and summarizes the comments and responses in the Committee’s annual report. The annual report also includes a summary of provisions in legislation enacted in that year that authorize, require, clarify, or remove authority for rules and regulations.
Committee-introduced legislation. The Joint Committee may introduce legislation it deems necessary in the performance of its review functions (KSA 2024 Supp. 77-436(e)).
Legislative concurrent resolution. Provisions of KSA 2024 Supp. 77-426(c) authorize the Legislature to adopt a concurrent resolution expressing its concern with any temporary or permanent rule and regulation filed during the preceding year and requesting revocation or amendment of such rule and regulation.
Legislative ratification of certain rules and regulations. KSA 2024 Supp. 77-441, added to the statutes in 2024, requires a bill to be enacted to authorize a state agency to adopt a rule and regulation for which $1.0 million or more in implementation and compliance costs are reasonably expected to be incurred by or passed along to businesses, local governmental units, and individuals as a result of a proposed rule and regulation in the initial five-year period following adoption of the rule and regulation. This requirement does not apply if the rule and regulation is temporary or is proposed because of a federal mandate.
Amendments to Rule and Regulation Procedures
Increasing numbers of bills since 2000 have changed the procedures for agency adoption of rules and regulations and review of them.
2008
SB 579 (L. 2008, ch. 25) required state agencies to consider the impact of proposed rules and regulations on small employers. (These provisions, currently found in KSA 2024 Supp. 77-416, were expanded in 2018.) The bill defined “small employer” in KSA 77-415 as any person, firm, corporation, partnership, or association with 50 or fewer employees, the majority of whom are employed in Kansas.
2010
House Sub. for SB 213 (L. 2010, ch. 95) revised law on rules and regulations by removing obsolete language and authorized publication of the KAR in paper or electronic form by the Secretary of State (KSA 77-430). In addition, the bill amended definitions and the exclusion of certain rules and regulations from the Act (KSA 77-415). Certain procedures to be followed in the rulemaking process and procedures were also revised. One provision requires state agencies to begin new rulemaking procedures when the adopted rules and regulations differ in subject matter or effect in a material respect from those reviewed by the Joint Committee (KSA 77-421).
2011
HB 2027 (L. 2011, ch. 14) named the Rules and Regulations Filing Act (Act) and simplified the definitions of terms such as “rule and regulation” and removed certain obsolete exclusions. It also expanded the definition of “person” to include individuals and legal or commercial entities that previously had not been included (KSA 77-415).
The bill gave precedential value to orders (KSA 77-415) issued in an adjudication against a person who was not a party to the original adjudication when the order is:
Designated by the agency as precedent;
Not overruled by a court or other adjudication; and
Disseminated to the public through the agency website or made available to the public in any other manner required by the Secretary of State.
The bill provided that agency-issued forms, the contents of which are governed by rule and regulation or statute, and guidance and information the agency provides to the public do not give rise to a legal right or duty and are not treated as authority for any standard, requirement, or policy reflected in the forms, guidance, or information.
The bill provided for the following to be exempt from the Act (KSA 77-415):
Policies relating to the curriculum of a public educational institution or to the administration, conduct, discipline, or graduation of students from such institution;
Parking and traffic regulations of any state educational institution under the control and supervision of the State Board of Regents; and
Rules and regulations relating to the emergency or security procedures of a correctional institution and orders issued by the Secretary of Corrections or any warden of a correctional institution, to which other procedures apply.
The bill authorized state agencies to issue guidance documents without following the procedures set forth in the Act. Under the terms of this section (KSA 2024 Supp. 77-438), guidance documents may contain binding instructions to state agency staff members, except presiding officers, concerning their duties. The bill required each state agency to maintain an index of the guidance documents, publish the index on the agency’s website, make all guidance documents available to the public, file the index in any other manner required by the Secretary of State, and provide a copy of each guidance document to the Joint Committee.
2012
SB 252 (L. 2012, ch. 61) changed notice requirements (currently found in KSA 2024 Supp. 77-421) from 30 days to 60 days for new rulemaking proceedings when an agency proposes to adopt a final rule and regulation that:
Differs in subject matter or effect in any material respect from the rule and regulation as originally proposed; and
Is not a logical outgrowth of the rule and regulation as originally proposed.
