AN ACT relating to education.

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AN ACT relating to education. 1
Be it enacted by the General Assembly of the Commonwealth of Kentucky: 2
Section 1. KRS 160.210 is amended to read as follows: 3
(1) In independent school districts, the members of the school board shall be elected 4
from the district at large. In county school districts, members shall be elected from 5
divisions. 6
(2) The board of education of each county school district shall [, not later than July 1, 7
1940,] divide its district into five (5) divisions containing integral voting precincts 8
and as equal in population insofar as is practicable. In [ first] dividing the county 9
district into divisi ons the board shall, if more than one (1) of its members reside in 10
one (1) division, determine by lot which member from that division shall represent 11
that division, and which members shall represent the divisions in which no member 12
resides. The members so determined to represent divisions in which no member 13
resides shall be considered the members from those divisions until their terms 14
expire, and thereafter the members from those divisions shall be nominated and 15
elected as provided in KRS 160.200 and 160.220 to 160.250. 16
(3) Any changes made in division boundary lines shall be to make divisions as equal in 17
population and containing integral voting precincts insofar as is practical. No 18
change may be made in division boundary lines less than five (5) years after the last 19
change in any division lines, except in case of merger of districts, a change in 20
territory due to annexation, a district meeting the provisions of subsection (5) of 21
this section, or to allow compliance with KRS 117.055(2). 22
(4) (a) Notwithstanding the provisions of subsection (3) of this section, if one 23
hundred (100) residents of a county school district division petition the 24
Kentucky Board of Education stating that the school district divisions are not 25
divided as nearly equal in population as can reasonably be expected, the chief 26
state school officer shall cause an investigation to determine the validity of the 27
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petition, the investigation to be completed within thirty (30) days after receipt 1
of the petition. 2
(b) If the investigation reveals the school district to be unequally divided 3
according to population, the Kentucky Board of Education, upon the 4
recommendation of the chief state school officer, shall order the local board of 5
education to make changes in school district divisions as are necessary to 6
equalize population within the five (5) school divisions. 7
(c) If any board fails to comply with the order of the Kentucky Board of 8
Education within thirty (30) days or prior to August 1 in any year in which 9
any members of the board are to be elected, members shall be elected from 10
the district at large until the order of the Kentucky Board of Education has 11
been complied with. 12
(d) No change shall be made in the boundary of any division under the provisions 13
of this subsection after August 1 in the year in which a member of the school 14
board is to be elected from any division. 15
(5) Notwithstanding the provisions of subsection (2) of this section, in county school 16
districts having reached an end -of-year enrollment of twenty -five thousand 17
(25,000) or more students [counties containing a city of the first class wherein a 18
merger pursuant to KRS 160.041 shall have been accomplished]: 19
(a) [, ]There shall be: 20
1. Seven (7) divisions as equal in population as is practicable, with one (1) 21
member appointed[ members elected] from each of the divisions by the 22
chief executive officer of the county and confirmed by the legislative 23
body of the county in accordance with paragraph (c) of this 24
subsection. The county board of education shall deter mine the 25
divisions. To be eligible to be appointed[elected] from a division, a 26
candidate must reside in that division; and 27
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2. Four (4) members from the district at large appointed by the chief 1
executive officer of the county in accordance with paragraph (b ) of 2
this subsection and confirmed by the legislative body of the county in 3
accordance with paragraph (c) of this subsection; 4
(b) Appointments to the county board of education under this subsection shall 5
reflect no less than proportional representation of the two (2) leading 6
political parties of the Commonwealth based on the county's voter 7
registration and the political affiliation of each appointee as of December 8
31 of the year preceding the date of his or her appointment. A particular 9
political party affi liation shall not be a prerequisite to appointment to the 10
board generally, however, if any person is appointed to the board who is not 11
affiliated with either of the two (2) leading political parties of the 12
Commonwealth, the proportional representation by political party affiliation 13
requirement shall be determined and satisfied based on the total number of 14
members on the board less any members not affiliated with either of the two 15
(2) leading political parties; [. The divisions, based upon 1970 United States 16
Census Bureau Reports on total population by census tracts for Jefferson 17
County, Kentucky shall be as follows: Division One shall include census 18
tracts 1-28; Division Two shall include census tracts 29 -35, 47-53, 57-74, 80-19
84, 93, 129, 130; Division Three shall include census tracts 75 -79, 85-88, 98-20
106, 107.01, 108; Division Four shall include census tracts 121.01, 123 -128; 21
