262 Kan. 635
(941 P2d 1321)
No. 76,524
KANSAS PUBLIC EMPLOYEES RETIREMENT SYSTEM, Appellee, v. REIMER & KOGER ASSOCIATES, INC., et al., Appellants.
SYLLABUS BY THE COURT
1. Under the Kansas Public Employees Retirement System (KPERS), benefits payable to retired or disabled employees or their beneficiaries are contractual obligations of the State of Kansas.
2. As KPERS is a classic "defined benefit" retirement plan, the State of Kansas and the numerous public entities whose employees are subject to the plan have an unequivocal constitutional, statutory, and contractual obligation to ensure that KPERS has sufficient funds to pay the required benefits to public employees who are participating in the plan.
3. The beneficiaries of KPERS's investment activities are not KPERS members and beneficiaries, but rather Kansas taxpayers and the taxpayers of hundreds of public entities throughout the state who provide retirement plans to their employees through KPERS provisions. As such, KPERS's investment function is primarily for the advantage of the state as a whole.
4. A statute of limitations does not run against the state unless expressly so provided, and all doubts as to whether it shall run are to be resolved in favor of the state.
5. K.S.A. 60-521 subjects the claims of governmental entities arising from proprietary functions to the general statutes of limitations. However, causes of action arising out of a governmental function are not subject to any statute of limitations.
6. Governmental functions are those which are performed for the general public with respect to the common welfare for which no compensation or particular benefit is received, while proprietary functions are exercised when an enterprise is commercial in character, is usually carried on by private individuals, or is for the profit, benefit, or advantage of the governmental unit conducting an activity.
7. Governmental entities may act in both a proprietary and governmental capacity.
8. The reasons for restricting governmental immunity from suit do not support a restriction of the State's immunity from the statute of limitations. Kansas has taken a more favorable view of governmental immunity from the statute of limitations than governmental immunity from suit. The doctrine of governmental immunity from statutes of limitation has been and remains supported in modern law by the important policy that public rights and causes of action should not be lost by the acts or omissions of public officers.
9. The investment of KPERS funds is necessary to promote the public welfare generally and to satisfy the contractual obligations of the State of Kansas, the school districts, the municipalities, and the other governmental entities to their employees, through which each entity acts and functions. The public is much more than indirectly interested in the investment affairs of KPERS when it has the taxation obligation to uphold KPERS's financial integrity. KPERS investments are in fact "affairs of the state and promote the public welfare generally," thus making them governmental in nature.
10. The actions of KPERS involved in this litigation are all governmental in character, to which no statute of limitations applied until the Kansas Legislature enacted K.S.A. 60-522 in 1992.
11. Application of collateral estoppel under the unique facts of the KPERS litigation would have the effect of fostering injustice and allowing a federal court to preclude consideration of its erroneous determination of state law.
12. Federal court decisions on issues of state law are not binding on and have limited precedential effect in state courts.
13. The requirements of collateral estoppel are: (1) There must be a prior judgment on the merits which determined the rights and liabilities of the parties on the issue based upon ultimate facts as disclosed by the pleadings and judgment; (2) the parties must be the same or in privity; and (3) the issue litigated must have been determined and necessary to support the judgment.
14. The unique facts of this case warrant an exception to the application of collateral estoppel, as the doctrine should not be applied to bar relitigation of unmixed questions of law erroneously reached in a decision.
15. K.S.A. 60-522 grants all parties that may be sued by KPERS for claims arising from a governmental function a 10-year period of limitations where none had previously existed. As such, the provision does not violate the Equal Protection or Due Process Clauses of either the United States or Kansas Constitutions.
16. Statutes of limitation are measures of public policy and are entirely subject to the will of the legislature. The legislative history is clear that the 1993 Kansas Legislature intended K.S.A. 60-522 to be applied retroactively.
17. A court should not declare a statute violative of Article 2, § 16 of the Kansas Constitution unless invalidity is manifest. Legislation is valid under § 16 so long as the provisions of the bill are all germane to the subject expressed in the title. Duly enacted legislation should only be invalidated where an act embraces two or more dissimilar and discordant subjects that cannot reasonably be considered as having any legitimate connection with or relationship to each other.
18. The retroactivity amendment to K.S.A. 60-522 does not violate Article 2, § 16, of the Kansas Constitution. All of its provisions are germane to one subject, KPERS, and statutes of limitations are frequently among those "innumerable minor subjects" that are properly included in a broad and comprehensive bill.