2018
HB 2280 (L. 2018, ch. 117) made several changes to the Act:
Granted new authority to the Director of the Budget to review and approve proposed rules and regulations (KSA 2024 Supp. 77-420);
Added certain economic analysis requirements (KSA 2024 Supp. 77-416);
Added a member of the minority party and a representative of an appropriations committee to the State Rules and Regulations Board (KSA 2024 Supp. 77-423);
Added a ranking minority member to the Joint Committee (KSA 2024 Supp. 77- 436);
Requires reports to the Legislature from the Joint Committee after each meeting (KSA 2024 Supp. 77-436); and
Required the Legislative Post Audit Committee, in 2021, to direct the Legislative Division of Post Audit to evaluate the implementation of the new provisions contained in the bill [Note: This date was changed to 2026 by 2022 HB 2087, and the requirement was removed by 2024 HB 2648.] (KSA 2024 Supp. 77-416).
2021
HB 2391 (L. 2021, ch. 61), a bill amending law regarding business filing and publication duties of the Secretary of State, removed a requirement that the price of KARs be set in rules and regulations (KSA 45-107). The price of the KARs is to recover costs of publishing and storing the KARs. [The corresponding rules and regulations were revoked as of April 29, 2022.]
2022
HB 2087 (L. 2022, ch. 61) amended provisions regarding review by the Director of the Budget and review by agencies to:
Require review by the Director only if the agency determines the rules and regulations would result in implementation and compliance costs of more than $1.0 million over two years through June 30, 2024, or more than $3.0 million over two years on and after July 1, 2024. If the agency proposes a rule and regulation because of a federal mandate, no Director review or approval is required, regardless of estimated implementation and compliance costs;
Remove provisions requiring the Director to make an independent determination of implementation and compliance costs;
Require the Director to approve a proposed rule and regulation regardless of determined costs if the agency has held a public hearing, the agency found the costs have been accurately determined and are necessary for legislative intent, and the Director concurs with the agency’s findings and approves the economic impact statement after an independent analysis;
Require the Director to review the rules and regulations only after review by and approval of the Department of Administration and the Office of the Attorney General.
The bill changed, from 2021 to 2026, the year in which the Legislative Post Audit Committee must direct the Legislative Division of Post Audit to study the accuracy of economic impact statements submitted in the previous seven years, the impact of the review by the Director on the accuracy of the statements, and whether the amounts triggering the public hearing procedure are appropriate. [Note: This requirement was removed by 2024 HB 2648.]
The bill also added the provisions described above regarding state agency review of each rule and regulation, on a five-year cycle, to determine whether the rule and regulation is necessary or whether it may be revoked, using a streamlined revocation procedure created by the bill.
HCR 5014 placed an amendment to the Kansas Constitution on the ballot for the general election in November 2022 to create a new section in Article 1 to provide that, whenever the Legislature by law has authorized any officer or agency within the Executive Branch to adopt rules and regulations that have the force and effect of law, the Legislature may provide by law for revocation or suspension of any such rule and regulation, or any portion thereof, by a majority vote of the members of each house. The amendment was not approved by voters.
2024
HB 2648 (L. 2024, ch. 90) requires ratification of certain rules and regulations in the form of an enacted bill, changes the duties of the Director of the Budget (Director) with regard to rules and regulations, states policies established by orders in adjudications under the Kansas Administrative Procedure Act or other procedures may not establish rules governing future private conduct that have the force of law, and eliminates a requirement that the Legislative Division of Post Audit conduct an audit in 2026 to study the accuracy of economic impact statements submitted with proposed rules and regulations.
Ratification. The bill requires ratification of a rule and regulation for which implementation and compliance costs, as defined by the bill (i.e., readily ascertainable costs based upon standard business practices, such as costs for licensing and registration, equipment, additional operating costs, and costs for monitoring and reporting), exceed $1.0 million over the initial five-year period following adoption of the rule and regulation. This requirement does not apply to temporary rules and regulations, rules and regulations proposed because of a federal mandate, or rules and regulations of the Kansas Agricultural Remediation Board. The bill authorizes any legislator to introduce a ratification bill and the state agency to resume adopting such rule and regulation upon enactment of the ratification bill.
