As used in KRS § 78.510 to KRS § 78.852, unless the context otherwise requires: (1) “System” means the County Employees Retirement System;
(2) “Board” means the board of trustees of the system as provided in KRS § 78.782;
(3) “County” means any county, or nonprofit organization created and governed by a county, counties, or elected county officers, sheriff and his or her employees, county clerk and his or her employees, circuit clerk and his or her deputies, former circuit clerks or former circuit clerk deputies, or political subdivision or instrumentality, including school boards, cities, charter county governments, urban-county governments, consolidated local governments, or unified local governments participating in the system by order appropriate to its governmental structure, as provided in KRS § 78.530, and if the board is willing to accept the agency, organization, or corporation, the board being hereby granted the authority to determine the eligibility of the agency to participate;
(4) “School board” means:
(a) Any board of education participating in the system by order appropriate to its governmental structure, as provided in KRS § 78.530, and if the board is willing to accept the agency or corporation, the board being hereby granted the authority to determine the eligibility of the agency to participate; or
(b) A public charter school as defined in KRS § 160.1590 if the public charter school satisfies the criteria set by the Internal Revenue Service to participate in a governmental retirement plan;
(5) “Examiner” means the medical examiners as provided in KRS § 61.665;
(6) “Employee” means every regular full-time appointed or elective officer or employee of a participating county and the coroner of a participating county, whether or not he or she qualifies as a regular full-time officer. The term shall not include persons engaged as independent contractors, seasonal, emergency, temporary, and part-time workers. In case of any doubt, the board shall determine if a person is an employee within the meaning of KRS § 78.510 to KRS § 78.852;
(7) “Employer” means a county, as defined in subsection (3) of this section, the elected officials of a county, or any authority of the county having the power to appoint or elect an employee to office or employment in the county;
(8) “Member” means any employee who is included in the membership of the system or any former employee whose membership has not ceased under KRS § 78.535;
(9) “Service” means the total of current service and prior service as defined in this section;
(10) “Current service” means the number of years and months of employment as an employee, on and after July 1, 1958, for which creditable compensation is paid and employee contributions deducted, except as otherwise provided;
(11) “Prior service” means the number of years and completed months, expressed as a fraction of a year, of employment as an employee, prior to July 1, 1958, for which creditable compensation was paid. An employee shall be credited with one (1)
month of prior service only in those months he received compensation for at least one hundred (100) hours of work. Twelve (12) months of current service in the system shall be required to validate prior service;
(12) “Accumulated contributions” means the sum of all amounts deducted from the compensation of a member and credited to his individual account in the members’ account, including employee contributions picked up after August 1, 1982, pursuant to KRS § 78.610(4), together with interest credited, on the amounts, and any other amounts the member shall have contributed thereto, including interest credited thereon. “Accumulated contributions” shall not include employee contributions that are deposited into accounts established pursuant to 26 U.S.C. § 401(h) within the fund established in KRS § 78.520, as prescribed by KRS § 78.5536(3)(b);
(13) “Creditable compensation”:
(a) Except as limited by paragraph (c) of this subsection, means all salary, wages, and fees, including payments for compensatory time, paid to the employee as a result of services performed for the employer or for time during which the member is on paid leave, which are includable on the member’s federal form W-2 wage and tax statement under the heading “wages, tips, other compensation”, including employee contributions picked up after August 1,
1982, pursuant to KRS § 78.610(4). The creditable compensation of fee officers who receive salary, fees, maintenance, or other perquisites as a result of their official duties is the gross amount received decreased by the cost of salary paid deputies and clerks and the cost of office supplies and other official expenses;
(b) Includes:
1. Lump-sum bonuses, severance pay, or employer-provided payments for purchase of service credit, which shall be averaged over the employee’s service with the system in which it is recorded if it is equal to or greater than one thousand dollars ($1,000);
2. Cases where compensation includes maintenance and other perquisites, but the board shall fix the value of that part of the compensation not paid in money;
