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HB 600/LM/AA/CI (BR 382) - M. Cherry, H. Moberly Jr., R. Adkins, L. Clark, C. Hoffman, D. Keene, J. Richards, T. Thompson, D. Watkins, R. Wilkey, B. Yonts
AN ACT relating to retirement and declaring an emergency.
Amend KRS 6.350 to establish new procedures for the completion of the required actuarial analysis for bills pertaining to state-administered retirement systems; amend KRS 16.505, 61.510, and 78.510 to establish new calculation of final compensation for KERS, CERS, and SPRS employees hired on or after July 1, 2008; amend KRS 16.560, 61.575, and 78.640 to establish fixed 2.5% interest rate on member contribution accounts for KERS, CERS, and SPRS employees hired on or after July 1, 2008; amend KRS 16.576, 16.577, 61.559, and 61.595 to establish new retirement requirements and benefit multipliers for KERS, CERS, and SPRS employees hired on or after July 1, 2008; create a new section of KRS Chapter 42 to establish the Kentucky Public Pension Financing Advisory Commission in the Finance and Administration Cabinet to review investments and financing of the state-administered retirement systems and to provide a report to the General Assembly; amend KRS 61.546 to limit sick leave service credit for KERS and SPRS employees hired on or after July 1, 2008 to 12 months and only for benefit determination; amend KRS 61.5525 to require service purchases made on or after July 1, 2008, to reflect full actuarial cost; amend KRS 61.592 to establish a new definition of hazardous duty for CERS employees hired on or after July 1, 2008 and to require the agency to recertify new employees to the retirement systems; amend KRS 61.635 to provide that the partial lump-sum payment option shall only be provided to KERS, CERS, and SPRS employees retiring on or before July 1, 2008; amend KRS 61.637 to establish new requirements for KERS, CERS, and SPRS retirees who are reemployed on or after July 1, 2008; amend KRS 61.645 to limit KERS, CERS, and SPRS elected trustees to three terms, to require the board to establish a formal trustee education program, and to require the systems' to post specific board administration, financial, and investment materials to the systems' website; amend KRS 61.691 to provide a 1.5% COLA to KERS, CERS, and SPRS recipients on or after July 1, 2009 and to clarify policy and funding for COLA's in excess of 1.5%; amend KRS 61.702 to require KERS, CERS, and SPRS employees hired on or after July 1, 2008 to pay 1% in contributions for retiree health benefits, to work fifteen years before vesting for health benefits, and to provide that the amount of retiree health benefits that KERS, CERS, and SPRS employees hired on or after July 1, 2003 are eligible for shall be increased by 1.5% annually; amend 78.616 to limit sick leave service credit for CERS employees hired on or after July 1, 2008 to 12 months or as limited by Section 24 of this Act and used only for benefit determination; amend KRS 161.155 to set sick leave maximum for retirement purposes at 300 days for school employees and teachers; amend KRS 161.220 to remove annual compensation and compensatory leave paid at retirement from calculation of retirement benefits and to establish fixed 2.5% interest rate on member contribution accounts for KTRS employees hired on or after July 1, 2008; amend KRS 161.250 to limit KTRS elected trustees to three terms, to require the board to establish a formal trustee education program, and to require the systems' to post specific board administration, financial, and investment materials to the systems' website; amend KRS 161.420 and 161.540 to require KTRS employees hired on or after July 1, 2008 to pay an additional 1% in contributions for retiree health benefits; amend KRS 161.545 and 161.5465 to provide that KTRS employees hired on or after July 1, 2008, shall not be eligible to purchase noncurrent leave and air-time, except that upon retirement the new KTRS employee may purchase up to 10 months of air-time to complete the 27 year requirement; amend KRS 161.600 to increase service requirement from 5 to 10 years for a KTRS employee who is hired on or after July 1, 2008; amend KRS 161.605 to provide an additional option for reemployment after retirement for KTRS retirees who wish to return to work; amend KRS 161.620 to establish new benefit multipliers for KTRS employees hired on or after July 1, 2008; amend KRS 161.675 to require KTRS employees hired on or after July 1, 2008, to have at least 15 years of service in order to be eligible for retiree health benefits after retirement; repeal 161.603; establish the CERS contributions for the 2008-2010 biennium; require the Interim Joint Committee on State Government to study transferring school board employees in CERS to KTRS and to study KERS hazardous duty positions; declare an EMERGENCY.
