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AN ACT relating to insurance coverage of state property. 1
Be it enacted by the General Assembly of the Commonwealth of Kentucky: 2
SECTION 1. A NEW SECTION OF KRS 164A.555 TO 164A.630 IS 3
CREATED TO READ AS FOLLOWS: 4
(1) Notwithstanding KRS 56.065 to 56.180 and any other law to the contrary: 5
(a) Instead of insurance coverage provided through the state fire and tornado 6
insurance fund, the governing board of each institution may, subject to 7
paragraph (b) of this subsection, elect to obtain insurance under this section 8
to cover any state property in the institution's possession against loss by fire 9
and other hazards; 10
(b) An institution whose governing board elects to obtain insurance under this 11
section shall: 12
1. Not be required to obtain approval by the Finance and Administration 13
Cabinet or any other state agency or official to terminate the 14
institution's insurance coverage through the state fire and tornado 15
insurance fund; 16
2. Notify the secretary of the Finance and Administration Cabinet at 17
least sixty (60) days before terminating the institution's insurance 18
coverage through the state fire and tornado insurance fund; 19
3. Ensure that the insurance is in place immediately following 20
termination of the institution's insurance coverage through the state 21
fire and tornado insurance fund; and 22
4. Comply with any bidding or advertising requirements under KRS 23
Chapters 45A and 424; and 24
(c) 1. An institution that terminates the institution's insurance coverage 25
through the state fire and tornado insurance fund under this 26
subsection shall be permitted to resume that coverage, without any 27 UNOFFICIAL COPY 24 RS BR 1276
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need for approval by the Finance and Administration Cabinet or any 1
other state agency or official, at any future date by providing notice to 2
the secretary of the Finance and Administration Cabinet. 3
2. Upon receipt of the notice provided by an institution under 4
subparagraph 1. of this paragraph, the Finance and Administration 5
Cabinet shall insure the state property in the institution's possession 6
against loss by fire and other hazards through the state fire and 7
tornado insurance fund, and coverage shall become effective not later 8
than: 9
a. The next date of renewal of the coverage provided through the 10
fund; or 11
b. Any other date agreed upon by the institution and the cabinet. 12
(2) Insurance obtained under this section: 13
(a) May be provided: 14
1. By an authorized insurer, as defined in KRS 304.1-100; or 15
2. Through a self-insurance pool if the pool is: 16
a. Adequately reinsured by an authorized insurer, as defined in 17
KRS 304.1-100; and 18
b. Capable of insuring all of the state property in the institution's 19
possession; 20
(b) Shall state the following for each insured building and its contents: 21
1. Estimated replacement cost; and 22
2. The amount of coverage provided; 23
(c) 1. Except as provided in subsection (3) of this section, shall insure each 24
building and its contents for an amount equal to one hundred percent 25
(100%) of the replacement cost determined through a certified 26
replacement cost appraisal performed at the direction of the institution 27 UNOFFICIAL COPY 24 RS BR 1276
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by an appraiser: 1
a. Licensed to perform appraisal services under KRS Chapter 2
324A; and 3
b. Experienced in appraising commercial or governmental 4
property. 5
2. As used in this paragraph, "replacement cost" includes the increased 6
cost of construction brought about by code changes that: 7
a. Have occurred since the original structure was built; and 8
b. Are required to be incorporated within a rebuilt structure; 9
(d) Shall contain an agreed amount provision; and 10
(e) Shall include: 11
1. Ordinance and law coverage at not less than five million dollars 12
($5,000,000); 13
2. Debris removal coverage at not less than one million dollars 14
($1,000,000); 15
3. Extra expense coverage at not less than five million dollars 16
($5,000,000); and 17
4. For any building containing a steam boiler, boiler and machinery 18
coverage at not less than the total value of the real and personal 19
property in the building in which the steam boiler is located. 20
(3) A governing board may obtain actual cash value coverage of a building and its 21
contents if a certification signed by the governing board chair is attached to the 22
insurance policy or contract, or self-insurance pool contract, stating that it would 23
not be fiscally responsible to provide replacement cost coverage for the building 24
being insured. 25
Section 2. KRS 164A.575 is amended to read as follows: 26
(1) The governing boards of each institution may elect to purchase interest in real 27 UNOFFICIAL COPY 24 RS BR 1276
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property, contractual services, rentals of all types, supplies, materials, equipment, 1
printing, and services, except that competitive bids may not be required for: 2
(a) Contractual services where no competition exists; 3
(b) Food, clothing, equipment, supplies, or other materials to be used in 4
laboratory and experimental studies; 5
(c) Instructional materials available from only one (1) source; 6
(d) Where rates are fixed by law or ordinance; 7
(e) Library books; 8
(f) Commercial items that are purchased for resale; 9
(g) Professional, technical, scientific, or artistic services, but contracts shall be 10
submitted in accordance with KRS 45A.690 to 45A.725; 11
(h) All other commodities, equipment, and services which, in the reasonable 12