Division Five shall include census tracts 36 -46, 56, 90, 120, 121.02, 122; 22
Division Six shall include census tracts 54, 55, 91, 92, 94 , 95, 110.02, 113, 23
114, 117.01, 117.02, 118, 119; Division Seven shall include census tracts 89, 24
96, 97, 107.02, 109, 110.01, 111, 112, 115, 116, 117.03, 131, 132.] 25
(c) For confirmation of appointments to county boards of education under this 26
subsection, if the legislative body of the county declines to: 27
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1. Consider an appointee within ninety (90) calendar days, the position 1
shall become vacant at that time and the appointee shall not be 2
reappointed to the county board of education for a period of two (2) 3
years from that date; and 4
2. Confirm the appointee, the position shall become vacant upon the date 5
the legislative body of the county declines to confirm the appointment 6
and the appointee shall not be reappointed to the county board of 7
education for a period of two (2) years from that date; and 8
(d) The terms of the members [ to be elected] , KRS 160.044 notwithstanding, 9
shall be four (4) years[ and the election for the initial four (4) year terms shall 10
be as follows: The election of the members from Divisions Two, Four and 11
Seven shall be held at the next regular November election following the 12
effective date of the merger pursuant to KRS 160.041, and the election of the 13
members from Divisions One, Three, Five and Six shall be held at the regular 14
November election two (2) years thereafter]. 15
(6) [In counties containing cities of the first class, ] Responsibility for the establishment 16
and[or] the changing of county school board division boundaries shall be with the 17
county[local] board of education, subject to the re view and approval of the county 18
board of elections , or in the case of a county school district having reached an 19
end-of-year enrollment of twenty-five thousand (25,000) or more students, subject 20
to the review and approval of the legislative body of the cou nty. Where division 21
and census tract boundaries do not coincide with existing election precinct 22
boundaries, school board divisions shall be redrawn to comply with precinct 23
boundaries. In no instance shall precinct boundaries be redrawn nor shall a precinct 24
be divided to accommodate the drawing of school board division lines. [Precinct 25
boundaries nearest existing school board division boundaries shall become the new 26
division boundary. ]All changes under this section[statute] shall be completed on or 27
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before[ January 1, 1979, and on or before] January 1 in any [ succeeding] year in 1
which a member of the [ school] board is to be elected or appointed from any 2
division. A record of all changes in division lines shall be kept in the offices of the 3
county board of education [ and the county board of elections] . The board of 4
education shall publish all changes pursuant to KRS Chapter 424. A copy of the 5
newspaper in which the notice is published shall be filed with the chief state school 6
officer within ten (10) days following its publication. 7
Section 2. KRS 160.160 is amended to read as follows: 8
(1) As used in Sections 1, 2, 4, and 6 of this Act, for counties containing a county 9
school district having reached an end -of-year enrollment of twenty-five thousand 10
(25,000) or more students, "chief executive officer" means the: 11
(a) Mayor of a consolidated local government; 12
(b) Mayor of an urban-county government; or 13
(c) County judge/executive of the county for counties not organized under the 14
forms of government listed in paragraph (a) or (b) of this subsection. 15
(2) Each school district shall be under the management and control of a board of 16
education consisting of five (5) members, except in county school districts having 17
reached an end -of-year enrollment of twenty -five thousand (25,000) or more 18
students[counties containing a city of the first class wherein a merger pursuant to 19
KRS 160.041 shall have been accomplished] which shall have eleven (11) 20
members, including seven (7) members appointed by the chief executive 21
officer[elected] from[ the] divisions and four (4) members appointed by the chief 22
executive officer from the district at large in the manner prescribed by Section 1 of 23
this Act [KRS 160.210(5)] , to be known as the "Board of Education of ...., 24
Kentucky." Each board of education shall be a body politic and corporate with 25
perpetual succession. It may sue and be sued; make co ntracts; expend funds 26
necessary for liability insurance premiums and for the defense of any civil action 27
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brought against an individual board member in his or her official or individual 1
capacity, or both, on account of an act made in the scope and course of his or her 2
performance of legal duties as a board member; purchase, receive, hold, and sell 3
property; issue its bonds to build and construct improvements; and do all things 4
necessary to accomplish the purposes for which it is created. Each board of 5
education shall elect a chair[chairman] and vice chair[chairman] from its 6
membership in a manner and for a term prescribed by the board not to exceed two 7
(2) years. 8
(3)[(2)] No board of education shall participate in any financing of school buildings, 9
school imp rovements, appurtenances thereto, or furnishing and equipment, 10
including education technology equipment without: 11
(a) First establishing the cost of the project in advance of financing, based on the 12