HB 600 - AMENDMENTS
HCS/LM/AA/CI - Retain original provisions, except remove sunset provisions for the Kentucky Public Pension Financing Advisory Commission and to clarify reporting requirements of the commission; amend KRS 6.521 to provide a 1.5 percent COLA to recipients of the Legislators' Retirement Plan on or after July 1, 2009, and to clarify policy and funding for COLA's in excess of 1.5 percent; amend KRS 6.521 to increase employee contribution to 6 percent for legislators entering the Legislators' Retirement Plan on or after July 1, 2008, and to make exceptions to the requirement; make technical amendments.
HFA (1, G. Stumbo) - Retain original provisions with the following additions; amend section relating to establishing the Kentucky Public Pension Financing Advisory Commission to include the Attorney General in the commission; amend section relating to the duties of the commission to include reviewing securities litigation policies and programs of the state-administered retirement systems, reviewing the possibility of authorizing the Attorney General to act on behalf of the retirement systems in cases regarding securities litigation, and providing recommendations to the General Assembly.
HFA (2, B. Yonts) - Retain original provisions with the following additions; amend KRS 21.405 to provide a 1.5 percent COLA to recipients of the Judicial Retirement Plan on or after July 1, 2009, and to clarify policy and funding for COLA's in excess of 1.5 percent; amend KRS 21.360 to increase employee contribution to 6 percent for judges and justices entering the Judicial Retirement Plan on or after July 1, 2008.
HFA (3, D. Ford) - Retain original provisions with the following additions; amend KRS 61.510 to extend the high-three final compensation window set to expire January 1, 2009, for those state employees eligible for the benefit based upon service credit as of December 31, 2008; amend KRS 61.595 to extend the 2.2 percent benefit factor window set to expire January 31, 2009, for those state employees eligible for the benefit based upon service credit as of December 31, 2008; amend KRS 78.510 to extend the high-three final compensation window set to expire January 1, 2009, for those county employees eligible for the benefit based upon service credit as of December 31, 2008.
HFA (4, D. Ford) - Retain original provisions with the following additions; amend KRS 78.510 to extend the high-three final compensation window set to expire January 1, 2009, for those county employees eligible for the benefit based upon service credit as of December 31, 2008.
HFA (5, T. Riner) - Retain original provisions, except to insert a section to find that the interest of KRS, KTRS, and the public are advanced if KRS and KTRS curtail investments in China and Sudan and to encourage KRS and KTRS to curtail such investments.
HFA (6, T. Riner) - Retain original provisions except amend section pertaining to the Legislators' Retirement Plan COLA to provide a 1.4 percent COLA to recipients of the Legislators' Retirement Plan on or after July 1, 2009.
HFA (7, M. Cherry) - Retain original provisions with the following additions; amend KRS 61.546 to clarify payment of sick leave service credit in KERS by the employer for employees hired on or after July 1, 2008; amend section pertaining to study of transferring classified school board employees in CERS to KTRS by inserting language to ensure that CERS classified employees hired on or after July 1, 2008 who could be transferred to KTRS by subsequent future legislation, shall be provided the same benefits as new classified employees in KTRS under any potential future legislation.
HFA (8, J. Wayne) - Require all members of the Kentucky Public Pension Financing Advisory Commission to comply with the Executive Branch Code of Ethics established in KRS Chapter 11A; prohibit any member from having any direct or indirect interest in commission findings or recommendations that puts the member's personal interest in conflict with his duties on the commission; require any investment advisor contracted by the commission to abide by the CFA Institute Code of Ethics and Standards of Professional Conduct; prohibit any investment advisor from serving simultaneously as an investment advisor to the commission and one of the state-administered retirement systems; amend KRS 11A.010 of the Executive Branch Ethics Code to include the members of the Kentucky Public Pension Financing Commission in the definition of "officer," thereby applying the code guidelines and financial disclosure requirements to the commission members.
