AN ACT relating to office space leases for the Kentucky Public Pensions Authority and declaring an emergency.

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AN ACT relating to office space leases for the Kentucky Public Pensions Authority 1
and declaring an emergency. 2
Be it enacted by the General Assembly of the Commonwealth of Kentucky: 3
Section 1. KRS 61.505 is amended to read as follows: 4
(1) There is created an eight (8) member Kentucky Public Pensions Authority whose 5
purpose shall be to administer and operate: 6
(a) A single personnel system for the staffing needs of the Kentucky Retirement 7
Systems and the County Employees Retirement System; 8
(b) A system of accounting that is developed by the Authority for the Kentucky 9
Retirement Systems and the County Employees Retirement System; 10
(c) Day-to-day administrative needs of the Kentucky Retirement Systems and the 11
County Employees Retirement System, including but not limited to: 12
1. Benefit counseling and administration; 13
2. Information technology and services, including a centralized website f or 14
the Authority, the Kentucky Retirement Systems, and the County 15
Employees Retirement System; 16
3. Legal services; 17
4. Employer reporting and compliance; 18
5. Processing and distribution of benefit payments, and other financial, 19
investment administration, and accounting duties as directed by the 20
Kentucky Retirement Systems board of trustees or the County 21
Employees Retirement System board of trustees; 22
6. All administrative actions, orders, decisions, and determinations 23
necessary to carry out benefit functions re quired by the Kentucky 24
Retirement Systems and the County Employees Retirement System 25
statutes, including but not limited to administration of reduced and 26
unreduced retirement benefits, disability retirement, reemployment after 27
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retirement, service purchases , computation of sick -leave credit costs, 1
correction of system records, qualified domestic relations orders, and 2
pension spiking determinations; and 3
7. Completing and compiling financial data and reports; 4
(d) Any jointly held assets used for the administra tion of the Kentucky 5
Retirement Systems and the County Employees Retirement System, including 6
but not limited to real estate, office space, equipment, and supplies; 7
(e) The hiring of a single actuarial consulting firm who shall serve both the 8
Kentucky Retirement Systems and the County Employees Retirement System; 9
(f) The hiring of a single external certified public accountant who shall perform 10
audits for both the Kentucky Retirement Systems and the County Employees 11
Retirement System; 12
(g) The promulgation of administrative regulations as an authority or on behalf of 13
the Kentucky Retirement Systems and the County Employees Retirement 14
System, individually or collectively, provided such regulations are not 15
inconsistent with the provisions of this section and KRS 16.505 to 16.652, 16
61.505, 61.510 to 61.705, and 78.510 to 78.852, necessary or proper in order 17
to carry out the provisions of this section and duties authorized by KRS 18
16.505 to 16.652 and 61.510 to 61.705; 19
(h) A system of contracting management for administrative services; and 20
(i) Other tasks or duties as directed solely or jointly by the boards of the 21
Kentucky Retirement Systems or the County Employees Retirement System. 22
(2) The eight (8) member Kentucky Public Pensions Authority shall be composed of 23
the following individuals: 24
(a) The chair of the Kentucky Retirement Systems board of trustees; 25
(b) The chair of the County Employees Retirement System board of trustees; 26
(c) The investment committee chair of the Kentucky Retirement Systems board 27
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of trustees, unless the investment committee chair is also the chair of the 1
board of trustees in which case the chair of the Kentucky Retirement Systems 2
shall appoint an individual who serves on the investment committee; 3
(d) The investment committee chair of the County Employees Retirement System 4
board of trustees, unless the investment committee chair is also the chair of 5
the County Employees Retirement System board of trustees in which case the 6
chair of the County Employees Retirement System shall appoint an individua l 7
who serves on the investment committee; 8
(e) Two additional (2) trustees of the Kentucky Retirement Systems board of 9
trustees selected by the chair of the Kentucky Retirement Systems board of 10
trustees of which one (1) shall be a trustee who was elected by the 11
membership of one (1) of the systems administered by Kentucky Retirement 12
Systems and one (1) shall be a trustee of Kentucky Retirement Systems who 13
was appointed by the Governor; and 14
(f) Two additional (2) trustees of the County Employees Retirement Sy stem 15
board of trustees selected by the chair of the County Employees Retirement 16
System board of trustees of which one (1) shall be a trustee who was elected 17
by the membership of the County Employees Retirement System and one (1) 18
shall be a trustee of the C ounty Employees Retirement System who was 19
appointed by the Governor. 20
(3) The Kentucky Public Pensions Authority is hereby granted the powers and 21
privileges of a corporation, including but not limited to the following powers: 22