State agencies prohibited from adopting rules and regulations pursuant to this limitation are authorized to modify the proposed rule and regulation and prepare a revised economic impact statement. The adoption of the modified rule and regulation is authorized if the $1.0 million limitation is not anticipated to be exceeded by the modified rule and regulation. (KSA 2024 Supp. 77-421)
Duties of the Director of the Budget. The bill requires the Director, in reviewing the economic impact statements for proposed rules and regulations, to conduct an independent analysis to determine whether the agency has complied with the requirements for economic impact statements. It also requires the Director to review the agency’s determination of the amount of implementation and compliance costs reasonably expected to be incurred by or passed along to businesses, local governments, and individuals over the initial five-year period following adoption of the rule and regulation.
If such costs do not exceed $1.0 million, the bill requires the Director to:
Approve a rule and regulation if the Director independently determines the economic impact statement is a complete analysis and the Director concurs with the economic impact statement or if the proposed rule and regulation has been ratified via a bill; and
Disapprove the rule and regulation if the economic statement is incomplete or contains substantive inaccuracies. (KSA 2024 Supp. 77-420)
The ninth edition of Kansas Tax Facts (“Tax Facts”) was published in December 2023. This addendum is designed to supplement and update that publication by providing information on legislation enacted through 2024 and tax receipts for state fiscal year 2024 and tax year 2023 for taxes generally reported on a calendar year basis.
The main purpose of Tax Facts is to provide basic information on state and local imposed taxes in a convenient handbook to be used as a reference resource on the Kansas tax system.
KLRD expresses its appreciation to the state tax administrative agencies, especially the Department of Revenue, and to the Division of Accounts and Reports of the Department of Administration for their assistance in providing basic data for Tax Facts.
In a recent trend, states are seeking to limit economic interactions with countries of concern within their borders. This trend raises several questions:
Why are states concerned by foreign transactions within their state?
Why are states acting in an area typically considered under federal jurisdiction?
What actions are states taking?
How are state and federal courts interpreting these actions?
This memorandum will address those questions by looking at the:
Risks to states posed by countries of concern;
Federalism concept and the federal government’s willingness to let states act in this area;
Relevant enacted state statutes; and
Relevant court decisions.
The Risk to States from Countries of Concern
In recent legislative sessions, states have begun addressing potential threats posed by foreign adversaries. Typically, states have labeled these adversaries as “countries of concern” (Note: this labeling typically is consistent with 15 CFR 791.4) and limiting the transactions conducted by governments, entities, and agents from these countries. As defined by other states, these countries typically include:
China (including Hong Kong and excluding Taiwan);
Cuba;
Iran;
North Korea;
Russia;
Syria; and
Venezuela under the Maduro Regime.
States are addressing perceived threats that typically coalesce around land ownership, data privacy, and investment or procurement. To mitigate these threats, states have enacted laws to restrict agricultural land purchases, land ownership within proximity to critical infrastructure and military installations, activities involving personal or proprietary data, third- party litigation funding, and investment or procurement by entities and individuals from these countries.
Federalism and Federal Policy
With Congressional gridlock, some states are acting on their own to address the potential risks from countries of concern. These actions seem to intrude into the federal government’s jurisdiction and violate the federalism concept found in the U.S. Constitution and acknowledged by the U.S. Supreme Court.
Federalism Overview
In 1991, the Supreme Court (Gregory v. Ashcroft, 501 U.S. 452, 457) held that the U.S. Constitution establishes a “system of dual sovereignty between the States and the Federal Government.” This dual sovereignty is typically referred to as “federalism.” State and local governments were intended to have policing powers (day-to-day government), while the federal government was to provide for defense, foreign relations, and facilitating a common economic market for the states.
Why Do We Have Federalism?
Federalism offers the following benefits:
It provides a check on abuses of government power by allocating a healthy balance of power between the states and the federal government (Gregory);
It harmonizes access to resources while providing administrative decentralization;
It allows local governments to govern issues where there is enough variance between states to preclude a national approach;
It provides for states to experiment with new programs or policies; and
It increases the accountability of elected officials.
Where Does the Federalism Concept Come From?
Federalism refers to the dual sovereignty that federal and state governments have over their citizens. The U.S. Constitution provides for federalism in several places:
The Tenth Amendment provides that “powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.”
The Supremacy Clause in Article VI states federal law is superior to state law.