SCS/LM/AA/CI - Retain original provisions except create a new section of KRS Chapter 6 to establish a Kentucky Pension Investment Review Commission and to create a new permanent subcommittee of the Legislative Research Commission to be known as the Public Employee Benefit Oversight Committee; amend KRS 6.505 to require new legislators whose terms begin on or after July 1, 2008 to participate in KERS non-hazardous; amend KRS 21.350 to require new judges who begin serving on or after July 1, 2008 to participate in KERS non-hazardous; amend KRS 6.505 to include employee contributions, employer contributions, and investment return credited to the member's annuity savings account in the definition of "accumulated contributions," and change the definition of "final compensation," "normal retirement date," and "early retirement date"; amend KRS 16.545 to require SPRS members who begin participating on or after July 1, 2008 to contribute 7% of their creditable compensation; amend KRS 16.576 to change the benefit factors for SPRS employees hired on or after July 1, 2008; amend KRS 16.645 to include annuity savings accounts for SPRS new hires as of July 1, 2008; amend KRS 61.510 and 78.510 to include employee contributions, employer contributions, and investment return credited to the member's annuity savings account in the definition of "accumulated contributions," and change the definition of "final compensation"; amend KRS 61.559 to change the requirements for retirement eligibility to include at least age 57 with age and service equal to 87 or at least age 62 with ten years of service; amend KRS 61.560 and 78.610 to require those KERS and CERS employees hired after July 1, 2008 to contribute 4% of their creditable compensation; amend KRS 61.565 to implement a plan toward meeting actuarially required contributions rates; amend KRS 61.595 to implement a benefit factor of 1.14% for up to 30 years services and 1.75% for 30 or more years of service for members of KERS or CERS nonhazardous who begin participating on or after July 1, 2008; amend KRS 61.637 to require retirees who return to work on or after July 1, 2008 to observe a 12 month break in employment; amend 61.701 to create the Kentucky Retirement Systems Insurance Trust Fund; amend KRS 61.702 to require employers participating in SPRS, CERS, and KERS to deduct 1% from the creditable compensation of each member having a membership date on or after July 1, 2008 to credit to the Kentucky Retirement Systems Insurance Trust Fund; create a new section of KRS Chapter 78 to require the retirement systems to file a legislative proposal to transfer school board and retired members participating in or retired from a classified school board position in the CERS to the KERS instead of requiring the Interim Joint Committee on State Government to study transferring them to KTRS; create a new section of KRS Chapter 61 that creates an annuity savings account for employees who begin participating on or after July 1, 2008 in the Kentucky Employees Retirement System, the County Employees Retirement System, and the State Police Retirement System; require employers to deduct 1% of the creditable compensation of members who begin participating on or after July 1, 2008 with the deducted amounts credited to the annuity savings account established for the individual employee; require employers to pick up the employee contributions in accordance with Section 414(h) of the Internal Revenue Code with the employee having no option to receive the contributions directly; require the employer to contribute and report a 2% lump-sum payment to the annuity savings account of each non-hazardous duty employee after the employee has earned five years of service credit; require the employer to contribute and report a 2.5% lump-sum payment to the annuity savings account of each hazardous duty employee after the employee has earned two years of service credit; for non-hazardous duty employees, require the employer to contribute 2% of the employee's creditable compensation if the employee has earned at least five years of service credit, 2.25% of the employee's creditable compensation if the employee has earned at least ten years of service credit, and 2.5% of the employee's creditable compensation if the employee has earned at least twenty years of service credit; for hazardous duty employees, require the employer to contribute 2.5% of the employee's creditable compensation if the employee has earned at least two years of service credit, 2.75% of the employee's creditable compensation if the employee has earned at least ten years of service credit, and 3% of the employee's creditable compensation if the employee has earned at least twenty years of service credit; mandate that the funds in the annuity savings account be invested in the same manner as the pension funds are administered during the first five years of the member's contribution; specify that the employer is to contribute to the annuity savings account in addition to the contribution rate established in KRS 61.565; require that the systems adjust the balance of the funds in the annuity savings account at least quarterly to credit the members account; specify that no funds may be available from the annuity