receipt of advertised, public, and competitive bids for su ch project, in 13
accordance with KRS Chapter 424; and 14
(b) Establishing the cost of financing in advance of the sale of any bonds, 15
certificates of participation in any leases, or other evidences of financial 16
commitments issued by or on behalf of such board. A ny bonds, leases, 17
participations, or other financial arrangements shall not involve a final 18
commitment of the board until the purchaser or lender involved shall have 19
been determined by public advertising in accordance with KRS Chapter 424. 20
(4)[(3)] No boar d of education shall make a mortgage, lien, or other encumbrance 21
upon any school building owned by the board, or transfer title to any such school 22
building as part of any financing arrangement, without the specific approval of the 23
Department of Education, and without the transaction being entered into pursuant to 24
a detailed plan or procedure specifically authorized by Kentucky statute. 25
(5)[(4)] Without the approval of the Department of Education, no board may lease, as 26
lessee, a building or public facility that has been or is to be financed at the request 27
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of the board or on its behalf through the issuance of bonds by another public body 1
or by a nonprofit corporation serving as an agency and instrumentality of the board, 2
or by a leasing corporation. Any lease , participation, or other financial arrangement 3
shall not involve a final commitment of the board unless and until the purchaser or 4
lender involved in same shall have been determined by public advertising in 5
accordance with KRS Chapter 424. No transaction shall be entered into by the 6
board except upon the basis of public advertising and competitive bidding in 7
accordance with KRS Chapter 424. 8
(6)[(5)] A school district may issue general obligation bonds in accordance with KRS 9
Chapter 66. 10
(7)[(6)] Rental payments due by a board under a lease approved by the Department of 11
Education in accordance with subsection (5)[(4)] of this section, and debt service 12
payments under a general obligation bond issued in accordance with this section, 13
shall be due and payable not less than ten (10) days prior to the interest due date for 14
the bonds, notes, or other debt obligations issued to finance the building or public 15
facility. If a board fails to make a rental payment when due under a lease or a debt 16
service payment when due for a general obligation bond issue, upon notification to 17
the Department of Education by the paying agent, bond registrar, or trustee for the 18
bonds not less than three (3) days prior to the interest due date, the Department of 19
Education shall wit hhold or intercept any funds then due the board to the extent of 20
the amount of the required payment on the bonds and remit the amount to the 21
paying agent, bond registrar, or trustee as appropriate. Thereafter, the Department 22
of Education shall resolve the matter with the board and adjust remittances to the 23
board to the extent of the amount paid by the Department of Education on the 24
board's behalf. 25
(8)[(7)] Bonds, notes, or leases negotiated to provide education technology shall not 26
be sold for longer than s even (7) years or the useful life of the equipment as 27
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established by the state technology master plan, whichever is less. 1
(9)[(8)] Notwithstanding any requirements of public advertising, competitive bidding, 2
or approval by the Department of Education, or any administrative regulation 3
promulgated pursuant to KRS 156.160(1)(o), a local board may authorize the 4
transfer or sale of the dis trict's real or personal property to another governmental or 5
quasi-governmental agency in exchange for money or a similar type of property that 6
equals or exceeds the fair market value of the district property as determined by an 7
independent appraisal conducted by: 8
(a) An individual or organization not affiliated with the district or its officers or 9
employees, using a generally accepted national or professional standard; or 10
(b) A district's officers or employees using a nationally published valuation of 11
property based on the most recent edition of the publication. 12
Section 3. KRS 160.170 is amended to read as follows: 13
Every person elected or appointed to a board of education shall, before assuming the 14
duties of the office, take the following oath, in addition to the constitutional oath: 15
"State of Kentucky, 16
"County of _________ 17
"_______________, being duly sworn, says that he or she is eligible under the law 18
to serve as a member of the board of education, and that he or she will, while serving as a 19
member of such board, carry out all duties prescribed by law and remain eligible for 20
membership on the board of education. 21
"_______________________ 22
"Subscribed and sworn to before me this _____ day of ____________ 23
"_______________________" 24
The oath shall be kept on record by the board. 25
Section 4. KRS 160.190 is amended to read as follows: 26
(1) (a) Except as provided in paragraph (b) of this subsection, any vacancy in any 27
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board of education shall be filled by a majority vote of the remaining 1
members of the local board within sixty (60) days after the vacancy occurs. 2
Within thirty (30) days of the vacancy, the local board shall, for two (2) 3
weeks, have solicited applications by posting a notice announcing the vacancy 4
on the district's website and by placing an advertisement in the newspaper of 5