The Commerce Clause in Article I grants Congress the authority to legislate on matters concerning interstate commerce. The U.S. Supreme Court has held that Congress has authority to regulate purely intrastate economic activities that substantially affect interstate commerce in the aggregate (United States v. Lopez, 514 U.S. 549 (1995)).
The Fourteenth Amendment also grants Congress the power to enforce that Amendment’s guarantees against the states through the enactment of appropriate legislation to prevent states from depriving people of their constitutional rights. (Note: Claimants in the Shen v. Simpson case discussed below make Fourteenth Amendment arguments against the Florida law that is barring their transaction.)
The Necessary and Proper Clause augments Congress’ enumerated powers by allowing the federal government to enact appropriate laws that are plainly adapted to achieve a legitimate end within its enumerated powers, like national security.
Related to countries of concern, it is currently unclear whether the power to regulate these types of transactions falls within federal or state law. With no federal laws currently enacted, states have enacted their own legislation.
Federal Laws and Regulations Related to Countries of Concern
Legislative Action
Congress could use its power to regulate foreign commerce by enacting legislation that preempts state law regulating transactions with foreign entities in the United States. Several Congressional bills are pending:
Currently, no federal law comprehensively regulates such transactions. However, the President has historically taken action through Executive Order, such as establishing an interagency committee.
Committee on Foreign Investment in the United States
The Committee on Foreign Investment in the United States (CFIUS) was established in 1975 under Executive Order 11858 and is given statutory authority from Section 721 of the Defense Production Act, as amended and codified in 50 USC 4565. The Committee is chaired by the Secretary of the Treasury and consists of 11 regular members. This interagency committee serves the President by reviewing foreign investments in the United States that may pose national security risks. The Committee can review any foreign investment transaction that falls within its statutory realm.
When CFIUS determines that a transaction poses a sufficient national security risk, it can impose mitigation measures and make recommendations to the President on whether to prohibit or suspend the transaction. The President has ultimate authority to prohibit or suspend a covered transaction if he or she finds there is credible evidence that the transaction would threaten to impair national security and that other laws do not provide adequate and appropriate authority to protect the United States.
Presidents have used this authority to prohibit planned transactions and to require parties to divest or unwind completed transactions. Since CFIUS’ formation, the President has prohibited seven transactions:
MAMCO Manufacturing (1990);
Four U.S. wind farm project companies (2012);
Aixtron (2016);
Lattice Semiconductor Company (2017);
Qualcomm (2018);
StayNTouch (2020); and
Musical.ly (2020).
Unlike the legislative branch, the federal executive branch has issued direct policy that affects transacting with countries of concern.
Executive Action
Executive Order
The Biden Administration, on February 28, 2024, issued Executive Order 14117 on “Preventing Access to Americans’ Bulk Sensitive Personal Data and United States Government- Related Data by Countries of Concern.”
Under the Order, the U.S. Attorney General is directed to issue regulations that prohibit or otherwise restrict U.S. persons from engaging in any acquisition, holding, use, transfer, or transportation of, or dealing in, any property in which a foreign country has an interest in a transaction involving U.S. government-related data or bulk sensitive personal data.
The Order states the banning of such transactions is necessary because they may pose an unacceptable risk to the national security of the United States since the transaction may enable countries of concern to access Americans’ personal data or U.S. government-related data.
An Unlikely Pairing: State Department and Local Governments
On October 2, 2022, the U.S. Secretary of State institutionalized the State Department’s Subnational Diplomacy Unit (Unit). According to the State Department, the Unit does important work to connect foreign policy with the American people through city, state, and local leaders across the nation. The Unit’s website states that “it supports U.S. national security priorities by integrating local ideas into foreign policy and fostering connections among cities, municipalities, and communities in the United States and abroad.”
Ambassador Nina Hachigian stated her team is “supporting and encouraging U.S. local leaders to engage internationally and with the Department by providing them with capacity, guidance, and greater connectivity to cities and states.”
Even though the State Department is working to improve foreign policy collaboration on the local level, several states are addressing their perceived foreign priorities in a different manner.
State Actions
In 2024, several states enacted legislation targeting countries of concern and the relevant risks posed to their state.