3. Lump-sum payments for creditable compensation paid as a result of an order of a court of competent jurisdiction, the Personnel Board, or the Commission on Human Rights, or for any creditable compensation paid in anticipation of settlement of an action before a court of competent jurisdiction, the Personnel Board, or the Commission on Human Rights, including notices of violations of state or federal wage and hour statutes or violations of state or federal discrimination statutes, which shall be credited to the fiscal year during which the wages were earned or should have been paid by the employer. This subparagraph shall also include lump-sum payments for reinstated wages pursuant to KRS § 61.569, which shall be credited to the period during which the wages were earned or should have been paid by the employer;
4. Amounts which are not includable in the member’s gross income by
virtue of the member having taken a voluntary salary reduction provided for under applicable provisions of the Internal Revenue Code; and
5. Elective amounts for qualified transportation fringes paid or made available on or after January 1, 2001, for calendar years on or after January 1, 2001, that are not includable in the gross income of the employee by reason of 26 U.S.C. § 132(f)(4); and
(c) Excludes:
1. Living allowances, expense reimbursements, lump-sum payments for accrued vacation leave, sick leave except as provided in KRS § 78.616(5), and other items determined by the board;
2. For employees who begin participating on or after September 1, 2008, lump-sum payments for compensatory time;
3. Training incentive payments for city officers paid as set out in KRS
64.5277 to 64.5279;
4. For employees who begin participating on or after August 1, 2016, nominal fees paid for services as a volunteer; and
5. Any salary or wages paid to an employee for services as a Kentucky
State Police school resource officer as defined by KRS § 158.441; (14) “Final compensation” means:
(a) For a member who begins participating before September 1, 2008, who is employed in a nonhazardous position, the creditable compensation of the member during the five (5) fiscal years he or she was paid at the highest average monthly rate divided by the number of months of service credit during that five (5) year period multiplied by twelve (12). The five (5) years may be fractional and need not be consecutive. If the number of months of service credit during the five (5) year period is less than forty-eight (48), one (1) or more additional fiscal years shall be used;
(b) For a member who is employed in a nonhazardous position, whose effective retirement date is between August 1, 2001, and January 1, 2009, and whose total service credit is at least twenty-seven (27) years and whose age and years of service total at least seventy-five (75), final compensation means the creditable compensation of the member during the three (3) fiscal years the member was paid at the highest average monthly rate divided by the number of months of service credit during that three (3) year period multiplied by twelve (12). The three (3) years may be fractional and need not be consecutive. If the number of months of service credit during the three (3) year period is less than twenty-four (24), one (1) or more additional fiscal years shall be used;
(c) For a member who begins participating before September 1, 2008, who is employed in a hazardous position, as provided in KRS § 61.592, the creditable compensation of the member during the three (3) fiscal years he or she was paid at the highest average monthly rate divided by the number of months of service credit during that three (3) year period multiplied by twelve (12). The
three (3) years may be fractional and need not be consecutive. If the number of months of service credit during the three (3) year period is less than twenty- four (24), one (1) or more additional fiscal years, which may contain less than twelve (12) months of service credit, shall be used;
(d) For a member who begins participating on or after September 1, 2008, but prior to January 1, 2014, who is employed in a nonhazardous position, the creditable compensation of the member during the five (5) complete fiscal years immediately preceding retirement divided by five (5). Each fiscal year used to determine final compensation must contain twelve (12) months of service credit. If the member does not have five (5) complete fiscal years that each contain twelve (12) months of service credit, then one (1) or more additional fiscal years, which may contain less than twelve (12) months of service credit, shall be added until the number of months in the final compensation calculation is at least sixty (60) months; or
(e) For a member who begins participating on or after September 1, 2008, but prior to January 1, 2014, who is employed in a hazardous position as provided in KRS § 61.592, the creditable compensation of the member during the three (3) complete fiscal years he or she was paid at the highest average monthly rate divided by three (3). Each fiscal year used to determine final compensation must contain twelve (12) months of service credit. If the member does not have three (3) complete fiscal years that each contain twelve (12) months of service credit, then one (1) or more additional fiscal years, which may contain less than twelve (12) months of service credit, shall be added until the number of months in the final compensation calculation is at least thirty-six (36) months;