(a) To sue and be sued in its corporate name; 23
(b) To make bylaws not inconsistent with the law and in accordance with its 24
duties as provided by this section; 25
(c) To conduct the business and promote the purposes for which it was formed; 26
(d) To carry out the obligations of the Authority s ubject to KRS Chapters 45, 27
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45A, 56, and 57 , except that the Authority may purchase or lease suitable 1
office space for administration and operation of the retirement systems 2
administered by the Authority notwithstanding KRS Chapter 56; 3
(e) To purchase fiduciary liability insurance; and 4
(f) The Kentucky Public Pensions Authority shall reimburse any Authority 5
member, officer, or employee for any legal expense resulting from a civil 6
action arising out of the performance of his or her official duties. The hourly 7
rate of reimbursement for any con tract for legal services under this paragraph 8
shall not exceed the maximum hourly rate provided in the Legal Services 9
Duties and Maximum Rate Schedule promulgated by the Government 10
Contract Review Committee established pursuant to KRS 45A.705, unless a 11
higher rate is specifically approved by the secretary of the Finance and 12
Administration Cabinet or his or her designee. 13
(4) Any vacancy which may occur in an appointed position on the Kentucky Public 14
Pensions Authority shall be filled in the same manner which provides for the 15
selection of the particular member of the Authority. No person shall serve in more 16
than one (1) position as a member of the Authority and if a person holds more than 17
one (1) position as a member of the Authority, he or she shall resign a position. 18
(5) (a) Membership on the Authority shall not be incompatible with any other office 19
unless a constitutional incompatibility exists. No Authority member shall 20
serve in more than one (1) position as a member of the Authority. 21
(b) An Authority membe r shall be removed from office upon conviction of a 22
felony or for a finding of a violation of any provision of KRS 11A.020 or 23
11A.040 by a court of competent jurisdiction. 24
(c) A current or former employee of the County Employees Retirement System, 25
Kentucky Retirement Systems, or the Kentucky Public Pensions Authority 26
shall not be eligible to serve as a member of the Authority. 27
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(6) Kentucky Public Pensions Authority members who do not otherwise receive a 1
salary from the State Treasury shall receive a per die m of eighty dollars ($80) for 2
each day they are in session or on official duty, and they shall be reimbursed for 3
their actual and necessary expenses in accordance with state administrative 4
regulations and standards, except that the members shall not receiv e a per diem or 5
receive reimbursements on the same day they receive a per diem or reimbursements 6
for service to the Kentucky Retirement Systems board of trustees or County 7
Employees Retirement Systems board of trustees. 8
(7) (a) The Authority shall meet at least once in each quarter of the year and may 9
meet in special session upon the call of the chair or the executive director of 10
the Authority. 11
(b) The Authority shall elect a chair and a vice chair. The chair shall not serve 12
more than four (4) consecutive y ears as chair or vice chair of the Authority. 13
The vice chair shall not serve more than four (4) consecutive years as chair or 14
vice chair of the Authority. A member who has served four (4) consecutive 15
years as chair or vice chair of the Authority may be ele cted chair or vice chair 16
of the Authority after an absence of two (2) years from the positions. 17
(c) A majority of the Authority members shall constitute a quorum and all actions 18
taken by the Authority shall be by affirmative vote of a majority of the 19
Authority members present. 20
(d) The Authority shall post on the Authority's website and shall make available 21
to the public: 22
1. All meeting notices and agendas of the Authority. Notices and agendas 23
shall be posted to the Authority's website at least seventy-two (72) hours 24
in advance of the Authority's meetings, except in the case of special or 25
emergency meetings as provided by KRS 61.823; 26
2. All Authority minutes or other materials that require adoption or 27
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ratification by the Authority. The items listed in this su bparagraph shall 1
be posted within three (3) business days of adoption or ratification of the 2
Authority; 3
3. All bylaws, policies, or procedures adopted or ratified by the Authority; 4
and 5
4. A listing of the members of the Authority and membership on each 6
committee established by the Authority. 7
(8) (a) The Kentucky Public Pensions Authority shall appoint or contract for the 8
services of an executive director and a chief auditor and fix the compensation 9
and other terms of employment for these positions without l imitation of the 10
provisions of KRS Chapter 18A, 45A, and KRS 64.640. The executive 11
director shall be the chief administrative officer of the Authority, the 12
Kentucky Retirement Systems board of trustees, and the County Employees 13
Retirement System board of t rustees. The chief auditor shall report directly to 14
the Kentucky Public Pensions Authority members to perform internal audit 15
functions as directed by the Authority. The executive director and chief 16
