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2019ANNUAL REPORTto theKANSAS LEGISLATURESubmitted by the Honorable Kansas State Treasurer Jake LaTurner900 SW Jackson, Suite 201 Topeka, KS 66612 kansasstatetreasurer.com
Dear Governor Kelly, members of the Kansas Legislature, and fellow Kansans,I’m honored to present you with the 2019 Annual Report for the Kansas State Treasurer’s Office.This has been another exceptional year of growth and outreach with the addition of newinnovative ideas for carrying out our responsibilities as the state bank of Kansas. We proudlycelebrated the success of a second record-breaking year for returning unclaimed property tothe people of Kansas. In addition, we have been hard at work educating more Kansans with theseveral options we offer to help them save for their future. In this report you will find summariesof the functions of our office and a brief review of each department’s activities during the 2019fiscal year.Statewide outreach through our in-house developed website, state fair presentations, televisedweb events, and expansive social media campaigns have helped our Unclaimed Property Divisionreturn millions of dollars to Kansans every month. We have continued to see growth in theLearning Quest 529 Education Savings Program thanks to a number of marketing efforts as wellas outreach across the state. We began a partnership with city and county treasurer’s officesacross the state to encourage more businesses to retrieve their unclaimed property. Finally, wehave added a new aspect to our efforts at encouraging better financial literacy for our youth bypromoting the development of bank branches inside of Kansas high schools.As we start the New Year, we are excited to continue educating Kansans about ways they canbe better prepared financially as well as helping their children acheive their future financialgoals. We have also made it a goal to break the record in 2020 for unclaimed property returnsby continuing to find more ways to let Kansans know about our free search option and the easeof claiming their money.The information in this report highlights the important services the State Treasurer’s Office isproviding to the people of Kansas. I am very pleased with the progress that we have madein 2019 and look forward to sharing with you our 2019 Annual Report for the Kansas StateTreasurer’s Office.2 2019 STATE TREASURER’S OFFICE ANNUAL REPORT
TABLE OF CONTENTSMessage from the Treasurer. 2Table of Contents. 3Learning Quest. 4KIDS Program. 4ABLE Savings Program. 5Bond Services. 6Unclaimed Property. 7Outreach Initiatives. 8Cash Management. 9Kansas Agricultural Loan Program. 10Kansas Housing Loan Development Program. 10Aid to Local Units of Government. 11Financial Literacy. 123 2019 STATE TREASURER’S OFFICE ANNUAL REPORT
Learning Quest 529 Savings PlanThis savings program includes three plans undersection 529 of the I.R.S. Code: Learning Quest,Learning Quest Advisor, and the Schwab 529. Ourcontract for the program with American CenturyInvestments, Inc. currently runs through June 30,2025.an increase of 2.7 percent over FY2018.Total StatisticsThis was the 13th year for the K.I.D.S. MatchingGrant Program in which investors with ahousehold income below 200 percent of thefederal poverty level may receive a matchingcontribution of up to 600 per beneficiarybased on theircontributions totheir Learning Questaccounts. (Example:A family of four withan income less than 51,500 was eligibleto participate in2018.) Accountowners must reapplyeach year, and theprogram currentlyhas up to 1,200spaces.Assets under management in the program asof November 30, 2019, rose to 7.21 billion.The total number of active accounts increasedby 5.0 percent toa total of 242,403accounts. Dollarscontributed to theprogram increased by 730 million, a 10.24percent increase overFY2018, continuingthe trend of growthin contributions afterseeing a decreasein contributions inFY2016.Kansas SpecificStatisticsKansas Investments Developing Scholars(K.I.D.S.) Matching Grant ProgramJake presenting a Learning Quest contribution of 1,529to the winner of the Royals Learning Quest Sweepstakesat Kaufman Stadium.The total assets inKansas accounts as of November 30, 2019, rose to 1.25 billion. The number of accounts owned byKansans increased in FY2019 by 1.8 percent to atotal of 69,325 accounts. Kansans contributed justover 115.72 million to these accounts in FY2019,4 2019 STATE TREASURER’S OFFICE ANNUAL REPORTIn FY2019,participationincreased by 47participants and 3.78% in contributions for atotal of 393,166. Just over 4.5 million hasbeen contributed to accounts for studentsparticipating in the K.I.D.S. Matching GrantProgram since it’s inception.