(15) “Final rate of pay” means the actual rate upon which earnings of an employee were calculated during the twelve (12) month period immediately preceding the member’s effective retirement date, and shall include employee contributions picked up after August 1, 1982, pursuant to KRS § 78.610(4). The rate shall be certified to the system by the employer and the following equivalents shall be used to convert the rate to an annual rate: two thousand eighty (2,080) hours for eight (8) hour workdays, one thousand nine hundred fifty (1,950) hours for seven and one-half (7.5) hour workdays, two hundred sixty (260) days, fifty-two (52) weeks, twelve (12) months, one (1) year;
(16) “Retirement allowance” means the retirement payments to which a member is entitled;
(17) “Actuarial equivalent” means a benefit of equal value when computed upon the basis of the actuarial tables adopted by the board. In cases of disability retirement, the options authorized by KRS § 61.635 shall be computed by adding ten (10) years to the age of the member, unless the member has chosen the Social Security adjustment option as provided for in KRS § 61.635(8), in which case the member’s actual age shall be used. For members who begin participating in the system prior to January 1, 2014, no disability retirement option shall be less than the same option computed under early retirement;
(18) “Normal retirement date”, unless otherwise provided in KRS § 78.510 to KRS § 78.852, means:
(a) For a member with service in a nonhazardous position, the sixty-fifth birthday of a member;
(b) For a member with service in a hazardous position who begins participating before September 1, 2008, the first day of the month following a member’s fifty-fifth birthday; or
(c) For a member with service in a hazardous position who begins participating on or after September 1, 2008, the first day of the month following a member’s sixtieth birthday;
(19) “Fiscal year” of the system means the twelve (12) months from July 1 through the following June 30, which shall also be the plan year. The “fiscal year” shall be the limitation year used to determine contribution and benefits limits as set out in 26
U.S.C. sec. 415;
(20) “Agency reporting official” means the person designated by the participating employer who shall be responsible for forwarding all employer and employee contributions and a record of the contributions to the system and for performing other administrative duties pursuant to the provisions of KRS § 78.510 to KRS § 78.852;
(21) “Regular full-time positions,” as used in subsection (6) of this section, shall mean all positions that average one hundred (100) or more hours per month, determined by using the number of hours actually worked in a calendar or fiscal year, or eighty (80) or more hours per month in the case of noncertified employees of school boards, determined by using the number of hours actually worked in a calendar or school year, unless otherwise specified, except:
(a) Seasonal positions, which although temporary in duration, are positions which coincide in duration with a particular season or seasons of the year and that may recur regularly from year to year, in which case the period of time shall not exceed nine (9) months, except for employees of school boards, in which case the period of time shall not exceed six (6) months;
(b) Emergency positions which are positions utilized by the employer during:
1. An emergency as determined by the employer for a period not exceeding thirty (30) working days and are nonrenewable; or
2. A state of emergency declared by the President of the United States or the Governor of the Commonwealth of Kentucky that are created or filled specifically for addressing the employer’s needs during and as a result of the declared emergency;
(c) Temporary positions that are positions of employment with a participating agency for a period of time not to exceed twelve (12) months and not renewable;
(d) Probationary positions which are positions of employment with a participating employer that do not exceed twelve (12) months and that are used uniformly by the participating agency on new employees who would otherwise be eligible for participation in the system. Probationary positions shall not be
renewable by the participating employer for the same employee, unless the employee has not been employed with the participating employer for a period of at least twelve (12) months; or
(e) Part-time positions that are positions that may be permanent in duration, but that require less than a calendar or fiscal year average of one hundred (100) hours of work per month, determined by using the number of months actually worked within a calendar or fiscal year, in the performance of duty, except in case of noncertified employees of school boards, the school term average shall be eighty (80) hours of work per month, determined by using the number of months actually worked in a calendar or school year, in the performance of duty;
(22) “Alternate participation plan” means a method of participation in the system as provided for by KRS § 78.530(3);
(23) “Retired member” means any former member receiving a retirement allowance or any former member who has on file at the retirement office the necessary documents for retirement benefits and is no longer contributing to the system;
(24) “Current rate of pay” means the member’s actual hourly, daily, weekly, biweekly, monthly, or yearly rate of pay converted to an annual rate as defined in final rate of pay. The rate shall be certified by the employer;