the largest general circulation in the county. An applicant shall file a letter of 6
intent with the local board affirming that the applicant mee ts the eligibility 7
requirements as established by KRS 160.180 and shall submit with the 8
application a transcript evidencing completion of the twelfth grade or results 9
of a twelfth grade equivalency examination. After the two (2) weeks of 10
advertisement on t he district's website and in the newspaper, the local board 11
shall select from the applicants under this subsection to fill the vacancy. 12
(b) In county school districts having reached an end -of-year enrollment of 13
twenty-five thousand (25,000) or more student s, any vacancy in the county 14
board of education shall be filled for the remainder of the unexpired term 15
by the chief executive officer of the county within sixty (60) days after the 16
vacancy occurs and in accordance with subsection (5) of Section 1 of this 17
Act. 18
(2) If the local board or chief executive officer, as applicable, fails to make an 19
appointment under subsection (1) of this section, then the chief state school officer 20
shall fill the vacancy within sixty (60) days of the failure. 21
(3) The member appointed[chosen] under this section shall meet the eligibility 22
requirements as established by KRS 160.180 and shall hold office until his or her 23
successor is elected or appointed, and has qualified. 24
(4) Any vacancy of an elected position having an unexpired te rm of one (1) year or 25
more on August 1 after the vacancy occurs shall be filled for the unexpired term by 26
an election to be held at the next regular election after the vacancy occurs. The 27
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elected member shall succeed the member chosen under subsection (1) or (2) of this 1
section to fill the vacancy. Nominating petitions shall be filed with the county clerk 2
not later than the second Tuesday in August preceding the day for holding the 3
regular election for the unexpired term. Declarations of intent to be a writ e-in 4
candidate shall be filed with the county clerk in accordance with KRS 117.265. 5
(5) (a) If no candidate files a petition of nomination or declaration of intent to be a 6
write-in candidate to fill an unexpired term on a local board of education 7
under sub section (4) of this section, then a new vacancy shall exist on 8
November 1 and the vacancy shall be filled according to subsection (1) of this 9
section. 10
(b) If no candidate files a petition of nomination or declaration of intent to be a 11
write-in candidate fo r a new term on a local board of education opening 12
pursuant to KRS 118.315 and 118.365, then a vacancy shall exist on January 1 13
and the vacancy shall be filled according to subsection (1) of this section. 14
Section 5. KRS 160.180 is amended to read as follows: 15
(1) As used in this section, "relative" means father, mother, brother, sister, husband, 16
wife, son, and daughter. 17
(2) A person shall only be eligible for membership on a board of education if the 18
person: 19
(a) Has attained the age of twenty-four (24) years; 20
(b) Has been a citizen of Kentucky for at least three (3) years preceding the 21
election and is a voter of the district for which he or she is elected; 22
(c) Has completed at least the twelfth grade or has been issued a High School 23
Equivalency Diploma, as evidenced by: 24
1. An affidavit signed under penalty of perjury certifying completion of the 25
twelfth grade or the equivalent that has been filed with the nominating 26
petition required by KRS 118.315; or 27
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2. A transcript evidencing completion of the twelfth grade or th e results of 1
a twelfth grade equivalency examination that has been filed with the 2
nominating petition required by KRS 118.315; 3
(d) Does not hold any elective federal, state, county, or city office; 4
(e) Is not, at the time of his or her election or appointment, directly or indirectly 5
interested in the sale to the board of books, stationery, or any other property, 6
materials, supplies, equipment, or services for which school funds are 7
expended; 8
(f) Has not been removed from membership on a board of education f or cause; 9
and 10
(g) Does not have a relative employed by the school district, in the case of a 11
person elected or appointed after July 13, 1990. This shall not apply to a 12
board member holding office on July 13, 1990, whose relative was not 13
initially hired by the district during the tenure of the board member. 14
(3) (a) An elected [A] member of a board of education shall be subject to removal 15
from office pursuant to KRS 415.050 and 415.060, and an appointed member 16
shall be subject to removal from office pursuant t o subsection (2) of Section 17
6 of this Act, if[,] after the election or appointment the member: 18
1. Becomes interested in any contract with or claims against the board, of 19
the kind mentioned in subsection (2)(e) of this section; 20
2. Moves his or her residence from the division for which he or she was 21
chosen; 22
3. Attempts to influence the employment of any school employee, except 23
the superintendent or school board attorney; 24
4. Is convicted of a felony; 25
5. Performs acts of malfeasance in performance of duties pre scribed by 26
law; 27
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6. Willfully misuses, converts, or misappropriates public property or funds; 1
or 2
7. Does anything that would render the member ineligible for reelection or 3
reappointment. 4
(b) In accordance with KRS 7.410, the Office of Education Accountabili ty shall 5
have the duty and responsibility to investigate current local board of education 6