ABLE SAVINGS PROGRAMIn 2015 the ABLE Act (Achieving a Better Life Experience) became law in Kansas. As stated in K.S.A. 75-651 “Thepurpose of the Kansas ABLE savings program is to authorize the establishment of savings accounts empoweringindividuals with a disability and their families to save private funds to support the individual with a disability and to provide guidelines for the maintenance of such accounts.” ABLE Savings Accounts were created byFederal legislation that modeled the accounts after 529 Higher Education Savings Accounts. Contributions intoABLE accounts are made on an after-tax basis and funds within the account grow tax-deferred and are tax-freeif used for qualified disability related expenses.The State Treasurer administers the Kansas ABLE Savings Program. In 2015 Kansas began working with a consortium of nine other states to build a multi-state ABLE savings program. As of December 2019, the NationalABLE alliance has expanded to 17 states. The consortium, which is known as the “National ABLE Alliance,”helps connect the program with vendors who provide ABLE account maintenance, investment options, marketing tools and a customer service center. Through the National ABLE Alliance, Kansas currently contracts withAscensus, LLC for these services, with a five-year contract ending in 2020 with the option to extend up to anadditional five years.The Kansas ABLE Savings Program began enrollment on January 26, 2017. Enrollees can choose between sixdifferent investments options and/or an FDIC insured checking account which is accompanied with an ABLEdebit card.The marketing efforts for ABLE remain very targeted. Social media has been one of the most effective ways topromote the Kansas ABLE Savings Program over the past year. Along with social media, community involvement and coordinated awareness efforts with various advocacy groups within the disability community continue to play an important role in increasing awareness of the program.As of December 2019: There are 530 “active” KansasABLE accounts 3,016,741.79 assets undermanagement (AUM) The average Kansas ABLE balance 5,691.97Continued marketing efforts areplanned for 2020 to bring awareness to this valuable savings program with the hope of increasingthe number of accounts openedover the next calendar year.5 2019 STATE TREASURER’S OFFICE ANNUAL REPORT
MUNICIPAL BOND SERVICES PROGRAMThe Municipal Bond Services Program is responsiblefor the registration of all municipal bonds andtemporary notes issued in Kansas. This program alsoprovides registrar and transfer agent services for themajority of all local and state municipal bond issuesincluding bonds authorized by the Kansas Departmentof Transportation and by the Kansas DevelopmentFinance Authority.As registrar and transfer agent for outstandingmunicipal bond issues in Kansas, the State Treasurermaintains and services 2,327 registered bonds andtemporary notes, and 3 bearer bond issues. The StateTreasurer was named paying agent on 93 percent ofthe 164 new issues that were recorded during thefiscal year. In addition, the State Treasurer was namedpaying agent on 73 percent of the 56 temporary noteissues that were recorded. The total principal amountoutstanding on bonds and temporary notes as of June6 2019 STATE TREASURER’S OFFICE ANNUAL REPORT30, 2019 was in excess of 18.9 billion.When the State Treasurer is named as paying agent,the Bond Services Department collects principal andinterest amounts from the respective municipalities inadvance of maturities to ensure timely payments onthe bond issue. For providing the paying agent service,a fee is charged to the issuing municipality for theservices provided. Under current law, K.S.A. 10-506,K.S.A. 10-603 and K.S.A. 10-627, as amended July 1,2000, amounts are received and deposited in the statetreasury and credited to the Bond Services Fee Fund.The State Treasurer is also authorized to charge andcollect fees for the registration of bonds for whichthe State Treasurer is not the paying agent. Thesefees are credited to the Bond Services Fee Fund andboth are used to support the program. The BondServices Department is completely funded by thesefees. Total fees collected and credited to the BondServices Fee Fund in FY2019 were 484,942. Thepayments collected for all bond issues serviced were 2.9 billion in FY2019. The Bond Services Departmenthas established a level of performance that comparesfavorably with that of other transfer and payingagents. The Bond Department also boasts prompt andaccurate processing that leads to timely payments.