Appeal from Shawnee district court, FRANKLIN R. THEIS, judge. Opinion filed June 27, 1997. Affirmed.
Robert L. Howard, of Foulston & Siefkin, L.L.P., of Wichita, argued the cause, and Timothy B. Mustaine, of the same firm, was with him on the briefs for appellant Fran Jabara.
Thomas P. Sullivan, of Jenner & Block, of Chicago, Illinois, argued the cause, and David P. Sanders and David A. Schwartz, of the same firm; J. Paul Oetken, of Jenner & Block, of Washington, D.C.; and Elizabeth Drill Nay, of Lewis, Rice & Fingersh, L.C., of Kansas City, Missouri, were with him on the briefs for appellants Brown, Koralchik & Fingersh; Lewis, Rice & Fingersh, L.C.; Jacob Brown; Robert J. Campbell; William E. Carr; Peter M. DiGiovanni; Jack N. Fingersh; Alan G. Keith; Charles F. Miller; C. Robert Monroe; and H. Boone Porter, III.
Anne Lamborn Baker and Thomas E. Wright, of Wright, Henson, Somers, Sebelius, Clark & Baker, L.L.P., of Topeka, were on the briefs for appellants Cohen, Brame & Smith, P.C., and Roger C. Cohen.
David J. Waxse and Timothy M. O'Brien, of Shook, Hardy & Bacon, L.L.P., of Overland Park, and John K. Villa, Mary G. Clark, and Eric A. Kuhl, of Williams & Connolly, of Washington, D.C., were on the briefs for appellants Shook, Hardy & Bacon; defendant partners of Shook, Hardy & Bacon; and Shook, Hardy & Bacon, P.C.
Karen D. Wedel and R. Frederick Walters, of Walters, Bender & Strohbehn, P.C., of Kansas City, Missouri, were on the briefs for appellants Linde Thomson Langworthy Kohn & Van Dyke, P.C., and Thomas W. Van Dyke.
Heather S. Woodson, of Stinson, Mag & Fizzell, P.C., of Overland Park, and Lawrence M. Berkowitz and John C. Aisenbrey, of the same firm of Kansas City, Missouri, were on the briefs for appellants GKB, Inc., William D. Thomas, and G. Kenneth Baum.
Gregory F. Maher and Brian G. Boos, of Yeretsky & Maher, L.L.C., of Kansas City, Missouri, and Kathleen A. Hardee, of Gilliland & Hayes, P.A., of Kansas City, Missouri, were on the briefs for appellants Reimer & Koger Associates, Inc., Kenneth H. Koger, Brent Messick, and Edward Hart.
Marc K. Erickson, of Lathrop & Gage L.C., of Overland Park, and Timothy K. McNamara, of Kansas City, Missouri, were on the brief for appellant Frank L. Victor.
Wayne T. Stratton, of Goodell, Stratton, Edmonds & Palmer, L.L.P., of Topeka; Steven D. Ruse, of Shughart, Thomson & Kilroy, P.C., of Overland Park; and R. Lawrence Ward, Russell S. Jones, Jr., and Richard M. Paul III, of Shughart, Thomson, & Kilroy, P.C., of Kansas City, Missouri, were on the briefs for appellants Blackwell Sanders Matheny Weary & Lombardi and Kutak Rock.
Frank M. Rice, of Schroer, Rice, P.A., of Topeka, argued the cause, and Gene E. Schroer and Charles D. McAtee, of the same firm; Eugene I. Pavalon and Geoffrey L. Gifford, of Pavalon & Gifford, of Chicago, Illinois; Bess Schenkier and Timothy K. McPike, of KPERS Litigation Group, of Chicago, Illinois; Robert F. Coleman, Eugene J. Schlitz, and Kenneth Philip Ross, of Robert F. Coleman & Associates, of Chicago, Illinois; and Robin R. LaFollette, James L. Ungerer, and Donald H. Loudon, Jr., of KPERS Litigation Group, of Shawnee Mission, were on the brief for appellee Kansas Public Employees Retirement System.
Thomas L. Theis, Jeffrey W. Jones, and Gregory J. Bien, of Sloan, Listrom, Eisenbarth, Sloan & Glassman, L.L.C., of Topeka, were on the brief for amicus curiae Hershberger, Patterson, Jones & Roth, L.L.C.