members for allegations of conduct prohibited by paragraph (a) of this 7
subsection. After review and investigation, the Office of Education 8
Accountability shall refer appropriate matters to the Attorney General. 9
(4) A member of a board of education shall be eligible for reelection or reappointment 10
unless he or she becomes disqualified. 11
(5) The annual in-service training requirements for all members of boards of educatio n 12
serving[in office] as of December 31, 2014, shall be as follows: 13
(a) Twelve (12) hours for members with zero to three (3) years of experience; 14
(b) Eight (8) hours for members with four (4) to seven (7) years of experience; 15
and 16
(c) Four (4) hours for members with eight (8) or more years of experience. 17
The Kentucky Board of Education shall identify the criteria for fulfilling this 18
requirement. 19
(6) (a) For all members of boards of education who begin their initial service on or 20
after January 1, 2015, the in-service training requirements shall be: 21
1. Twelve (12) hours for members with zero to eight (8) years of 22
experience each year, which shall include a minimum of: 23
a. One (1) hour of ethics training each year; and 24
b. One (1) hour of open meetings and open records training within 25
the first twelve (12) months of initial service and at least once 26
every four (4) years thereafter; and 27
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2. Eight (8) hours for members with more than eight (8) years of 1
experience each year, which shall include a minimum of: 2
a. One (1) hour of ethics training each year; and 3
b. One (1) hour of open meetings and open records training at least 4
once every four (4) years. 5
(b) Training topics for members under this subsection with less than two (2) years 6
of consecutive service shall include three (3) hours of finance and one (1) 7
hour of superintendent evaluation within the first two (2) years of service. The 8
Kentucky Board of Education shall identify criteria for fulfilling this 9
requirement. 10
Section 6. KRS 156.132 is amended to read as follows: 11
(1) (a) As used in this subsection[section], except in paragraph (b) of this 12
subsection[ (1)] , "public school officer" means a person who previously 13
served as a superintendent of schools or as an appointed member of a county 14
board of education during which time charges were brought against him or 15
her under this section. 16
(b)[(1)] The chief state school officer shall recommend, by written charges to the 17
proper school authorities having immediate jurisdiction, the removal of any 18
superintendent of schools, principal, teacher, member of a school council, 19
appointed member of a county board of education, or other public school 20
officer as to whom he or she has reason to believe is guilty of immorality, 21
misconduct in office, incompetency, willful neglect of duty, or nonfeasance. 22
In the case of a member of a school council or appointed member of a county 23
board of education, the written charges shall be provided to the local board of 24
education. 25
(c)[(2)] The chief state school officer shall recommend by written charges the 26
suspension by the Kentucky Board of Education of any superintendent of 27
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schools or other public school officer whom he or she has reason to believe is 1
guilty of immorality, misconduct in office, incompetency, willful neglect of 2
duty, or nonfeasance. If the charges brought under this paragraph[subsection] 3
represent an immediate threat to the publ ic health, safety, or welfare, the 4
Kentucky Board of Education shall summarily suspend the person against 5
whom the charges are made. The action by the Kentucky Board of Education 6
may be taken upon a recommendation of the chief state school officer, or the 7
action may be taken by a majority vote of the Kentucky Board of Education 8
without recommendation from the chief state school officer. 9
(d)[(3)] The Kentucky Board of Education may suspend a district superintendent 10
of schools or other public school officer u nder paragraph (c) of this 11
subsection[subsection (2) of this section] or remove him or her pursuant to 12
paragraph (f) of this subsection[ (5) of this section] only if, after thirty (30) 13
days of receipt of the written charges specified in subsection (1) of t his 14
section, the proper school authorities having immediate jurisdiction, either the 15
superintendent or the district board of education, have refused to act, have 16
acted in bad faith, arbitrarily, or capriciously, or if a recommendation to the 17
district board would have been futile. 18
(e)[(4)] Any officer suspended by the Kentucky Board of Education under 19
paragraph (c) of this subsection[ (2) of this section] shall be furnished with 20
an emergency order specifying in detail the reasons for suspension and 21
notifying the officer of his or her right to appeal the action and have an 22
emergency hearing pursuant to KRS 13B.125. 23
(f)[(5)] As an alternative to first seeking suspension, the chief state school 24
officer may recommend by written charges the removal by the Kentucky 25
Board of Education of any superintendent of schools or other public school 26
officer whom he or she has reason to believe is guilty of immorality, 27
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misconduct in office, incompetency, willful neglect of duty, or nonfeasance. 1
The officer against whom the writ ten charges are issued by the chief state 2
school officer shall be furnished with the written charges and notice of 3