(25) “Beneficiary” means the person, persons, estate, trust, or trustee designated by the member in accordance with KRS § 61.542 or 61.705 to receive any available benefits in the event of the member’s death. As used in KRS § 78.5536, beneficiary shall not mean an estate, trust, or trustee;
(26) “Recipient” means the retired member, the person or persons designated as beneficiary by the member and drawing a retirement allowance as a result of the member’s death, or a dependent child drawing a retirement allowance. An alternate payee of a qualified domestic relations order shall not be considered a recipient, except for purposes of KRS § 61.623;
(27) “Person” means a natural person;
(28) “School term or year” means the twelve (12) months from July 1 through the following June 30;
(29) “Retirement office” means the Kentucky Public Pensions Authority office building in Frankfort, unless otherwise designated by the Kentucky Public Pensions Authority;
(30) “Vested” for purposes of determining eligibility for purchasing service credit under KRS § 61.552 means the employee has at least forty-eight (48) months of service if age sixty-five (65) or older or at least sixty (60) months of service if under the age of sixty-five (65). For purposes of this subsection, “service” means service in the systems administered by the Kentucky Retirement Systems and County Employees Retirement System;
(31) “Participating” means an employee is currently earning service credit in the system as provided in KRS § 78.615;
(32) “Month” means a calendar month;
(33) “Membership date” means the date upon which the member began participating in the system as provided in KRS § 78.615;
(34) “Participant” means a member, as defined by subsection (8) of this section, or a retired member, as defined by subsection (23) of this section;
(35) “Qualified domestic relations order” means any judgment, decree, or order, including approval of a property settlement agreement, that:
(a) Is issued by a court or administrative agency; and
(b) Relates to the provision of child support, alimony payments, or marital property rights to an alternate payee;
(36) “Alternate payee” means a spouse, former spouse, child, or other dependent of a participant, who is designated to be paid retirement benefits in a qualified domestic relations order;
(37) “Accumulated employer credit” means the employer pay credit deposited to the member’s account and interest credited on such amounts as provided by KRS
78.5512 and 78.5516;
(38) “Accumulated account balance” means:
(a) For members who began participating in the system prior to January 1, 2014, the member’s accumulated contributions; or
(b) For members who began participating in the system on or after January 1,
2014, in the hybrid cash balance plan as provided by KRS § 78.5512 and
78.5516, the combined sum of the member’s accumulated contributions and the member’s accumulated employer credit;
(39) “Volunteer” means an individual who:
(a) Freely and without pressure or coercion performs hours of service for an employer participating in one (1) of the systems administered by Kentucky Retirement Systems or the County Employees Retirement System without receipt of compensation for services rendered, except for reimbursement of actual expenses, payment of a nominal fee to offset the costs of performing the voluntary services, or both; and
(b) If a retired member, does not become an employee, leased employee, or independent contractor of the employer for which he or she is performing volunteer services for a period of at least twelve (12) months following the retired member’s most recent retirement date;
(40) “Nominal fee” means compensation earned for services as a volunteer that does not exceed five hundred dollars ($500) per month with each participating employer. Compensation earned for services as a volunteer from more than one (1) participating employer during a month shall not be aggregated to determine whether the compensation exceeds the five hundred dollars ($500) per month maximum provided by this subsection;
(41) “Nonhazardous position” means a position that does not meet the requirements of
KRS § 78.5520 or has not been approved by the board as a hazardous position;
(42) “Hazardous position” means a position that meets the requirements of KRS § 78.5520
and has been approved by the board as hazardous;
(43) “Level-percentage-of-payroll amortization method” means a method of determining the annual amortization payment on the unfunded actuarial accrued liability as expressed as a percentage of payroll over a set period of years. Under this method, the percentage of payroll shall be projected to remain constant for all years remaining in the set period and the unfunded actuarially accrued liability shall be projected to be fully amortized at the conclusion of the set period;
(44) “Increment” means twelve (12) months of service credit which are purchased. The twelve (12) months need not be consecutive. The final increment may be less than twelve (12) months;
(45) “Last day of paid employment” means the last date employer and employee contributions are required to be reported in accordance with KRS § 16.543, 61.543, or
78.615 to the retirement office in order for the employee to receive current service credit for the month. Last day of paid employment does not mean a date the employee receives payment for accrued leave, whether by lump sum or otherwise, if that date occurs twenty-four (24) or more months after previous contributions;
