(a) Subject to the limitations of this section, during the fiscal year ending June 30, 2006, and each fiscal year thereafter, if it appears that the resources are insufficient to meet in full the estimated expenditures as they become due to meet the financial obligations imposed by law on the death and disability program as a result of a cash flow shortfall, the pooled money investment board is authorized and directed to loan to the Kansas public employees retirement system sufficient funds to maintain the cash flow of the death and disability program upon approval of such loan by the state finance council acting on this matter which is hereby characterized as a matter of legislative delegation and subject to the guidelines prescribed in subsection (c) of Kan. Stat. Ann. § 75-3711c, and amendments thereto. No loan shall be made unless the terms thereof have been approved by the director of the budget. A copy of the terms of the loan shall be submitted to the director of the legislative research department. The pooled money investment board is authorized and directed to use any moneys in the operating accounts, investment accounts or other investments of the state of Kansas to provide the funds for such loan. Each such loan shall bear interest at a rate equal to the net earnings rate of the pooled money investment portfolio at the time of the making of such loan. Such loan shall not be deemed to be an indebtedness or debt of the state of Kansas within the meaning of section 6 of article 11 of the constitution of the state of Kansas.

(b) Upon certification by the pooled money investment board by the executive director of the Kansas public employees retirement system of the amount of each loan authorized pursuant to subsection (a), the pooled money investment board shall transfer each such amount certified by the executive director of the Kansas public employees retirement system from the state bank account or accounts prescribed in subsection (a) to the group insurance reserve fund.

(c) The principal and interest of each loan authorized pursuant to subsection (a) shall be repaid in payments payable on or before June 30, 2007, or June 30 of each subsequent year where a loan to the system has occurred pursuant to this section.