procedural rights conferred under KRS Chapter 13B. Within twenty (20) days 4
after receipt of the charges, the officer may notify the Kentucky Board of 5
Education of his or her intention to appear and answer the charges. Upon 6
appeal, an administrative hearing shall be conducted in accordance with KRS 7
Chapter 13B. If the officer fails to notify the board of his or her intention to 8
appear and answer the charges, the Kentucky Board of Education may remove 9
the officer by a majority vote, and the dismissal shall be final. 10
(g)[(6)] The hearing shall be public or private at the discretion of the accused 11
former or current superintendent and shall be public when testimony is taken 12
for board members. 13
(h)[(7)] The Kentucky Board of Education may meet in closed session to 14
consider the evidence and may by a majority vote remove the officer. If the 15
board votes to remove the officer, the board shall prepare final order 16
specifying which charge or charges it found to be the basis for removal. If 17
within ninety (90) days from the date of suspension if applicable, the state 18
board has not removed the officer, or has dismissed the charges, the 19
suspended officer shall be reinstated and shall be paid his or her full salary for 20
the period of suspension. 21
(i)[(8)] The officer shall have a right to appeal on the record to the Circuit Court 22
located in the county of the school district in accordance with KRS Chapter 23
13B. If the de cision of the court is against removal, the officer shall be paid 24
his or her full salary from the date of suspension. The payment shall be made 25
from funds appropriated to the State Department of Education. 26
(j)[(9)] If a superintendent of schools is removed from office or resigns while 27
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charges are pending pursuant to this section [ after July 15, 1994] , any 1
continuing contract pursuant to KRS 161.720 to 161.810 shall be terminated. 2
If the removal is reversed upon appeal, the continuing contract shall be 3
restored and he or she shall be paid his or her full salary for the period of 4
suspension. 5
(2) In county school districts having reached an end -of-year enrollment of twenty -6
five thousand (25,000) or more students, the chief executive officer of the county 7
may remove a member of the board of education appointed in accordance with 8
subsection (5) of Section 1 of this Act for cause, including but not limited to 9
malfeasance, misfeasance, incompetence, or gross neglect of duty. 10
Section 7. KRS 160.240 is amended to read as follows: 11
[(1) ]The general election laws shall apply to all elections of school board members[. 12
(2) In school districts embracing designated cities, the expense of the election shall be 13
paid by the cit y from its general funds. In all other districts the expense shall be 14
paid by the fiscal court out of its general funds. 15
(3) As used in this section, "designated city" has the same meaning as in KRS 16
160.020]. 17
Section 8. KRS 304.48-250 is amended to read as follows: 18
(1) If the assets of a liability self -insurance group are at any time insufficient to enable 19
the group to discharge its legal liabilities, other obligations, and to maintain the 20
required reserves under this sub title, the group shall immediately levy an 21
assessment upon its members for the amount necessary to make up the deficiency. 22
(2) If there is a deficiency in any fund year, the deficiency shall be made up 23
immediately, from the following: 24
(a) Surplus from a fu nd year other than the current fund year after prior notice of 25
the transfer has been given to the commissioner; 26
(b) Administrative funds; 27
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(c) Assessment of membership; or 1
(d) Alternate methods as the commissioner may direct or approve. 2
(3) If a liability self -insurance group fails to assess its members within thirty (30) days 3
to make up a deficit, the commissioner shall order it to do so. This subsection shall 4
not apply to liability self -insurance groups formed by governmental entities which 5
do not have joint and several liability. 6
(4) If a liability self -insurance group fails to make the required assessment of its 7
members within thirty (30) days after the commissioner orders it to do so, or if the 8
deficiency is no t fully made up within sixty (60) days after the date on which the 9
assessment is made, or within a longer period of time as may be permitted by the 10
commissioner, the group shall be determined to be insolvent and may be placed in 11
delinquency proceedings as an insurer pursuant to Subtitle 33 of this chapter. 12
(5) (a) Governmental entities that: 13
1. Participate or have participated in a liability self -insurance group 14
authorized by this subtitle; and 15
2. Are assessed by the liability self -insurance group to cover an accrued 16
deficit; 17
may finance the payment of the assessment over a period not to exceed twenty 18
(20) years. 19
(b) Financing obtained pursuant to paragraph (a) of this subsection may be 20
accomplished by: 21
1. The issuance of bonds, notes, or other obligations; or 22
2. A lease, installment payment agreement, or other similar agreement. 23
(c) If the governmental entity fails to make a scheduled payment on the financing 24
obtained pursuant to paragraph (a) of this subsection, any payments due to 25
that governmental entity shall be withheld or intercepted using the process 26
established in subsection (7) of Section 2 of this Act[KRS 160.160(6)]. 27
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(6) Except as provided in subsection (5) of this section, all other provisions of the 1
