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Sedgwick County staff weigh opposition to Kansas bill that would centralize collateral for municipal deposits
Summary
County officials discussed a proposed Kansas bill that would create a centralized collateral pool for public deposits, heard concerns about potential lower returns for local governments and agreed to coordinate testimony to the state committee.
Sedgwick County officials discussed a proposed Kansas bill that would centralize collateral for public deposits and considered filing opposition testimony with the Kansas Senate Committee on Financial Institutions and Pensions.
The discussion centered on a provision to create a centralized collateral pool monitored by the state treasury rather than having each county or local government accept pledged collateral from individual banks. An unidentified staff member said, "they think that the focus of this is more on the collateralization because our deposits are collateralized if they exceed FDIC insurance limits. And they wanna create a centralized collateral pool ... and I'm not sure how that would work, but it would kinda shift that to the state treasury to monitor that." The staff member added that the county’s concern is that centralization could require accepting lower interest rates in exchange for giving local banks less preferential treatment.
Why it matters: County officials noted that state law currently gives local banks a first look for county deposits, a practice many counties follow to keep public funds local. County staff warned centralizing collateral could undercut that local preference and lower returns on invested public funds. An unidentified board member asked about investment maturities; a staff member replied the county can invest for up to a four-year maturity under current practice.
County staff discussed timing and tactics for responding to the bill. An unidentified staff member said the committee hearing was scheduled for Monday and that Jason had already spoken to Nick Hoheisel, who chairs the Senate committee. The staff member said Johnson County had already provided written testimony and planned to testify orally. An unidentified board member said the county would "circle the wagons and probably get that done," indicating staff would coordinate a response and submit testimony, either in writing or by email, to the committee.
During the discussion, staff offered to distribute regular investment reports. The board was told the quarterly investment report for Q4 is prepared by David Florida, the county’s investment manager, and that a summary and the full report could be circulated to commissioners who want the detailed information.
Other legislative updates mentioned at the meeting included two Kansas Senate bills that had already passed the Senate. An unidentified staff member reported that Senate Bill 35, which eliminates a 1.5 mill levy for state educational and institutional buildings, had passed, and that Senate Bill 10, which would exempt certain recreational vehicles and trailers from property tax, had also passed. The staff member said county appraisers supported SB10 as a cost- and efficiency-improving measure. The staff member also noted there had been no movement on a separate measure to cap increases at 3 percent.
No formal vote was taken during the discussion. County staff said they would prepare testimony and coordinate with other counties and stakeholders ahead of the committee hearing.
Sedgwick County commissioners and staff may revisit the issue if the bill advances or if additional state guidance is provided.
