Kansas Changes Pledged Fund Pool

State of Kansas Makes Changes to Pledged Fund Pool 

First Published October 2025

Beginning January 1, 2026, Kansas law will require all public entities within the state to utilize a new method for securing deposits that exceed FDIC coverage. Under House Bill 2152, governmental units such as county and city municipalities, school districts and water districts will use a new “pooled collateral method” administered through the Kansas State Treasurer’s office.

“We are taking a proactive approach to support our customers affected by the transition to the new pooled collateral program,” said Amber Groene, Union State Bank’s Directory of Treasury Services. “Our goal is to ensure a smooth transition for our customers ahead of the deadline.”

Union State Bank notified their municipal customers earlier this month of the upcoming changes. Bank staff continue to meet directly with the customers most impacted by the change and USB is working with the State Treasurer’s Office as a test bank prior to the changes taking effect.

“The bank is getting out in front of their customers to notify them of the changes,” said Brian Boyce, Assistant CFO and Chief Investment Officer for Union State Bank. “By doing so, the bank can help educate the customer of the best option for their banking needs.”

USB is awaiting final implementation guidance from the State for HB 2152, however preliminary research indicates the new law introduces several important changes impacting municipalities.

“The “first look” provision, already practiced by many Kansas municipalities will now be formally mandated,” explained Groene. “This requires entities to certify that deposits were first offered to local financial institutions within the preceding year.”

HB 2152 also allows greater flexibility in rate negotiations between the governmental unit and the financial institution, rather than requiring adherence to specific published benchmarks.

“From a customer perspective, they will still bid their funds out the way they always have,” explained Boyce. “However, the customer will no longer be in control of the pledging, as that function will be controlled by the state.”

While the bid process remains relatively unchanged, the bill will require increased compliance expectations through detailed documentation by the municipalities. Potential penalties for non-compliance include mandatory training for initial violations and civil fines of up to $500 for repeat offenses.

“Many customers may find the new administrative requirements complex and burdensome, especially smaller municipalities,” said Groene. “In contrast, IntraFi, our alternative solution, offers a streamlined, secure, and fully FDIC-insured product that eliminates the need for ongoing collateral tracking, simplifies reporting, and provides daily liquidity.”

USB staff are encouraging their customers to consider IntraFi as a preferred alternative during this transition.

“IntraFi allows customers to maintain a single banking relationship while accessing multi-million-dollar FDIC insurance coverage, ensuring peace of mind and compliance with investment policy mandates,” explains Groene. “Additionally, funds placed through IntraFi can remain local, supporting community lending and development.”

Municipal customers are invited to contact a member of the Union State Bank Treasury Services Department with questions pertaining to HB 2152, or to discuss available options.