Kentucky Revised Statutes applying to any fina ncing obtained by a governmental 2
entity shall apply. 3
Section 9. KRS 304.50-055 is amended to read as follows: 4
(1) As used in this section, "nationally recognized statistical rating organization" or 5
"NRSRO" means a credit rating agency approved by the United States Securities 6
and Exchange Commission to provide assessments of the creditworthiness of 7
financial instruments. 8
(2) A workers' compensation self -insured group shall establish plans for premium 9
payment, determination and collection of assessments, and for declaration and 10
payment of dividends or other disbursements, which shall be filed for prior 11
approval with the commissioner. Any change in the plans for premium payment, 12
assessments, or dividends shall be filed for pr ior approval with the commissioner. 13
Approval of plans for assessments and dividends does not constitute approval of 14
any particular assessment or dividend by the commissioner. 15
(3) Prior to the inception of each group member's self -insurance year, the truste es shall 16
collect from that member at least twenty -five percent (25%) of the estimated 17
premium for the ensuing year, except that in the case of a self-insured group formed 18
by governmental entities twenty -five percent (25%) of the estimated premium for 19
the ensuing year shall be collected no later than thirty (30) days after the beginning 20
of the self -insured group's self -insurance year. The balance of the estimated 21
premium shall be collected in either quarterly or monthly installments as set forth in 22
the enabl ing documents described in KRS 304.50 -030(2)(b) or 304.50 -060(2)(b). 23
Each group member's payroll shall be audited annually and an adjustment to 24
premium shall be made accordingly. 25
(4) A disbursement from a workers' compensation self -insured group fund shall be for 26
a purpose related to the self -insured group. A dividend shall not be approved or 27
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paid until at least thirty -six (36) months after the expiration of the self -insurance 1
year and shall be paid from surplus funds not required for payment of claims or 2
other liabilities. The dividends shall be paid or credited to members according to the 3
reasonable classifications the trustees may establish. A dividend shall not be paid 4
which unfairly discriminates between members of the same classifications. A 5
dividend p lan shall specify whether past group members are eligible for the 6
dividend. Payment of a dividend under a dividend plan shall not be made unless the 7
self-insured group has notified the commissioner of its intent to make a dividend 8
payment at least thirty (30) days prior to the payment, and the commissioner has not 9
disapproved the payment within that time. 10
(5) The formula to be used for collection of assessments shall be determined by the 11
trustees and approved by the commissioner. Assessments shall be fair a nd equitable 12
and shall not unfairly discriminate between members of the same classification. 13
(6) A trustee, fiscal agent, or service organization shall not utilize an asset of the self -14
insured group for a purpose unrelated to workers' compensation. The tru stees shall 15
maintain cash or cash equivalent accounts as may be prudently necessary to pay 16
expenses without having to liquidate long-term investments. 17
(7) The trustees may invest funds in: 18
(a) United States Government bonds, United States Treasury notes, T reasury 19
bills, or other direct obligations guaranteed by the full faith and credit of the 20
United States Government or its agencies; 21
(b) Tax exempt and taxable obligations issued by any state or any of its agencies, 22
counties, cities, municipalities, distric ts, political subdivisions, or other legal 23
authorities within the United States of America with a minimum rating of 24
"BBB" by any NRSRO, except that no less than fifty percent (50%) of the 25
investments made under this paragraph shall be in obligations issued by the 26
Commonwealth, its agencies, or a county, city district, municipality, political 27
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subdivision, or other legal authority within the Commonwealth; 1
(c) Investment share accounts in a savings and loan association in the 2
Commonwealth whose deposits are insured by a federal agency; 3
(d) Certificates of deposit if issued by a duly chartered commercial bank; 4
(e) 1. At the time of purchase, equity securities actively traded on the New 5
York or NASDAQ Stock Exchanges or other registered national 6
securities exchanges with no individual equity holding comprising 7
greater than ten percent (10%) of the equity portion of the portfo lio 8
reflected on the most recent quarterly or annual statement of financial 9
condition on file with the commissioner. 10
2. An investment in an individual equity holding shall not represent at the 11
time of purchase more than five percent (5%) of the total marke t value 12
of the security. 13
3. At the time of purchase, investments in equity securities shall not exceed 14
twenty percent (20%) of the total market value of the investment 15
portfolio of the self-insured group reflected on the most recent quarterly 16
or annual statement of financial condition on file with the commissioner; 17
(f) Corporate bonds if: 18
1. The bond is issued, assumed, or guaranteed by a solvent institution 19
created or existing under the laws of the United States, or a state, 20
province, district, or territory; 21
2. At the time of purchase, the corporate bond investments do not exceed 22
twenty-five percent (25%) of the total market value of the investment 23