discretion of the board, are available from only one (1) source; and 13
(i) Interests in real property. 14
(2) Nothing in this section shall deprive the boards from negotiating with vendors who 15
maintain a General Services Administration price agreement with the United States 16
of America or any agency thereof, provided, however, that no contract executed 17
under this provision shall authorize a price higher than is contained in the contract 18
between General Services Administration and the vendor affected. 19
(3) The governing board shall require the institution to take and maintain inventories of 20
plant and equipment. 21
(4) The governing board shall establish procedures to identify items of common 22
general usage among all departments to foster volume purchasing. It shall establish 23
and enforce schedules for purchasing supplies, materials, and equipment. 24
(5) The governing board shall have power to salvage, to exchange, and to condemn 25
supplies, equipment, and real property. 26
(6) Upon the approval of the secretary of the Finance and Administration Cabinet, the 27 UNOFFICIAL COPY 24 RS BR 1276
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governing board may purchase or otherwise acquire all real property determined to 1
be needed for the institution's use. The amount paid shall not exceed the fair market 2
value as determined by a qualified appraiser or the value set by the eminent domain 3
procedure. Any real property acquired under this section shall be in name of the 4
Commonwealth for the use and benefit of the institution. 5
(7) (a) Notwithstanding KRS 56.806, the governing board may renegotiate the cost 6
of a lease after the expiration of the lease term and any renewal terms 7
provided in the lease prior to any renewal not provided for in the terms of the 8
lease. 9
(b) Except when a lease incorporates a lease-purchase under KRS 56.806, the 10
governing board shall reserve the right to cancel a lease upon at least thirty 11
(30) days' written notice. 12
(c) Notwithstanding KRS 56.823(2) and (3), any lease renewals, except automatic 13
renewals permitted under KRS 56.803, 56.805(2), and 56.806(1), for which 14
the annual rental cost will exceed two hundred thousand dollars ($200,000) 15
shall be reported to the Capital Projects and Bond Oversight Committee in the 16
same format as set out in KRS 56.823(2). 17
(d) Notwithstanding KRS 56.813, a public college or university may pay for 18
improvements to leased property costing in excess of ten thousand dollars 19
($10,000) but less than one million dollars ($1,000,000) in a lump sum upon 20
approval of its board using non-general fund appropriations and without 21
incurring debt. 22
(8) The governing board shall sell or otherwise dispose of all real or personal property 23
of the institution which is not needed or has become unsuitable for public use, or 24
would be more suitable consistent with the public interest for some other use, as 25
determined by the board. The determination of the board shall be set forth in an 26
order, and shall be reached only after review of a written request by the institution 27 UNOFFICIAL COPY 24 RS BR 1276
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desiring to dispose of the property. Such request shall describe the property and 1
state the reasons why the institution believes disposal should be effected. All 2
instruments required by law to be recorded which convey any interest in any such 3
real property so disposed of shall be executed and signed by the appropriate officer 4
of the board. Unless the board deems it in the best interest of the institution to 5
proceed otherwise, all such real or personal property shall be sold either by 6
invitation of sealed bids or by public auction; provided, however, that the selling 7
price of any interest in real property shall not be less than the fair market value 8
thereof as determined by the Finance and Administration Cabinet or the 9
Transportation Cabinet for such requirements of that department. 10
(9) Real property or any interest therein may, subject to the provisions of KRS Chapter 11
45A, be purchased, leased, or otherwise acquired from any officer or employee of 12
any board of the institution, based upon a written application by the grantor or 13
lessor approved by the board, that the employee has not either himself or through 14
any other person influenced or attempted to influence either the board requesting 15
the purchase of the property. In any case in which such an acquisition is 16
consummated, the said request and finding shall be recorded and kept by the 17
Secretary of State along with the other documents recorded pursuant to the 18
provisions of KRS Chapter 56. 19
(10) (a) As used in this section, "construction manager-agency," "construction 20
management-at-risk," "design-bid-build," "design-build," and "construction 21
manager-general contractor" shall have the same meaning as in KRS 22
45A.030. 23
(b) For capital construction projects, the procurement may be on a total design-24
bid-build basis, a design-build basis, construction manager-general contractor 25
basis, or construction management-at-risk basis, whichever in the judgment of 26
the board offers the best value to the taxpayer. Best value shall be determined 27 UNOFFICIAL COPY 24 RS BR 1276
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in accordance with KRS 45A.070. Proposals shall be reviewed by the 1
institution's engineering staff to assure quality and value, and compliance with 2
procurement procedures. All specifications shall be written to promote 3
competition. Services for projects delivered on the design-build basis, 4