(46) “Objective medical evidence” means reports of examinations or treatments; medical signs which are anatomical, physiological, or psychological abnormalities that can be observed; psychiatric signs which are medically demonstrable phenomena indicating specific abnormalities of behavior, affect, thought, memory, orientation, or contact with reality; or laboratory findings which are anatomical, physiological, or psychological phenomena that can be shown by medically acceptable laboratory diagnostic techniques, including but not limited to chemical tests, electrocardiograms, electroencephalograms, X-rays, and psychological tests;
(47) “Hazardous disability” as used in KRS § 78.510 to KRS § 78.852 means a disability which results in an employee’s total incapacity to continue as an employee in a hazardous position, but the employee is not necessarily deemed to be totally and permanently disabled to engage in other occupations for remuneration or profit;
(48) “Act in line of duty” means, for employees in hazardous positions under KRS
78.5520:
(a) A single act occurring which was required in the performance of the principal duties of the hazardous position as defined by the job description; or
(b) A single act of violence committed against the employee that is found to be related to his or her job duties, whether or not it occurs at his or her job site;
(49) “Dependent child” means a child in the womb and a natural or legally adopted child of the member who has neither attained age eighteen (18) nor married or who is an unmarried full-time student who has not attained age twenty-two (22). Solely in the case of a member who dies as a direct result of an act in line of duty as defined in this section, dies as a result of a duty-related injury as defined in KRS § 61.621, becomes totally and permanently disabled as a direct result of an act in the line of duty as defined in this section, or becomes disabled as a result of a duty-related injury as defined in KRS § 61.621 and is eligible for the benefits provided by KRS
61.621(5)(a), “dependent child” also means a naturally or legally adopted disabled
child of the member, regardless of the child’s age, if the child has been determined to be eligible for federal Social Security disability benefits or is being claimed as a qualifying child for tax purposes due to the child’s total and permanent disability;
(50) “Normal retirement age” means the age at which the member meets the requirements for his or her normal retirement date as provided by subsection (18) of this section;
(51) “Disability retirement date” means the first day of the month following the last day of paid employment;
(52) “Monthly average pay” means:
(a) In the case of a member who dies as a direct result of an act in line of duty as defined in KRS § 16.505 or who dies as a result of a duty-related injury as defined in KRS § 61.621, the higher of the member’s monthly final rate of pay or the average monthly creditable compensation earned by the deceased member during his or her last twelve (12) months of employment; or
(b) In the case where a member becomes totally and permanently disabled as a direct result of an act in line of duty as defined in KRS § 16.505 or becomes disabled as a result of a duty-related injury as defined in KRS § 61.621 and is eligible for the benefits provided by KRS § 61.621(5)(a), the higher of the member’s monthly final rate of pay or the average monthly creditable compensation earned by the disabled member during his or her last twelve (12) months of employment prior to the date the act in line of duty or duty- related injury occurred;
(53) “Authority” means the Kentucky Public Pensions Authority as provided by KRS
61.505; and
(54) “Executive director” means the executive director of the Kentucky Public Pensions
Authority.
Effective: July 14, 2022
History: Amended 2022 Ky. Acts ch. 213, sec. 15, effective July 14, 2022; and ch. 216, sec. 18, effective April 14, 2022. — Amended 2021 Ky. Acts ch. 102, sec. 18, effective April 1, 2021; and ch. 106, sec. 6, effective June 29, 2021. — Repealed, reenacted, and amended 2020 Ky. Acts ch. 79, sec. 32, effective April 1, 2021. — Amended 2019 Ky. Acts ch. 197, sec. 5, effective April 9, 2019. — Amended 2018
Ky. Acts ch. 107, sec. 15, effective July 14, 2018; and ch. 151, sec. 7, effective April
13, 2018. — Amended 2017 Ky. Acts ch. 32, sec. 17, effective June 29, 2017; and ch.
126, sec. 3, effective June 29, 2017. — Amended 2016 Ky. Acts ch. 25, sec. 2, effective July 15, 2016. — Amended 2013 Ky. Acts ch. 120, sec. 72, effective July 1,
2013. — Amended 2011 Ky. Acts ch. 44, sec. 4, effective June 8, 2011; and ch. 52, sec. 4, effective June 8, 2011. — Amended 2010 Ky. Acts ch. 148, sec. 7, effective July 15, 2010. — Amended 2009 Ky. Acts ch. 71, sec. 1, effective June 25, 2009; and ch. 77, sec. 24, effective June 25, 2009. — Amended 2008 (1st Extra. Sess.) Ky. Acts ch. 1, sec. 25, effective June 27, 2008. — Amended 2004 Ky. Acts ch. 36, sec. 31, effective July 13, 2004. — Amended 2003 Ky. Acts ch. 169, sec. 13, effective March
31, 2003. — Amended 2002 Ky. Acts ch. 52, sec. 18, effective July 15, 2002. — Amended 2001 Ky. Acts ch. 7, sec. 8, effective June 21, 2001. — Amended 2000 Ky. Acts ch. 210, sec. 4, effective July 14, 2000; and ch. 385, sec. 33, effective July 14,
2000. — Amended 1998 Ky. Acts ch. 105, sec. 21, effective July 15, 1998; and ch.