UNCLAIMED PROPERTYThe Unclaimed Property Division has one of themost rewarding missions in the state: returningunclaimed property to its rightful owners orheirs, the people of Kansas. After a period ofdormancy, a reporting business (also known as aholder) must remit specified types of abandonedpersonal property to the State Treasurer, who thenbecomes custodian in perpetuity. This upholds theright of the original owner or heirs to claim theproperty. The State Treasurer maintains a balancein the Unclaimed Property Claims Fund to payapproved claims. A balance is also maintained in theUnclaimed Property Expense Fund to operate theprogram.Some commonforms of abandonedproperty include: safedeposit box contents,bank accounts, sharesof stock, dividends,mineral royalties,certified checks,drafts or moneyorders, insurancepolicy payouts, utilitydeposits, propertydistributable during the voluntary closure ofbusiness associations, court deposits, funds frompublic agencies, and miscellaneous intangibleproperty held by one party for another.PROPERTY RECEIVED FROM HOLDERSAll property that meets statutory requirements forpresumption of abandonment must be reportedand remitted to the State Treasurer along withthe last known contact information for theowner. Any properties valued below 100 maybe combined into one lump sum and turned in tothe State Treasurer as aggregate. Holders have 4efficient, business-friendly options to file reports;7 2019 STATE TREASURER’S OFFICE ANNUAL REPORTuploading file to our secure server, electronicallyon diskettes or CD/DVD, or through writtenreports that are hand-entered into the system byunclaimed property staff. Holders also have theoption to use private vendor software to prepareand file reports. This unclaimed property datais stored and processed on a secure web-basedsystem. All properties valued 5.00 and up arelisted on the treasurer’s website, where ownersand heirs claiming an interest in a property maythen file a claim with the State Treasurer. TheUnclaimed Property Division reviews the claims forappropriateness, ensuring each claim is paid outonly to verified owners or heirs of the property.In FY2019, theUnclaimed PropertyProgram had anotherexceptional yearreturning property tothe people of Kansas.The UnclaimedProperty Divisionreceived over 47.9million in unclaimedproperty funds fromholders. A portionof this amountresulted from the sale of stock received in an earlieryear, as required by law. The amount of unclaimedproperty returned to its rightful owners exceeded 27.5 million in money and stock. That means morethan 57 percent of the value of property taken induring FY2019 was paid out to rightful owners apercentage far exceeding most states.
UNCLAIMED PROPERTY (Continued)OUTREACH INITIATIVESThe principal mission for the Unclaimed Property Division is to return property to its rightful owners.The newly updated website continues to be the most widely used outreach tool for the department.The public may go online and use a simple search function to find out if their name is on theunclaimed property list. Approved online claims allow the claimant to receive their payment muchfaster, usually less than one week from the date the claim was approved. In 2018, the option torequest payment by way of Direct Deposit was added to the claims process, increasing internalefficiencies and decreasing payment wait time for owners. Increased social media presence is alsoan effective outreach method.Unclaimed Property staff members proactively search for property owners. As new property isreported, staff members begin searching for owners, as time allows, using a variety of methods, mainlyaddress verification software or websites that provide current contact information for individuals.They attempt to make contact with the owner or theheirs and deliver a claim packet to them. While thismay seem like a tedious process, it actually producesa higher percentage of valid claims than some of themore visible outreach efforts.Thanks to law passed in 2013, the State Treasurer’sOffice continues to use Kansas claimant’s state-issueddriver’s license or identification card to validate theperson’s identity.In September 2019, the State Treasurer’s Officemaintained a booth at the Kansas State Fair. 56,206 searches were generated from this event alonefor a total amount of over 1,150,557 in potential claims.One of the most effective forms of outreach is the Treasurer himself. Treasurer LaTurner routinelymakes unclaimed property a focus as he travels throughout the state. This year, Treasurer LaTurnerinitiated a new outreach effort called “Bucks Back to Business”, which involves a more specific focuson engaging county treasurers and city and county Chambers of Commerce in assisting with outreachto businesses in their area that have unclaimed property. Treasurer LaTurner regularly visits countytreasurers and provides them with the most up to date unclaimed property list for their counties tohelp with this outreach. In addition, he speaks with a wide variety of groups around the state, alwayspromoting the Unclaimed Property Program.The Kansas State Treasurer’s Office continues to operate one of the most innovative UnclaimedProperty Divisions in the nation. It remains our goal to find new ways to quickly and efficientlyreturn unclaimed property to its rightful place with the people of Kansas.8 2019 STATE TREASURER’S OFFICE ANNUAL REPORT