portfolio reflected on the most recent quarterly or annual statement of 24
financial condition on file with the commissioner; and 25
3. The bond has a minimum rating of "BBB" by any NRSRO; 26
(g) At the time of purchase, mutual funds and exchange traded funds if the 27
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investments do not exceed twenty percent (20%) of the total market value of 1
the investment portfolio reflec ted on the most recent quarterly or annual 2
statement of financial condition on file with the commissioner; and 3
(h) Asset-backed securities if: 4
1. The bond is issued, assumed, or guaranteed by a solvent institution 5
created or existing under the laws of the United States, or a state, 6
province, district, or territory; 7
2. The asset-backed security investments do not exceed ten percent (10%) 8
of the total market value of the investment portfolio reflected on the 9
most recent quarterly or annual statement of financ ial condition on file 10
with the commissioner; and 11
3. The bond has a minimum rating of "BBB" by any NRSRO. 12
(8) Of the aggregate investments made by the trustees of the self -insured group under 13
this section: 14
(a) Not less than fifty percent (50%) of the total market value of the entire 15
investment portfolio shall be held in cash, cash equivalents, or securities as 16
described in subsection (7)(a) to (d) of this section; and 17
(b) A minimum of five percent (5%) of the total investment portfolio value shall 18
be maintained in cash or cash equivalent accounts or United States Treasury 19
and Federal Agency Securities with a remaining maturity of one (1) year or 20
less. 21
(9) In the event that any security investment authorized by subsection (7) of this section 22
is downgraded below "BBB," the workers' compensation self -insurance group shall 23
divest itself of that investment as prudently as possible without incurring 24
unnecessary losses. 25
(10) The commissioner may permit variation from the requirements of this section for 26
good cause. 27
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(11) (a) Governmental entities that: 1
1. Participate or have participated in a workers' compensation self -insured 2
group authorized by this subtitle; and 3
2. Are assessed by the workers' compensation self -insured group to cover 4
an accrued deficit; 5
may finance the payment of the assessment over a period not to exceed twenty 6
(20) years. 7
(b) Financing obtained pursuant to paragraph (a) of this subsection may be 8
accomplished by: 9
1. The issuance of bonds, notes, or other obligations; or 10
2. A lease, installment payment agreement, or other similar agreement. 11
(c) If the governmental entity fails to make a scheduled payment on the financing 12
obtained pursuant to paragraph (a) of this subsection, any payments due to 13
that governmental entity shall be withheld or intercepted using the process 14
established in subsection (7) of Section 2 of this Act[KRS 160.160(6)]. 15
(12) Except as provided in subsection (11) of this section, all other provisions of the 16
Kentucky Revised Statutes applying to any financing obtained by a governmental 17
entity shall apply. 18
Section 10. Notwithstanding subsection (5) of Section 1 of this Act and 19
subsection (2) of Section 2 of this Act, a member of the board of education for county 20
school districts having reached an end -of-year enrollment of twenty -five thousand 21
(25,000) or more students who has been elected to serve prior to January 1, 2027, shall be 22
permitted to serve on the county board of education for the remainder of the member's 23
unexpired term, unless the member resigns or is removed from office pursuant to KR S 24
415.050 and 415.060. 25
Section 11. Notwithstanding subsection (5)(d) of Section 1 of this Act, initial 26
appointments of members to be appointed from the county at large in accordance with 27
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subsection (5)(a) to (c) of Secti on 1 of this Act to the board of education for county 1
school districts having reached an end -of-year enrollment of twenty -five thousand 2
(25,000) or more students shall be as follows: 3
(1) Two members shall be appointed for a two year term; and 4
(2) Two members shall be appointed for a four year term. 5
Section 12. (1) By January 1, 2027, a local board of education that is 6
required to add membership pursuant to Sections 1 and 2 of this Act shall identify the 7
number of addition al positions and the appropriate expiration of the term for each 8
additional member. 9
(2) By January 1, 2027, the board of education of each county school district that 10
is required to add membership pursuant to Section 1 of this Act shall have divided its 11
district into the required number of divisions containing integral voting precincts and as 12
equal in population insofar as is practicable. In first dividing the county district into 13
divisions the board shall, if more than one of its current members reside in one division, 14
determine by lot which member from that division shall represent that division, and 15
which members shall represent a division in which no member resides. The members so 16
determined to represent divisions in which no member resides shall be cons idered the 17
members from those divisions until their terms expire, and thereafter the members from 18
those divisions shall be appointed as provided in Sections 1 of this Act. 19
(3) By January 1, 2027, the additional positions created that are not represented 20
by a member shall be filled pursuant to Sections 1 and 2 of this Act. 21
Section 13. This Act takes effect January 1, 2027. 22