300, sec. 2, effective July 15, 1998. — Amended 1996 Ky. Acts ch. 31, sec. 2,
effective July 15, 1996; and ch. 167, sec. 24, effective July 15, 1996. — Amended
1994 Ky. Acts ch. 485, sec. 25, effective July 15, 1994. – Amended 1992 Ky. Acts ch. 240, sec. 51, effective July 14, 1992. — Amended 1990 Ky. Acts ch. 117, sec. 1, effective July 13, 1990; and ch. 401, sec. 13, effective July 13, 1990. — Amended
1988 Ky. Acts ch. 349, sec. 31, effective July 15, 1988; and ch. 364, sec. 3, effective July 15, 1988. — Amended 1986 Ky. Acts ch. 90, sec. 22, effective July 15, 1986; and ch. 176, sec. 1, effective July 15, 1986. — Amended 1984 Ky. Acts ch. 111, sec.
49, effective July 13, 1984; and ch. 198, sec. 1, effective July 13, 1984. — Amended
1982 Ky. Acts ch. 166, sec. 28, effective July 15, 1982; and ch. 423, sec. 15, effective July 15, 1982. — Amended 1978 Ky. Acts ch. 311, sec. 20, effective June
17, 1978. — Amended 1976 Ky. Acts ch. 321, secs. 32 and 40. — Amended 1974 Ky. Acts ch. 87, sec. 1; and ch. 128, sec. 32. — Amended 1972 Ky. Acts ch. 116, sec. 61.
— Amended 1966 Ky. Acts ch. 34, sec. 1. — Amended 1964 Ky. Acts ch. 49, sec. 1. — Amended 1962 Ky. Acts ch. 31, sec. 1. — Amended 1960 Ky. Acts ch. 165, Part III, sec. 1. — Created 1958 Ky. Acts ch. 167, sec. 1.
Legislative Research Commission Note (7/14/2022). This statute was amended by 2022
Ky. Acts chs. 213 and 216, which do not appear to be in conflict and have been codified together.
Legislative Research Commission Note (4/14/2022). 2022 Ky. Acts ch. 216, sec. 31, provides that the amendments made to subsection (21)(b) of this statute in that Act are retroactive to March 1, 2020 “and shall for purposes of anyone employed or contracted by health departments during and as a result of the state of emergency declared by the Governor of Kentucky during the COVID-19 pandemic apply to any such employment or contracts through December 31, 2022, as determined by the health department and regardless of whether or not the state of emergency has expired or been lifted.”
Legislative Research Commission Note (6/29/2021). See 2021 Ky. Acts ch. 106, secs.
10, 11, 12, and 13 for information regarding the application of the amendments to this statute made in that Act.
Legislative Research Commission Note (4/1/2021). In codifying the amendments to this statute in 2020 Ky. Acts ch. 79, sec. 32, the Reviser of Statutes has restored two deleted statutory references. In subsection (26), the phrase “KRS § 61.623” was bracketed and struck through in the bill, and in subsection (37) the phrase “KRS
16.583 and 61.597″ was similarly bracketed and struck through. In both cases, these actions would have had the effect of deleting the language from the statute. It is clear from the context and from the history of this Act that both deletions were inadvertent errors. These corrections have been made under the authority of KRS § 7.136(1).
Legislative Research Commission Note (12/13/2018). On December 13, 2018, the
Kentucky Supreme Court ruled that the passage of 2018 SB 151 (2018 Ky. Acts ch.
107), did not comply with the three-readings rule of Kentucky Constitution Section
46 and that the legislation is, therefore, constitutionally invalid and declared void. That ruling applies to changes made to this statute in that Act.