Kansas
In the 2024 session, the Kansas Legislature considered three main bills related to countries of concern. H. Sub for SB 172 would have prohibited non-residential land ownership by foreign principals of countries of concern within a certain radius of all military installations in Kansas and adjacent states. H. Sub for SB 271 would have prevented all government entities in Kansas from procuring critical components used in drones made in countries of concern and would have prohibited state agencies from entering into a contract or agreement to procure final or finished goods or services from certain foreign principals. These bills were vetoed by the Governor.
HB 2711
HB 2711, as enacted, creates the Countries of Concern Divestment Act, which requires state-managed funds’ divestment from investments with countries of concern and prohibits investments and deposits with a bank or company domiciled in a country of concern. The provisions of the Act expire on July 1, 2029.
Other States
The following table is a summary of enacted country of concern legislation in 2024 by other states. A summary of bills from each state follows the table.
State
Real Property
Investing and Procurement
Data Privacy
Florida
X
Georgia
X
Idaho
X
Indiana
X
X
Louisiana
X
X
Mississippi
X
X
Maine
X
Nebraska
X
Wyoming
X
Real Property
Georgia
SB 420 prevents any nonresident alien from acquiring any possessory interest in agricultural land or land within a ten-mile radius of any military base, military installation, or military airport. The bill does not apply to residential property.
A “nonresident alien” is defined as:
A foreign government designated as a foreign adversary by the U.S. Secretary of Commerce pursuant to 15 CFR Section 7.4;
A business entity that is domiciled in a country designated as a foreign adversary; or
Any natural person who is not a U.S. citizen or legal resident, is an agent of a foreign government designated as a foreign adversary, and has been physically absent from the United States for more than 6 of the most-recent 12 months preceding the acquisition or physically absent from Georgia for more than 2 months out of the most-recent 12 months preceding the acquisition.
The nonresident alien may acquire a possessory interest as a security for indebtedness, by devise or inheritance, collection of debt, or any enforcement of a lien or claim. For those interests, the nonresident alien must dispose of the interest in one or two years, depending on the acquisition method.
Indiana
HB 1183 prevents any prohibited person from acquiring real property located in Indiana and within a ten-mile radius of a military installation. The restriction is not retroactive and is not applicable to:
Residential property;
Transactions involving an individual with a dual U.S. citizenship and citizenship in China, Iran, North Korea, Russia, or a country designated as a threat to critical infrastructure by the government, or
Any individual who is a lawful permanent resident of the United States.
A “prohibited person” is defined as:
An individual who is a citizen of a foreign adversary as defined by 15 CFR 7.4;
A business entity that is wholly owned by, or the majority of stock or other ownership interest of the business entity is held or controlled by, individuals who are citizens of a foreign adversary or directly controlled by the government of a foreign adversary or headquartered in a foreign adversary.
This definition does not include any individual who holds a dual citizenship or is a lawful permanent resident of the United States.
The bill also prevents a prohibited person from acquiring or leasing any agricultural land in Indiana. The prohibition does not apply to:
Agricultural land that has not had agricultural activity in the last five years unless recognized by the U.S. Department of Agriculture’s Farm Service Agency as farmland; or
Renewal of agricultural land lease that is in place prior to July 1, 2024, if the acreage and description of the agricultural land subject to the lease does not change.
The bill requires the Indiana Attorney General to investigate an alleged violation and authorizes the Attorney General to issue subpoenas. Violation of the act requires divestiture of the property. Divestiture proceeds will be used to pay for costs of receivership and sale, to lienholders in priority, with any remaining proceeds being transferred to the state general fund.
Louisiana
HB 238, on and after August 1, 2024, will prohibit foreign adversaries from acquiring any interest in agricultural land. A foreign adversary is a foreign nongovernment person or foreign government identified as a foreign adversary pursuant to 15 CFR 7.4, including the People’s Republic of China and the Hong Kong Special Administrative Region, Republic of Cuba, Islamic Republic of Iran, Democratic People’s Republic of Korea, Russian Federation, and Venezuela under the leadership of Nicolas Maduro. A “prohibited foreign actor” means a business entity in which a foreign adversary has a controlling interest.
This bill does not apply to:
Legal permanent residents with a lawful presence in the United States;
Entities if the property right is guaranteed by a treaty of the person’s country of origin that affords certain real estate rights to U.S. citizens;
A title to agricultural land if held as a security to indebtedness or real estate acquired upon collection of a debt;
A foreign business entity that is a religious, educational, charitable, or scientific corporation; or
Inherited land, or land received by such foreign business entity as payment for a debt, if sold or transferred within five years.