savings account prior to a member's retirement, death, or refund; allow the board of trustees to establish distribution options for the annuity savings account and specify requirements of various options; authorize the board of trustees to establish new plans or amend existing plans under the Internal Revenue Code, and to promulgate administrative regulations; create a new section of KRS Chapter 78A relating to the Local Government Employees Retirement System, and establish a new section therein that defines the terms used in KRS Chapter 78A; require that non-school board employers and their full-time members participating in the County Employees Retirement System shall begin participating in the Local Government Employees Retirement System on July 1, 2009; specify that service credit earned by affected members or retired members of the County Employees Retirement System shall be transferred to the Local Government Employees Retirement System on July 1, 2009, and that sufficient funds to fund the benefits and administrative expenses of the Local Government Employees Retirement System shall be transferred from the County Employees Retirement System on July 1, 2009; require the boards of trustees of the Local Government Employees Retirement System and the County Employees Retirement System on or after July 1, 2009, but no later than July 1, 2010, to distribute the assets and liabilities of the County Employees Retirement System between the County Employees Retirement System and the Local Government Employees Retirement System to reflect the transfer of members and retired members; specify that, except for school board service, the transfer of a member's non-school board service credit from the County Employees Retirement System to the Local Government Employees Retirement System terminates credit in the County Employees Retirement System; create a new section of KRS Chapter 78A to require each county sheriff, or county clerk to authorize participation in the Local Government Employees Retirement System by appropriate order specifying the effective date of participation; specify that the systems may deny participation of any agency that does not have an agreement with the Personnel Cabinet for health insurance coverage except for a county government that entered the system between April 9, 2002 and July 1, 2003; require an agency that issues an order of participation to continue to participate except as provided in the Act; specify that participation orders from a county government may exclude hospitals or other semi-independent agencies from participation, with the excluded agency allowed to participate as a separate agency; and state that an agency whose participation is terminated may at a later date request participation by the appropriate order and consideration by the board of trustees; create a new section of KRS Chapter 78A to require certain county attorneys to participate as an employer in the Local Government Employees Retirement System or the Kentucky Employees Retirement System; require the participating county attorneys to determine membership in the appropriate retirement system for their employee, certify the participation to the board of trustees, and make the required contributions; create a new section of KRS Chapter 78A specifying that counties that have acquired private corporations, organizations, or entities may adopt an order electing to have the affected employees participate in the system and designate eligible employees; create a new section of KRS Chapter 78A to describe the ramifications if a county fails to comply with the provisions of Sections 44 to 73 of the Act; create a new section of KRS Chapter 78A to designate the membership of the Local Government Employees Retirement System; create a new section of KRS Chapter 78A designating that non-hazardous duty employees shall contribute 5% of creditable compensation if their membership is before July 1, 2008, and 4% if their membership is on or after July 1, 2008, and that hazardous duty employees shall contribute 8% of creditable compensation if their membership is before July 1, 2008, and 7% if their membership is on or after July 1, 2008; require the agency reporting official to deduct the contribution, regardless of the minimum compensation law; specify that each employer shall pick up the employee contribution for the purpose of compliance with Section 414(h) of the Internal Revenue Code; create a new section of KRS Chapter 78A requiring employee contributions to be deducted from creditable compensation, specifying how service credit is earned, and how refunds are made; create a new section of KRS Chapter 78A designating the three accounts in which all assets of the system are held and invested; create a new section of KRS Chapter 78A specifying the contents of the members' contribution account and the amount of interest credited on June 30 of each year from the retirement allowance account; create a new section of KRS Chapter 78A specifying the contents of the members' retirement allowance account and the payments from the account; create a new section of KRS Chapter 78A creating the Local Government Employees Retirement System Excess Benefit Plan for payment of retirement allowances that would