The opinion of the court was delivered by
LARSON, J.: These 10 combined interlocutory appeals arise out of 5 of the numerous pending cases filed by the Kansas Public Employees Retirement System (KPERS) against a number of individuals, accounting firms, and law firms to recover amounts lost in KPERS's direct placement investment programs.
The defendants filed motions for summary judgment, alleging KPERS's claims were barred by the statute of limitations. The issue submitted was limited to which, if any, statute of limitations applies to KPERS's claims arising from its investment activities.
The trial court denied the defendants' motions, holding that KPERS's investment activity is a governmental and not a proprietary function, and, as such, no statute of limitations applies. It also held that if a period of limitations did apply, K.S.A. 60-522, which established a 10-year statute of limitations on any claims brought by KPERS, applies retroactively to revive any time-barred claims. The order was certified for an interlocutory appeal and accepted pursuant to K.S.A. 60-2102(b). We have jurisdiction under K.S.A. 20-3018(c).
Factual background
The five cases from which these appeals arise are as follows:
1. In KPERS v. Reimer & Koger Assocs., Inc., 93 CV 588, KPERS sued its investment advisor, Reimer & Koger Associates, Inc., (Reimer & Koger) for about $14.2 million in losses from investments made in Tallgrass Technologies Corporation. The suit was filed on May 20, 1993, for the investment course followed by Reimer & Koger starting in 1985.
2. In KPERS v. Russell, et al., 93 CV 389, KPERS sued to recover about $7.85 million from investments made in Emblem Graphics Systems and Emblem Tape & Label Corporation (Emblem) from September 1985 to December 1988. KPERS alleged that various defendants intentionally assisted Reimer & Koger and Michael Russell, then a KPERS board member, to breach their duties to KPERS. These defendants include Frank L. Victor, a former director of a creditor of Emblem; the George K. Baum Company, Emblem's investment banking consulting service; George K. Baum and William D. Thomas, officers and directors of both Emblem and the Baum Company; Linde Thomson Langworthy Kohn & Van Dyke, a law firm alleged to have represented Emblem, KPERS, and Reimer & Koger; and Blackwell Sanders Matheny Weary & Lombardi, a law firm alleged to have been retained by Reimer & Koger to represent KPERS's interests in the Emblem transactions.
3. In KPERS v. Ward, et al., 92 CV 433A, KPERS sued to recover about $4.425 million invested in Affinity Systems, Inc., (Affinity) from November 1987 to August 1990. KPERS alleged securities fraud and participation in a breach of trust. This suit was filed in 1992, but in 1995, KPERS moved to amend its petition to add claims against other parties, including Fran Jabara, who was alleged to have been Affinity's director.
4. In KPERS v. Byrd, et al., 92 CV 923, KPERS sought to recover about $2.5 million for investments made from April 1985 to April 1987 in the Hydrogen Energy Corporation (Hydrogen). KPERS initially sued in 1992, but an amended petition filed in 1994 added as defendants the law firms of Lewis, Rice & Fingersh a/k/a Brown, Koralchik & Fingersh, and Shook, Hardy & Bacon, alleging that they had breached their duties to KPERS after being retained to represent KPERS's interests in the Hydrogen investments.
5. In KPERS v. Cohen, Brame & Smith, et al., 92 CV 805, KPERS filed suit to recover for investment losses of $6.38 million in Sharoff Food Services, Inc. (Sharoff). KPERS claimed that Cohen, Brame & Smith, a law firm representing Sharoff, issued false opinion letters, thereby participating in Reimer & Koger's breach of its duties to KPERS. KPERS amended its petition in 1996 to add claims against Kutak Rock, which allegedly represented KPERS in the Sharoff investments between April 1987 to June 1987. On February 12, 1993, the trial court ruled against Cohen, Brame & Smith's motion for summary judgment on grounds similar to the consolidated rulings of April 3, 1996, on appeal before us now. The trial court, however, on June 10, 1996, amended its order of April 3, 1996, in order to allow Cohen, Brame & Smith to join in the interlocutory appeal regarding its statute of limitations defense.
Each defendant filed summary judgment motions which essentially contended KPERS's tort and statutory claims are barred under the general statutes of limitations of K.S.A 60-512 and K.S.A. 60-513. The parties framed the issues in such a manner that the trial court was not asked to determine any question of fact as to when the claims accrued. Rather, the trial court was asked to decide whether KPERS's claims arose out of a proprietary function so that the general statute of limitations would apply pursuant to K.S.A. 60-521. Further, the court also considered the applicability and constitutionality of K.S.A. 60-522, enacted in 1992 to grant KPERS a 10-year statute of limitations and amended in 1993 "to be construed and applied retroactively."