Violation of the act will require divestiture of the property within one year. If not divested, the entity is subject to a civil penalty of $50,000. The Louisiana Attorney General will have the authority to bring injunctive relief to enjoin a sale or lease prior to the transfer of the property. The Attorney General may investigate a transaction if the Attorney General believes it to be in the public interest to ascertain whether a foreign adversary or prohibited foreign actor is attempting to enter into a transaction.
Mississippi
SB 2519, the Mississippi Foreign Land Ownership Act, places certain restrictions on certain types of land purchases, including, forestry, agricultural, industrial, and residential purposes made by a nonresident alien. A “nonresident alien” includes:
An individual domiciled in a country who is designated as a foreign adversary by the U.S. Secretary of Commerce and is neither a U.S. citizen nor a resident of the United States;
A business entity that is domiciled in a foreign adversary or domiciled within the United States but is wholly or majority owned by any entity domiciled in a foreign adversary, with certain exceptions; or
A foreign adversary designated by the U.S. Secretary of Commerce.
The bill provides certain exceptions to land acquired by nonresident aliens to secure a debt, enforce a payment, or through inheritance.
Wyoming
SF 77 requires the Wyoming Office of Homeland Security to investigate any conveyances, leases, and leasehold interest within or near critical infrastructure as to whether the interest may result in a threat to national or state security, and whether the interest holder involves a foreign government or foreign nongovernment person determined to a foreign adversary as specified in 15 CFR 7.4 or as a state sponsor of terrorism as designated by the U.S. Secretary of State under the federal Export Administration Act of 1979, the Foreign Assistance Act of 1961, the Arms Export Control Act, or any other provision of federal law.
Investing & Procurement
Florida
HB 1363 prohibits governmental entities from knowingly entering into or renewing contracts to procure school bus infraction detection systems, speed detection systems, traffic infraction detectors, or any other camera system used to enforce traffic restrictions if the vendor is owned by, or has a controlling interest held by, the government of a foreign country of concern.
Indiana
HB 1160 prohibits commercial litigation financing that is directly or indirectly financed by a foreign entity of concern. A “foreign entity of concern” means a partnership, association, corporation, organization, or other combination of persons that is:
Organized or incorporated in a foreign country of concern;
Owned or controlled by the government, a political subdivision, or a political party of a country of concern; or
Owned, organized, or controlled by or affiliated with a foreign organization that has been placed on the federal Office of Foreign Assets Control Specially Designated Nationals and Blocked Persons List or designated by the U.S. Secretary of State as a foreign terrorist organization.
The bill defines a “foreign country of concern” as a foreign government listed in 15 CFR 7.4 or designated as a threat to critical infrastructure by the governor.
Louisiana
SB 355 limits third-party litigation agreements and mandates certain reporting involving foreign entities. The bill defines a “foreign entity” as an entity owned or controlled by the government of a foreign country of concern or a combination of persons organized under the law of or having its principal place of business in a foreign country of concern. A “foreign country of concern” means a foreign government listed in 15 CFR 7.4, including any agency or other entity of significant control of such foreign country of concern.
Maine
SP 374 prohibits contracting, using, or purchasing information or communications technology or services with foreign adversary business entities.
The bill defines a “foreign adversary business entity” as any entity engaged in commerce organized under the laws or rules of a foreign adversary, owned or controlled by a foreign adversary, or domiciled within the geographic borders of a foreign adversary.
A “foreign adversary” means a foreign government or nongovernment person pursuant to 15 CFR 7.4. The bill requires a person submitting a bid or proposal for contract with the state for goods or services to certify the person is not a foreign adversary business entity.
Nebraska
LB 1300 creates the Foreign Adversary Contracting Prohibition Act. It prevents public entities from entering into any contract or renewal with a scrutinized company for any technology-related product or service, or whose funds transfer would go to a scrutinized company.
The bill defines a “scrutinized company” as any business entity or association, including subsidiaries, affiliates, or other business association:
Organized under the laws of, or having its principal place of business in, a foreign adversary;
Company owned or operated by the government of a foreign adversary; or
Any company that sells to a public entity a technology-related product or service that originates with a company described above without incorporating that product or service into another final product of service.