CASH MANAGEMENT PROGRAMThe Cash Management Program serves as the state’sbank - recording and depositing all state receiptsand accurately accounting all disbursements madethrough the payment process. This program servesas ‘collateral custodian’ for the Pooled MoneyInvestment Board (PMIB), administers two linkeddeposit programs, distributes designated taxes to localunits of government, disburses license plate royaltyfees, distributes through the Aid-to- Local Units ofGovernment programs, receives County taxes, andreceives the district and municipal court fees.In an effort to ensure all processes are as efficient aspossible, we strongly encourage the use of electronictechnologies whenever possible. In FY 2019, 95% ofthe state’s receipt dollars were received electronicallyand 94% of the state’s disbursement dollars wereprocessed electronically. All checks received bystate agencies are scanned, balanced, and thenelectronically deposited with our contract bank.The number of checks paid by the State continued todecrease – from 689,215 in FY 2018 to 621,181 in fiscalyear 2019. Much progress has been made in moving toelectronic processing of receipts and disbursements,and we continue to work with all suppliers and stateagencies to encourage the use of electronic methods.To assist district and municipal courts and countytreasurers in reporting and remitting specific fees andtaxes to the state, the Treasurer’s Office developedand has enhanced an on-line reporting tool. TheACH payment option provides entities an efficientelectronic payment method. This system has reducedthe amount of paper and postage costs incurred bythe Judiciary and County Treasurers. We continue towork to make this system as efficient as possible forour partners.The Cash Management Program must ensure that themoney deposited in any Kansas bank is secured eitherby FDIC insurance or by an approved collateral type.9 2019 STATE TREASURER’S OFFICE ANNUAL REPORTWeekly, the PMIB places available cash with Kansasbanks in the form of Certificates of Deposit. The valueof the CD and the value of the pledged collateral istracked on a special software application called “TheVAULT”. The collateral is priced weekly by the State’scontract bank and all changes in pledged collateralare monitored to make sure the State’s funds are fullyprotected according to statute.The Cash Management Program is also chargedwith monitoring and improving the State’s cashmanagement practices. Each day the State’s pooledcash position is calculated and reported to the PMIB.The available monies are then invested by PMIBaccording to statute.We provide cash concentration service to severalagencies; Department of Children and Families,Department of Corrections, and Department ofWildlife, Parks and Tourism. At the direction of theirfiscal staff, we bring excess dollars from their feeaccounts into the State’s investment pool, maximizingthe cash availability and investment earnings.Working with the Department of Revenue, theTreasurer’s Office facilitates the return of taxes andfees to local entities: Sales Tax, Compensating Use Tax,Transient Guest Tax, Liquor Tax, Vehicle Excise Taxes,Distinctive License Plate Royalty Fees, CommunityDevelopment District Tax, etc.Cash Management serves as escrow agent for statemoney designated for STAR Bonds and EconomicRevitalization. At the end of 2019, there were thirteenactive STAR Bond projects and two Special EconomicRevitalization programs. These had a combined balanceof 40.1 million. The program balances are monitoredand the money distributed to the designated bondpaying agent as required by the bond documents.As the State’s bank, we continue to work with agencies
CASH MANAGEMENT PROGRAM (Continued)to make sure the state’s resources are used in themost efficient manner and to the greatest benefit ofthe State.KANSAS AGRICULTURAL PRODUCTION PROGRAMThe Agricultural Production Loan Deposit Program,has been administered by the Treasurer’s Officesince it was created by the 2000 Legislature. This is acooperative program with Kansas banks. The programis a method to assist agricultural borrowers with highdebit-to-asset ratios and/or whose lenders might n
section 529 of the I.R.S. Code: Learning Quest, Learning Quest Advisor, and the Schwab 529. Our contract for the program with American Century Investments, Inc. currently runs through June 30, 2025. Total Statistics Assets under management in the program as of November 30, 2019, rose to 7.