otherwise be limited by 26 U.S.C. sec. 415, and the Local Government Employees Retirement System Excess Benefit fund consisting of all the assets of the plan; create a new section of KRS Chapter 78A establishing normal and early retirement eligibility requirements for employees in hazardous and non-hazardous duty positions whose membership date is before July 1, 2008, and applying the provision of KRS 78.510 to 78.852 whenever retirement benefits are not specified in the Act; create a new section of KRS Chapter 78A specifying the retirement eligibility for employees in hazardous and non-hazardous duty positions whose membership date is on or after July 1, 2008; create a new section of KRS Chapter 78A designating the benefit factors for members whose membership date is on or after July 1, 2008; create a new section of KRS Chapter 78A establishing an annuity savings account for employees whose membership date is on or after July 1, 2008, and requiring employers to deduct 1% of the member's creditable compensation to be credited to the member's annuity savings account; require each employer to pick up the employee contribution in accordance with Section 414(h) of the Internal Revenue Code; for employees whose membership in the Local Government Employees Retirement System is on or after July 1, 2008, require the employer to contribute and report a 2% lump-sum payment to the annuity savings account of each non-hazardous duty employee after the employee has earned five years of service credit; require the employer to contribute and report a 2.5% lump-sum payment to the annuity savings account of each hazardous duty employee after the employee has earned two years of service credit; for non-hazardous duty employees, require the employer to contribute 2% of the employee's creditable compensation if the employee has earned at least five years of service credit, 2.25% of the employee's creditable compensation if the employee has earned at least ten years of service credit, and 2.5% of the employee's creditable compensation if the employee has earned at least twenty years of service credit; for hazardous duty employees, require the employer to contribute 2.5% of the employee's creditable compensation if the employee has earned at least two years of service credit, 2.75% of the employee's creditable compensation if the employee has earned at least ten years of service credit, and 3% of the employee's creditable compensation if the employee has earned at least twenty years of service credit; mandate that the funds in the annuity savings account be invested in the same manner as the pension funds are administered during the first five years of the member's contribution; specify that the employer is to contribute to the annuity savings account in addition to the contribution rate established in KRS 61.565; require that the systems adjust the balance of the funds in the annuity savings account at least quarterly to credit the members account; specify that no funds may be available from the annuity savings account prior to a member's retirement, death, or refund; allow the board of trustees to establish distribution options for the annuity savings account and specify requirements of various options; authorize the board of trustees to establish new plans or amend existing plans under the Internal Revenue Code, and to promulgate administrative regulations; create a new section of KRS Chapter 78A allowing retired members to be re-employed by an agency participating in the Local Government Employees Retirement Systems under certain circumstances and specifying the resulting effect on their retirement, designating the contributions required of such a re-employed member, and specifying the retirement benefits available to the employee upon subsequent retirement; require that re-employed retired members and the participating agency shall certify on a board form that no prearranged agreement existed between the employee and the agency; create a new section of KRS Chapter 78A designating that the Local Government Employees Retirement System shall be administered by a separate board of trustees within the Kentucky Retirement Systems, and designate the board composition, powers, and duties; provide that the board shall promulgate administrative regulations; declare the legislative intent that the provisions of Sections 44 to 78 of this Act conform with federal statute or regulation and meet the qualification requirements under 26 U.S.C. sec. 401(a); require that provisions that conflict with federal law shall not be available; designate the Attorney General as the legal advisor and attorney for the board; allow the Attorney General to attend board meetings; require the system to publish an annual financial report and permit the board to select an independent certified public accountant or the Auditor of Public Accounts to perform the audit; provide all proceedings and records of the board to be open to the public; require expenses incurred to be paid by the retirement allowance account and provide for authorization of expenditures to be contained in the biennial budget; allow for appeals to the Franklin Circuit Court within 60 days of board action; set forth the ethical duties of the trustees; provide