construction manager-general contractor basis, or construction management-5
at-risk basis shall be procured in accordance with KRS 45A.180, KRS 6
45A.183, and the regulations promulgated in accordance with KRS 45A.180. 7
Nothing in this section shall prohibit the procurement of construction 8
manager-agency services. 9
(c) Notwithstanding KRS 45A.185, for all capital construction projects, bidder 10
security for competitive sealed bidding for construction contracts shall only be 11
required when the price is estimated to exceed one million dollars 12
($1,000,000). 13
(11) The governing board shall attempt in every practicable way to insure the 14
institution's supplying its real needs at the lowest possible cost. To accomplish this 15
the board may enter into cooperative agreements with other public or private 16
institutions of education or health care. 17
(12) The governing board shall have control and supervision over all purchases of 18
energy consuming equipment, supplies, and related equipment purchased or 19
acquired by the institution, and shall designate by regulation the manner in which 20
an energy consuming item will be purchased so as to promote energy conservation 21
and acquisition of energy efficient products. 22
(13) The governing board may negotiate directly for the purchase of contractual 23
services, supplies, materials, or equipment in bona fide emergencies regardless of 24
estimated costs. The existence of the emergency must be fully explained, in writing, 25
by the vice president responsible for business affairs and such explanation must be 26
approved by the institution president. The letter and approval shall be filed with the 27 UNOFFICIAL COPY 24 RS BR 1276
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record of all such purchases. Where practical, standard specifications shall be 1
followed in making emergency purchases. A good faith effort shall be made to 2
effect a competitively established price for emergency purchases. 3
(14) (a) All governing boards that purchase agricultural products, as defined by KRS 4
45A.630, shall, on or before January 1 of each year, provide a report to the 5
Legislative Research Commission and to the Department of Agriculture 6
describing the types, quantities, and costs of each product purchased. The 7
report shall be completed on a form provided by the department. 8
(b) If purchasing agricultural products, a governing board shall encourage the 9
purchase of Kentucky-grown agricultural products in accordance with KRS 10
45A.645. If a governing board purchases agricultural products through a 11
contract with a vendor or food service provider, the contract shall require that 12
if Kentucky-grown agricultural products are purchased, the products shall be 13
purchased in accordance with KRS 45A.645. Only contracts entered into or 14
renewed after July 15, 2008, shall be required to comply with the provisions 15
of this subsection. 16
(c) All governing boards that purchase Kentucky-grown agricultural products 17
shall, on or before January 1 of each year, provide a report to the Legislative 18
Research Commission and to the Department of Agriculture describing the 19
types, quantities, and costs of each product purchased. The report shall be 20
completed on a form provided by the department. 21
(15) Notwithstanding KRS 45.760, the governing board may authorize a capital 22
construction project or a major item of equipment even though it is not specifically 23
listed in any branch budget bill, subject to the following conditions and procedures: 24
(a) The full cost shall be funded solely by non-general fund appropriations; 25
(b) Moneys specifically budgeted and appropriated by the General Assembly for 26
another purpose shall not be allotted or reallotted for expenditure on the 27 UNOFFICIAL COPY 24 RS BR 1276
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project or major item of equipment. Moneys utilized shall not jeopardize any 1
existing program and shall not require the use of any current general funds 2
specifically dedicated to existing programs; and 3
(c) The institution's president, or designee, shall submit the project or major item 4
of equipment to the Capital Projects and Bond Oversight Committee for 5
review as provided by KRS 45.800. 6
(16) Governing boards shall apply the reciprocal resident bidder preference described in 7
KRS 45A.494 prior to the award of any contract. 8
(17) Governing boards may authorize the use of reverse auctions as defined in KRS 9
45A.070 for the procurement of goods and leases. 10
[(18) (a) Notwithstanding KRS 56.070, the governing board may obtain private 11
insurance to cover any state property in the institution's possession against 12
loss by fire and other hazards. The level of private insurance coverage shall be 13
commensurate with or greater than the insurance coverage provided through 14
the state fire and tornado insurance fund. An institution whose governing 15
board elects to obtain private insurance shall notify the secretary of the 16
Finance and Administration Cabinet at least six (6) months before terminating 17
the institution's insurance coverage through the state fire and tornado 18
insurance fund. 19
(b) No later than January 1 of each year, an institution whose governing board 20
elects to obtain private insurance instead of insurance coverage provided 21
through the state fire and tornado insurance fund shall certify, in writing, to 22
the secretary of the Finance and Administration Cabinet that the property is 23
insured in accordance with paragraph (a) of this subsection and shall attach a 24
copy of the private insurance policy.] 25