auditor shall work cooperatively with the chief executive officers of the 17
Kentucky Retirement Systems and the County Employees Retirement System. 18
The Authority shall annually conduct a performance evaluation of the 19
executive director and chief auditor. 20
(b) The Kentucky Public Pensions Authority shall authorize th e executive 21
director, or the chief auditor in the case of employees under the direct 22
supervision of the chief auditor, to appoint the employees deemed necessary 23
to transact the duties of the Authority for the purposes outlined in subsection 24
(1) of this sec tion. After April 14, 2022, approval by the Authority shall be 25
required for a petition to the secretary of the Personnel Cabinet for the 26
creation of any new unclassified position pursuant to KRS 18A.115(1)(e), (g), 27
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(h), and (i). 1
(c) Effective April 1, 2021, the Kentucky Public Pensions Authority shall assume 2
responsibility of administering the staff of the Kentucky Retirement Systems 3
in order to provide the services established by this section. 4
(d) 1. All employees of the Kentucky Public Pensions Authority, except for 5
the executive director, the chief auditor, and no more than six (6) 6
unclassified employees of the Office of Investments employed pursuant 7
to KRS 18A.115(1)(e), (g), (h), and (i), shall be subject to the state 8
personnel system established pursua nt to KRS 18A.005 to 18A.204 and 9
shall have their salaries determined by the secretary of the Personnel 10
Cabinet. 11
2. The employees exempted from the classified service under this 12
paragraph shall not be subject to the salary limitations specified in KRS 13
64.640(2) and (3). 14
3. The Kentucky Public Pensions Authority shall adopt a written salary and 15
classification plan fixing a range of compensation and written terms of 16
employment for any of the unclassified employees of the Office of 17
Investments it authorizes un der this paragraph. The Authority shall 18
authorize the executive director to appoint up to six (6) unclassified 19
employees of the Office of Investments subject to the compensation 20
ranges and terms of employment the Authority has established. The 21
Authority may amend the written salary and classification plan adopted 22
under this paragraph at any time. 23
(e) The Authority shall annually review, approve, and submit a report to the 24
Public Pension Oversight Board detailing the number of employees of the 25
Authority, the salary paid to each employee, and the change in the salaries of 26
each individual employed by the Authority over the prior year. 27
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(f) The Authority shall require the executive director and the employees as it 1
thinks proper to execute bonds for the faithful p erformance of their duties 2
notwithstanding the limitations of KRS Chapter 62. 3
(g) Notwithstanding any other provision of statute to the contrary, including but 4
not limited to any provision of KRS Chapter 12, the Governor shall have no 5
authority to change any provision of this section by executive order or action, 6
including but not limited to reorganizing, replacing, amending, or abolishing 7
the membership of the Kentucky Public Pensions Authority. 8
(9) All employees of the Authority shall serve during its wil l and pleasure. 9
Notwithstanding any statute to the contrary, employees shall not be considered 10
legislative agents under KRS 6.611. 11
(10) The Attorney General, or an assistant designated by him or her, may attend each 12
meeting of the Authority and may receive the agenda, board minutes, and other 13
information distributed to Authority members upon request. The Attorney General 14
may act as legal adviser and attorney for the Authority, and the Authority may 15
contract for legal services, notwithstanding the limitation s of KRS Chapter 12 or 16
13B. 17
(11) (a) 1. All expenses incurred by or on behalf of the Kentucky Public Pensions 18
Authority shall be paid by the systems administered by the Kentucky 19
Retirement Systems or the County Employees Retirement System and 20
shall be prorated, assigned, or allocated to each system as determined by 21
Kentucky Public Pensions Authority. 22
2. Until June 30, 2024, any additional initial costs determined by the 23
Authority to be attributable solely to establishing a separate County 24
Employees Retirement System board and the Kentucky Public Pensions 25
Authority as provided by this section and KRS 78.782 shall be paid by 26
the County Employees Retirement System. Until June 30, 2024, any 27
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additional ongoing annual administrative and investment expenses that 1
occur after the establishment of a separat e County Employees 2
Retirement System board and the Kentucky Public Pensions Authority 3
that are determined by the Authority to be a direct result of establishing 4
a separate County Employees Retirement System board and the 5
Kentucky Public Pensions Authority shall be paid by the County 6
Employees Retirement System. Beginning on and after July 1, 2024, any 7
annual administrative and investment expenses shall be prorated, 8
assigned, or allocated to each system as determined by the Kentucky 9
Public Pensions Authority as provided by subparagraph 1. of this 10
paragraph but without attribution to the establishment of a separate 11