that no monetary damages or injunctive relief may be taken on the basis of a trustee's action or inaction except for certain circumstances; provide for the burden of proof in an action for monetary damages; provide for a hearing under KRS Chapter 13B when an order by the system substantially impairs the benefits or rights of a member, retired member, or recipient, with appeal rights to Franklin Circuit Court; create a new section of KRS Chapter 78A providing that the board is the trustee of the funds created by Sections 44 to 73 of this Act; allow the board to create an investment committee, and set out the fiduciary duties of trustees, officers, employees, or other fiduciaries; specify the registration of all securities acquired under the authority of Sections 44 to 73 of this Act; require the board to give priority to investment of funds that would improve the industrial development and economic welfare of the Commonwealth; specify that certain information is excluded from KRS 61.870 to 61.884; create a new section of KRS Chapter 78A specifying the investment authority of the board, signatory requirements for changes in registration by reason of sale or assignment of securities; require the board to give priority to investment of funds that would improve the industrial development and economic welfare of the Commonwealth; create a new section of KRS Chapter 78A to establish the annual contribution amount of each employer participating in the Local Government Employees Retirement System, including "normal" and "past service" contributions, and the calculation to determine those contributions; require the system to advise each employer of any change in the employer contribution rate that sets out the funding required for each budget; create a new section of KRS Chapter 78A requiring the board to adopt the actuarial tables necessary for the administration of the system, and cause an actuarial valuation to be made annually; require the board to cause an actuarial investigation to be made of all the experience under the retirement system at least once in each ten year period with a copy of the ten year evaluation sent to the Legislative Research Commission; provide for the revision of actuarial tables based on the investigation; create a new section of KRS Chapter 78A defining the terms relating to hazardous duty; provide for a system for requesting hazardous duty coverage for positions; require each employer to pay employer contributions for hazardous duty employees at the rate determined by the board; provide for conversion by employers who elect hazardous duty coverage if they participated in the system prior to electing hazardous duty coverage; mandate that persons employed in hazardous positions after July 1, 1972 must undergo a physical; create a new section of KRS Chapter 78A to require the board to arrange for a group health insurance plan for present and future retirees for plan years occurring on or after January 1, 2013 with the level of coverage, benefits, and payments made by the system in accordance with KRS 61.702; create a new section of KRS Chapter 78A specifying that Sections 44 to 73 shall constitute an inviolable contract of the Commonwealth except for member participating on or after July 1, 2008; create a new section of KRS Chapter 78A setting forth matters that are to be administered in the same manner as provided for the Kentucky Employees Retirement System; create a new section of KRS Chapter 78A setting out matters that are to be administered in the same manner as provided for the County Employees Retirement System; revise the CERS contributions for the 2008-2010 biennium.
CCR - Cannot agree.
Feb 21-introduced in House
Feb 25-to State Government (H); posting waived
Feb 26-reported favorably, 1st reading, to Calendar with Committee Substitute ; floor amendment (1) filed to Committee Substitute
Feb 27-2nd reading, to Rules; posted for passage in the Regular Orders of the Day for Thursday, February 28, 2008; floor amendments (2) (3) (4) (5) (6) (7) and (8) filed to Committee Substitute
Feb 28-3rd reading, passed 96-0 with Committee Substitute, floor amendments (1) (2) (7) and (8)
Feb 29-received in Senate
Mar 4-to State & Local Government (S)
Mar 5-taken from committee; 1st reading; returned to State & Local Government (S)
Mar 6-taken from committee; 2nd reading; returned to State & Local Government (S)
Mar 12-reported favorably, to Rules with Committee Substitute ; posted for passage in the Regular Orders of the Day for Wednesday, March 12, 2008; 3rd reading, passed 33-3 with Committee Substitute
Mar 13-received in House; to Rules (H)
Mar 19-posted for passage for concurrence in Senate Committee Substitute for Thursday, March 20, 2008; House refused to concur in Senate Committee Substitute
Mar 20-received in Senate; posted for passage for receding from Senate Committee Substitute ; Senate refused to recede from Committee Substitute ; Conference Committee appointed in Senate
Mar 25-Conference Committee appointed in House
Mar 26-Conference Committee report filed in House and Senate; Conference Committee report adopted in House and Senate; Free Conference Committee appointed in House and Senate
Vote History
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