Committee advances technical hearing on pooled-collateral method to secure public deposits

The committee opened a hearing on House Bill 2152, which would authorize a public-money pooled method for securing governmental deposits, adjust statutes governing municipal investments and reporting, and make changes to the pooled money investment board (PMIB) bank certificate-of-deposit program.

Committee advisor Eileen summarized the bill as creating a pooled-securities method that would let financial institutions secure the uninsured portion of governmental deposits by maintaining an aggregate market-value pool of securities equal to at least 102% of uninsured public deposits. Sections 1 through 3 were described as effective January 1, 2026; the bill would authorize the state treasurer to adopt rules to administer the pooled method and to designate a third-party administrator if appropriate.

Under the bill summary, an administrator would calculate the uninsured public monies for each governmental unit and determine the market value of the pooled securities daily; governmental units would have 10 business days to verify an administrator's determination. If a participating institution defaulted, the administrator would repay governmental units from the pool and prorate proceeds if the pool were insufficient. The bill, as explained to the committee, would also allow governmental units to request reports that list the securities in a pool and identify the amounts that are uninsured.

Other provisions summarized in testimony would: prohibit an investment adviser who executes bids for public monies from engaging in certain principal transactions tied to the same securities; require additional disclosures and annual reporting (including a list of financial institutions from which bids were requested); and amend KSA sections governing municipal investment pools and the PMIB bank CD program.

Alex Orel of the Kansas Bankers Association said the measure would "modernize, streamline and provide the necessary flexibility" to reinvest state and local tax dollars in Kansas and argued local reinvestment could generate additional loans and tax revenue for communities. Treasurer Steven Johnson told the committee many states use collateral pools and that the change would allow more efficient collateral management; he said the statute gives latitude about whether the treasury's office would administer the pool directly or contract with a third party.

Committee staff highlighted statute changes described in the bill brief: amendments to KSA 9-14-02 to update the term "governmental unit," changes to KSA 12-16-75 and KSA 12-16-77 (a and b) to permit the pooled method and to require certain certifications and reporting, and proposed adjustments to KSA 75-42-37 about the PMIB bank CD program. The brief also noted the bill would require the PMIB to report annually to the legislature on governmental units approved to participate.

On technical points, Eileen told the panel sections 1— would take effect January 1, 2026, while sections 4—10 would become effective July 1 of the stated year. The committee discussion noted implementation details remain to be decided, including whether the State Treasurer will serve as administrator or whether a third-party administrator will be designated; how daily accounting and verification will be run; how reports will be formatted; and whether any existing local practices would need additional resources.

No opponents were registered in committee testimony shown to members; multiple industry groups and local-government associations were listed as proponents and collaborators in drafting. The chair kept the record open and carried the hearing to the next committee date for detailed review; Treasurer Johnson said he would make himself available for follow-up on Monday.

Key technical details reflected in testimony: the pooled securities method would secure public funds above FDIC limits (the testimony described the pool as sized to at least 102% of uninsured deposits), the administrator would provide daily accounting and an itemized listing of securities on request, governmental units would have 10 business days to verify an administrator's determination, and the bill would impose enhanced reporting and certification requirements for investment activity. Testimony also described a change to the PMIB bank CD program that would cap state money placed in any single bank under the CD program; the hearing record used conflicting phrases about the cap (the transcript noted "2% 2.5%" in sequence), and the committee directed staff to clarify the intended numeric cap in follow-up materials.

The committee did not vote on HB 2152 and scheduled continuation of the hearing for an upcoming meeting to consider technical questions and receive supplementary materials from the treasurer and other stakeholders.