On April 3, 1996, the trial court ruled in favor of KPERS on all questions regarding the limitations defenses. The trial court's decision reaffirmed a prior decision of August 21, 1992, in an earlier filed KPERS case, KPERS v. Reimer & Koger Assocs., Inc., et al., 91 CV 786 (Home Savings), which was removed by the Resolution Trust Corporation to the United States District Court for the Western District of Missouri. Before removal, the Kansas trial court determined KPERS's claims arose from a governmental rather than a proprietary function, so that general statutes of limitations did not apply to its claims pursuant to K.S.A. 60-521.
After removal, however, the United States District Court determined KPERS's claims in Home Savings arose out of a proprietary function. But, the newly enacted K.S.A. 60-522, which granted KPERS a 10-year statute of limitations, was held to apply to KPERS's claims, so the claims were not time barred. KPERS v. Reimer & Koger (Home Savings), 92-0922-CV-W-9, filed May 3, 1994.
On appeal, the Eighth Circuit Court of Appeals reversed, finding that K.S.A. 60-522 was not intended to apply retroactively to revive previously time-barred claims. Kansas Pub. Emp. Retirement v. Reimer & Koger (Home Savings), 61 F.3d 608, 614-16 (8th Cir. 1995). In a later appeal, the Eighth Circuit determined that KPERS's investment activities were proprietary. Kansas Pub. Emp. Retirement v. Reimer & Koger (Home Savings) (No. 96-3262, filed May 13, 1997).
Reimer & Koger was named a defendant in the Home Savings case. Two of the other defendants in the current cases below, Shook, Hardy & Bacon and Blackwell Sanders Matheny Weary & Lombardi were permitted, over KPERS's objection, to intervene in the Home Savings case while the appeal to the Eighth Circuit was pending.
Irrespective of the federal courts' Home Savings decisions, the state trial court in the present cases reaffirmed its holding from Home Savings, and then went on to analyze the impact of the subsequent enactment of K.S.A. 60-522. The court stated the statute was enacted to remove the uncertainty of applying K.S.A. 60-521 to KPERS's claims as reflected by the varying interpretations by the state and federal district courts. The court ruled that K.S.A. 60-522 applied retroactively to claims that may have been time barred and established a period of limitations that did not heretofore exist. The court held that the retroactive application of 60-522 to revive what may have been time-barred claims was not unconstitutional. The court concluded by declaring that the doctrine of collateral estoppel did not bar redetermination of these matters.
It is from these rulings that the numerous defendants in the KPERS cases appeal.
Issues presented to the court:
1. Do KPERS's claims arise out of a proprietary function so that the general statutes of limitation apply as directed by K.S.A. 60-521?
2. Is KPERS collaterally estopped from relitigating the application and interpretation of K.S.A. 60-521 and 60-522 against all defendants?
3. Is K.S.A. 60-522 unconstitutional under either the United States or the Kansas Constitutions for the following reasons?
A. Does the statute violate equal protection?
B. Does the statute violate due process?
C. Was the statute enacted in violation of the single bill subject provision of Article 2, § 16 of the Kansas Constitution?
4. Does K.S.A. 60-522 revive claims previously time barred?
5. Are any of the defendants employees of KPERS so that if KPERS's claims arise from a proprietary function, K.S.A. 60-521 would prevent the statute of limitations from applying to KPERS's claims?
Because of the result we reach, several of the issues raised are of limited applicability. However, we will consider the distinction between proprietary and governmental functions in detail and will address the collateral estoppel argument. We will treat the remaining issues somewhat summarily.
Standard of review
Although the issues were initially raised by summary judgment motions, our standard of review of such rulings is not applicable here. The parties have appealed what are clearly only questions of law without any agreed or existing factual determinations. As such, we concur with the parties' contention that these are questions of law and of statutory construction over which we have unlimited review. See T.S.I. Holdings, Inc. v. Jenkins, 260 Kan. 703, 716, 924 P.2d 1239 (1996).
Before beginning our analysis of the issues raised, which are in part based upon interpretation of the applicable statutes, we again restate certain basic rules of statutory construction set forth in Todd v. Kelly, 251 Kan. 512, 515-16, 837 P.2d 381 (1992), by which we are bound:
"Interpretation of statutes is a question of law. The function of the court is to interpret the statutes, giving the statutes the effect intended by the legislature. State ex rel. Stephan v. Kansas Racing Comm'n, 246 Kan. 708, 719, 792 P.2d 971 (1990).