County Employees Retirement System board and the Kentucky Public 12
Pensions Authority. 13
3. In order to evaluate the results of establishing a separate County 14
Employees Retirement System board and the Kentucky Public Pensions 15
Authority, on or before November 15, 2022, and on or before November 16
15 following the close of each successive fiscal year, the Kentucky 17
Public Pensions Authority shall report to th e Public Pension Oversight 18
Board the annual administrative and investment expenses of the 19
Kentucky Retirement Systems and the County Employees Retirement 20
System. The report shall include but not be limited to the process or 21
manner the Authority used to pro rate, assign, or allocate to each system 22
its share of the expenses, the amount of expenses prorated, assigned, or 23
allocated to each system itemized by category, and any efforts by the 24
systems or the Authority to reduce administrative costs and staffing 25
needs. 26
(b) Any other statute to the contrary notwithstanding, authorization for all 27
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expenditures relating to the administrative operations of the Kentucky Public 1
Pensions Authority, the Kentucky Retirement Systems, and the County 2
Employees Retirement System s hall be contained in the biennial budget unit 3
request, branch budget recommendation, and the financial plan adopted by the 4
General Assembly pursuant to KRS Chapter 48. The Kentucky Public 5
Pensions Authority shall approve the biennial budget unit request pr ior to its 6
submission by the Authority. The request from the Kentucky Public Pensions 7
Authority shall include any specific administrative expenses requested by the 8
Kentucky Retirement Systems board of trustees or the County Employees 9
Retirement System boar d of trustees pursuant to KRS 61.645(13) or 10
78.782(13), as applicable, that are not otherwise expenses specified by 11
paragraph (a) of this subsection. 12
(12) (a) An Authority member shall discharge his or her duties as a member of the 13
Authority, including his or her duties as a member of a committee of the 14
Authority: 15
1. In good faith; 16
2. On an informed basis; and 17
3. In a manner he or she honestly believes to be in the best interest of the 18
County Employees Retirement System and the Kentucky Retirement 19
Systems, as applicable. 20
(b) An Authority member discharges his or her duties on an informed basis if, 21
when he or she makes an inquiry into the business and affairs of the 22
Authority, system, or systems or into a particular action to be taken or 23
decision to be made, he or she exercises the care an ordinary prudent person 24
in a like position would exercise under similar circumstances. 25
(c) In discharging his or her duties, an Authority member may rely on 26
information, opinions, reports, or statements, including financial statements 27
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and other financial data, if prepared or presented by: 1
1. One (1) or more officers or employees of the Authority whom the 2
Authority member honestly believes to be reliable and competent in the 3
matters presented; 4
2. Legal counsel, public accounta nts, actuaries, or other persons as to 5
matters the Authority member honestly believes are within the person's 6
professional or expert competence; or 7
3. A committee of the Authority of which he or she is not a member if the 8
Authority member honestly believes the committee merits confidence. 9
(d) An Authority member shall not be considered as acting in good faith if he or 10
she has knowledge concerning the matter in question that makes reliance 11
otherwise permitted by paragraph (c) of this subsection unwarranted. 12
(e) Any action taken as a member of the Authority, or any failure to take any 13
action as an Authority member, shall not be the basis for monetary damages 14
or injunctive relief unless: 15
1. The Authority member has breached or failed to perform the duties of 16
the member's office in compliance with this section; and 17
2. In the case of an action for monetary damages, the breach or failure to 18
perform constitutes willful misconduct or wanton or reckless disregard 19
for human rights, safety, or property. 20
(f) A person bri nging an action for monetary damages under this section shall 21
have the burden of proving by clear and convincing evidence the provisions of 22
paragraph (e)1. and 2. of this subsection, and the burden of proving that the 23
breach or failure to perform was the l egal cause of damages suffered by the 24
Kentucky Retirement Systems or County Employees Retirement System, as 25
applicable. 26
(g) In discharging his or her administrative duties under this section, an Authority 27
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member shall strive to administer the systems in an efficient and cost -1
effective manner for the taxpayers of the Commonwealth of Kentucky and 2
shall take all actions available under the law to contain costs for the trusts, 3
including costs for participating employers, members, and retirees. 4
Section 2. Whereas the efficient administration of the Kentucky Public 5
Pensions Authority is critical to system employees, system employers, and the 6
Commonwealth of Kentucky, an emergency is declared to exist, and this Act takes effect 7
upon its passage and approval by the Governor or upon its otherwise becoming a law. 8