The bill defines “foreign adversary” as determined pursuant to 15 CFR 7.4.
LB 1370 requires any electric generation facility within a ten-mile radius of a military installation to certify that no materials, electronics, or other components are manufactured by any foreign government or foreign nongovernment person determined to be a foreign adversary pursuant to 15 CFR 7.4.
Data Privacy
Idaho
HB 670 states that it intends to protect the genomic data of Idaho residents from companies from adversary countries. The bill prevents medical and research facilities from using genetic sequences or operational or research software used for genetic analysis if the final product is produced in or by a foreign adversary, or an entity owned by, domiciled in, or affiliated with a foreign adversary.
The bill defines a “foreign adversary” as any agent or other entity under significant control of the following:
People’s Republic of China;
Russian Federation;
Islamic Republic of Iran;
Democratic People’s Republic of Korea (North Korea);
Venezuelan regime of Nicolas Maduro; and
Syrian Arab Republic.
Judicial Review of State Actions
Even though several state bills have been enacted in 2024, these and prior laws have been challenged in federal court. At least one bill is the subject of a case that is pending a decision by a District Court of Appeals.
Shen v. Simpson (N.D. Fla. 2023)
In 2023, two Chinese nationals filed suit to challenge a Florida law that generally prohibits non-citizens domiciled in China or other countries of concern from acquiring any interest in real property in the state. The law provides limited exceptions for the purchase of one residential property that is not on or within five miles of any military installation in the state.
The plaintiffs sought injunctive relief on the basis the law violated the Equal Protection and Due Process clauses, the Fair Housing Act, and the Supremacy Clause. The district judge denied the relief and the plaintiffs appealed to the 11th Circuit Court of Appeals.
A panel of 11th Circuit Court of Appeals judges granted in part the injunctive relief. The Court determined the appellants were likely to succeed on their claim that the Florida law is preempted by federal law, specifically 50 USC 4565, known as the Foreign Investment Risk Review Modernization Act of 2018. One of the judges issued a concurring opinion stating the appellants should also have the relief granted because the Florida law violates the Equal Protection Clause.
The Court heard oral arguments in April 2024 and is expected to issue an opinion on the merits of the case at a later date.
Kansas Fiscal Facts includes information on the Kansas state budget. It is intended to inform legislators and others, particularly those without budget experience, by providing basic budgetary facts.
Information contained in this document reflects expenditures approved by the 2024 Legislature for state fiscal year 2025 (July 1, 2024–June 30, 2025). Comparison information to prior years is also included.
FY 2024 data reflect estimates as approved by the Legislature and will differ from actual expenditures.
Information contained in the Overview section and in the Budget Detail by Function of Government section reflects amounts approved by the 2024 Legislature.
The opening section of the document provides an overview of the state budget, including descriptive information on the approved budget, trends data, state personnel, and state revenues.
Following the overview, detailed information is provided for each of the six functions of government, including approved levels of expenditures and staffing for each state agency. Budget highlights from the 2024 Session are included for each function of government, as is other descriptive information.
A glossary of selected budget terms is included at the end of this document. A list of legislative fiscal analyst assignments is also included, should there be a need for additional information regarding a particular agency budget.
The reader is encouraged to keep this document as a handy reference tool. Suggestions for improvements are always welcome.
This publication includes summaries of the legislation enacted by the 2024 Legislature. Not summarized are bills of a limited, local, technical, clarifying, or repealing nature, and bills that were vetoed (sustained). However, these bills are listed beginning on page 366.
During the 2024 Session, 605 bills were introduced: 233 in the Senate and 372 in the House. In addition, 284 Senate bills and 371 House bills were carried over from the 2023 Session, for a grand total of 1,260 bills that were alive during the 2024 Session. Of these 1,260 bills, 111 (8.8 percent) became law: 47 Senate bills and 64 House bills. Further, of the 111 bills that became law, 103 (92.8 percent) were introduced by committees and 8 (7.2 percent) were introduced by individual legislators.
The Governor vetoed 21 bills and 44 line items in appropriations bills. Fourteen of the bill vetoes and 37 line item vetoes were sustained. No bills will be carried over to the 2025 Session of the Legislature.
Note: A separate summary of legislation for the special session of the 2024 Legislature is appended to this publication.
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