'As a general rule, statutes are construed to avoid unreasonable results. Wells v. Anderson, 8 Kan. App. 2d 431, 659 P.2d 833, rev. denied 233 Kan. 1093 (1983). There is a presumption that the legislature does not intend to enact useless or meaningless legislation. In re Adoption of Baby Boy L., 231 Kan. 199, Syl. ¶ 7, 643 P.2d 168 (1982).' City of Olathe v. Board of Zoning Appeals, 10 Kan. App. 2d 218, 221, 696 P.2d 409 (1985).
'A construction of a statute should be avoided which would render the application of a statute impracticable or inconvenient, or which would require the performance of a vain, idle, or futile thing, or attempt to require the performance of an impossible act.' In re Adoption of Baby Boy L., 231 Kan. 199, Syl. ¶ 8, 643 P.2d 168 (1982). See 73 Am. Jur. 2d, Statutes § 251.
'In construing statutes, the legislative intention is to be determined from a general consideration of the entire act. Effect must be given, if possible, to the entire act and every part thereof. To this end, it is the duty of the court, as far as practicable, to reconcile the different provisions so as to make them consistent, harmonious, and sensible.' In re Marriage of Ross, 245 Kan. 591, 594, 783 P.2d 331 (1989).
'[T]he court must give effect to the legislature's intent even though words, phrases or clauses at some place in the statute must be omitted or inserted.' Ross, 245 Kan. at 594.
'In order to ascertain the legislative intent, courts are not permitted to consider only a certain isolated part or parts of an act, but are required to consider and construe together all parts thereof in pari materia. . . .' Kansas Commission on Civil Rights v. Howard, 218 Kan. 248, Syl. ¶ 2, 544 P.2d 791 (1975)."
Arguments and authorities
We begin our analysis of the first and most important issue raised, subject to the scope of review stated and the rules of construction recognized.
Governmental or proprietary function
The fundamental issue we must decide, which was almost totally ignored by the federal court decisions available to the trial court, is whether the investment activity of KPERS is a governmental function or a proprietary function.
In commencing this analysis, we begin by setting forth a brief history of KPERS and its purposes, directives, and obligations. In Shapiro v. Kansas Public Employees Retirement System, 211 Kan. 452, 455, 457, 507 P.2d 281 (1973), we recognized that KPERS was established in 1961 by K.S.A. 74-4901 et seq. and its purposes have remained unaltered to date:
"The purpose of this act is to provide an orderly means whereby employees of the participating employers who have attained retirement age as herein set forth may be retired from active service without prejudice and without inflicting a hardship upon the employees retired and to enable such employees to accumulate reserves for themselves and their dependents to provide for old age, death and termination of employment, and for the purpose of effecting economy and efficiency in the administration of governmental affairs." K.S.A. 74-4901.
Another provision of the act further states:
"There is hereby created the 'Kansas public employees retirement system' which shall be a body corporate and instrumentality of the state of Kansas. The system shall be vested with the powers and duties specified in this act and such other powers as may be necessary or proper to enable it, its officers, employees and agents to carry out fully and effectively the purposes and intent of this act." K.S.A. 74-4903.
The right to sue and be sued exists in the act pursuant to K.S.A. 1996 Supp. 74-4904(1): "The system may sue and be sued in its official name, but its trustees, officers, employees and agents shall not be personally liable for acts of the system unless such person acted with willful, wanton or fraudulent misconduct or intentionally tortious conduct."
KPERS is governed by a board of trustees as provided in K.S.A. 1996 Supp. 74-4905. Participating employers are provided for in K.S.A. 1996 Supp. 74-4910. Eligible employees are designated in K.S.A. 1996 Supp. 74-4911. The normal retirement date for a member of the system is set forth in K.S.A. 1996 Supp. 74-4914. Retirement benefits are described in K.S.A. 1996 Supp. 74-4915. Payments of accidental death benefits and accumulated contributions upon death are included in K.S.A. 1996 Supp. 74-4916. Retirement benefits options are set forth in K.S.A. 1996 Supp. 74-4918. Employer contributions to the fund are required by K.S.A. 1996 Supp. 74-4920 from the employers of all fund members. Provisions for the investment of the fund are found in K.S.A. 1996 Supp. 74-4921, which reads:
"(1) There is hereby created in the state treasury the Kansas public employees retirement fund. All employee and employer contributions shall be deposited in the state treasury to be credited to the Kansas public employees retirement fund. The fund is a trust fund and shall be used solely for the exclusive purpose of providing benefits to members and member beneficiaries and defraying reasonable expenses of administering the fund. Investment income of the fund shall be added or credited to the fund as provided by law. All benefits payable under the system, refund of contributions and overpayments, purchases or investments under the law and expenses in connection with the system unless otherwise provided by law shall be paid from the fund. . . .
"(2) The board shall have the responsibility for the management of the fund and shall discharge the board's duties with respect to the fund solely in the interests of the members and beneficiaries of the system for the exclusive purpose of providing benefits to members and such member's beneficiaries and defraying reasonable expenses of administering the fund and shall invest and reinvest moneys in the fund and acquire, retain, manage, including the exercise of any voting rights and disposal of investments of the fund within the limitations and according to the powers, duties and purposes as prescribed by this section.
"(3) Moneys in the fund shall be invested and reinvested to achieve the investment objective which is preservation of the fund to provide benefits to members and member beneficiaries, as provided by law and accordingly providing that the moneys are as productive as possible, subject to the standards set forth in this act. No moneys in the fund shall be invested or reinvested if the sole or primary investment objective is for economic development or social purposes or objectives.
"(4) In investing and reinvesting moneys in the fund and in acquiring, retaining, managing and disposing of investments of the fund, the board shall exercise the judgment, care, skill, prudence and diligence under the circumstances then prevailing, which persons of prudence, discretion and intelligence acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of like character and with like aims by diversifying the investments of the fund so as to minimize the risk of large losses, unless under the circumstances it is clearly prudent not to do so, and not in regard to speculation but in regard to the permanent disposition of similar funds, considering the probable income as well as the probable safety of their capital."
Under KPERS's statutory provisions, contributions are made by both employees and employers, but our cases have uniformly held that employees' retirement, disability, and death benefits are contractual in nature between the state and the employee members of the system. In Shapiro, 216 Kan. 353, Syl. ¶ 1, we held: "State retirement systems create contracts between the state and its employees who are members of the system." In Brazelton v. Kansas Public Employees Retirement System, 227 Kan. 443, Syl. ¶ 4, 607 P.2d 510 (1980), we stated: "Retirement benefits are a valuable part of the consideration for entering into and continuing in public service and a participating member of a governmental pension system has certain vested rights in the pension plan."
In addition, Brazelton stated:
"Public employment seldom pays as much as a comparable job in the private sector. A pension to be received upon retirement is a prime inducement in securing qualified workers and avoiding the expense of a high turnover rate. Retirement benefits are a valuable part of the consideration for entering into and continuing in public service. A member of a governmental pension system has certain vested rights in the pension plan because it is a vital part of the consideration for entering into and performing under the employment contract." 227 Kan. at 449.
It is clear that fully vested benefits payable to retired or disabled employees or their beneficiaries are contractual obligations of the State. KPERS is a classic "defined benefit" retirement plan. See K.S.A. 1996 Supp. 74-4920. The State of Kansas and the numerous public entities whose employees are subject to the plan have an unequivocal constitutional, statutory, and contractual obligation to ensure that KPERS has sufficient funds to pay the defined benefits to public employees who are participating in the plan. See Brazelton, 227 Kan. at 447-48. Additionally, K.S.A. 1996 Supp. 74-4923(a) reads: "No alteration, amendment or repeal of this act shall affect the then existing rights of members and beneficiaries but shall be effective only as to rights which would otherwise accrue under this act as a result of services rendered by an employee after the alteration, amendment or repeal." K.S.A. 1996 Supp. 74-4920(2) further directs:
"The division of the budget and the governor shall include in the budget and in the budget request for appropriations for personal services the sum required to satisfy the state's obligation under this act as certified by the board and shall present the same to the legislature for allowance and appropriation."
If the State of Kansas and involved local entities of government do not adequately fund KPERS, they would be liable for breach of contract and will have violated both the KPERS Act and the constitutional prohibition against impairment of contracts. See Article 1, § 10 of the United States Constitution.
Yet, the success or failure of KPERS' investments does not affect the employees' contributions. These contributions are fixed percentages of their salaries, entitling employees to certain defined benefits. K.S.A. 74-4919. Employee benefits could not be reduced to cover any u