CHAPTER 50
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CHAPTER 50
( HB 554 )
AN ACT relating to insurance coverage of state property.
Be it enacted by the General Assembly of the Commonwealth of Kentucky:
SECTION 1. A NEW SECTION OF KRS 164A.555 TO 164A.630 IS CREATED TO READ AS
FOLLOWS:
(1) Notwithstanding KRS 56.065 to 56.180 and any other law to the contrary:
(a) Instead of insurance coverage provided through the state fire and tornado insurance fund, the
governing board of each institution may, subject to paragraph (b) of this subsection, elect to obtain
insurance under this section to cover all of the state property in the institution's possession against
loss by fire and other hazards;
(b) An institution whose governing board elects to obtain insurance under this section shall:
1. Not be required to obtain approval by the Finance and Administration Cabinet or any other
state agency or official to terminate the institution's insurance coverage through the state fire
and tornado insurance fund;
2. Notify the secretary of the Finance and Administration Cabinet at least sixty (60) days before
terminating the institution's insurance coverage through the state fire and tornado insurance
fund;
3. Ensure that the insurance is in place immediately following termination of the institution's
insurance coverage through the state fire and tornado insurance fund;
4. Comply with any bidding or advertising requirements under KRS Chapters 45A and 424; and
5. Comply with subsection (2) of this section; and
(c) 1. An institution that terminates the institution's insurance coverage through the state fire and
tornado insurance fund under this subsection shall be permitted to resume that coverage,
without any need for approval by the Finance and Administration Cabinet or any other state
agency or official, by providing the following notices to the secretary of the Finance and
Administration Cabinet:
a. At least six (6) months prior to the effective date of the institution's resumption of
coverage through the state fire and tornado insurance fund, as provided under
subparagraph 2. of this paragraph, a notice that the institution intends but is not
obligated to resume coverage through the fund; and
b. At least three (3) months prior to the effective date of the institution's resumption of
coverage through the state fire and tornado insurance fund, as provided under
subparagraph 2. of this paragraph, a notice that the institution is resuming coverage
through the fund.
2. Upon receipt of the notices required under subparagraph 1. of this paragraph, the Finance
and Administration Cabinet shall insure all of the state property in the institution's possession
against loss by fire and other hazards through the state fire and tornado insurance fund, and
coverage shall become effective not later than:
a. The next date of renewal of the coverage provided through the fund; or
b. Any other date agreed upon by the institution and the cabinet.
(2) An institution that obtains insurance under this section shall ensure that an annual inspection is made of
each state building and its contents in the institution's possession, for the purpose of determining the
unnecessary causes of a fire hazard therein, and recommendations are received for corrective actions, by
either: ACTS OF THE GENERAL ASSEMBLY 2
(a) 1. Allowing the Finance and Administration Cabinet to have the inspection made and to make
recommendations for corrective actions, consistent with the inspections and recommendations
made under KRS 56.170.
2. The institution shall pay a fee to the Finance and Administration Cabinet for an inspection
made under this paragraph if:
a. i. A fee is charged; and
ii. The fee is not in excess of the fee charged;
to agencies for an inspection made under KRS 56.170; and
b. The fee is reasonable; or
(b) 1. Having a qualified third party approved by the institution's insurer conduct the inspection and
make recommendations for corrective actions.
2. The institution may pay a reasonable fee for an inspection made under this paragraph if the
fee is not included in the premium charged by the insurer.
(3) Insurance obtained under this section:
(a) May be provided:
1. By an authorized insurer as defined in KRS 304.1-100; or
2. Through a self-insurance pool if the pool is:
a. Adequately reinsured by an authorized insurer as defined in KRS 304.1-100; and
b. Capable of insuring all of the state property in the institution's possession;
(b) Shall state the following for each insured building and its contents:
1. Estimated replacement cost; and
2. The amount of coverage provided;
(c) 1. Except as provided in subsection (4) of this section, shall insure each building and its contents
for an amount equal to one hundred percent (100%) of the replacement cost determined
through a certified replacement cost appraisal performed at the direction of the institution by
an appraiser:
a. Licensed to perform appraisal services under KRS Chapter 324A; and
b. Experienced in appraising commercial or governmental property.
2. As used in this paragraph, "replacement cost" includes the increased cost of construction
brought about by code changes that:
a. Have occurred since the original structure was built; and
b. Are required to be incorporated within a rebuilt structure;
(d) Shall contain an agreed amount provision; and
(e) Shall include:
1. Ordinance and law coverage at not less than five million dollars ($5,000,000);
2. Debris removal coverage at not less than one million dollars ($1,000,000);
3. Extra expense coverage at not less than five million dollars ($5,000,000); and
4. For any building containing a steam boiler, boiler and machinery coverage at not less than the
total value of the real and personal property in the building in which the steam boiler is
located.
(4) A governing board may obtain actual cash value coverage of a building and its contents if a certification
signed by the governing board chair is attached to the insurance policy or contract, or self-insurance pool
contract, stating that it would not be fiscally responsible to provide replacement cost coverage for the
building being insured. CHAPTER 50
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Section 2. KRS 164A.575 is amended to read as follows:
(1) The governing boards of each institution may elect to purchase interest in real property, contractual services,
rentals of all types, supplies, materials, equipment, printing, and services, except that competitive bids may not
be required for:
(a) Contractual services where no competition exists;
(b) Food, clothing, equipment, supplies, or other materials to be used in laboratory and experimental
studies;
(c) Instructional materials available from only one (1) source;
(d) Where rates are fixed by law or ordinance;
(e) Library books;
(f) Commercial items that are purchased for resale;
(g) Professional, technical, scientific, or artistic services, but contracts shall be submitted in accordance
with KRS 45A.690 to 45A.725;
(h) All other commodities, equipment, and services which, in the reasonable discretion of the board, are
available from only one (1) source; and
(i) Interests in real property.
(2) Nothing in this section shall deprive the boards from negotiating with vendors who maintain a General
Services Administration price agreement with the United States of America or any agency thereof, provided,
however, that no contract executed under this provision shall authorize a price higher than is contained in the
contract between General Services Administration and the vendor affected.
(3) The governing board shall require the institution to take and maintain inventories of plant and equipment.
(4) The governing board shall establish procedures to identify items of common general usage among all
departments to foster volume purchasing. It shall establish and enforce schedules for purchasing supplies,
materials, and equipment.
(5) The governing board shall have power to salvage, to exchange, and to condemn supplies, equipment, and real
property.
(6) Upon the approval of the secretary of the Finance and Administration Cabinet, the governing board may
purchase or otherwise acquire all real property determined to be needed for the institution's use. The amount
paid shall not exceed the fair market value as determined by a qualified appraiser or the value set by the
eminent domain procedure. Any real property acquired under this section shall be in name of the
Commonwealth for the use and benefit of the institution.
(7) (a) Notwithstanding KRS 56.806, the governing board may renegotiate the cost of a lease after the
expiration of the lease term and any renewal terms provided in the lease prior to any renewal not
provided for in the terms of the lease.
(b) Except when a lease incorporates a lease-purchase under KRS 56.806, the governing board shall reserve
the right to cancel a lease upon at least thirty (30) days' written notice.
(c) Notwithstanding KRS 56.823(2) and (3), any lease renewals, except automatic renewals permitted
under KRS 56.803, 56.805(2), and 56.806(1), for which the annual rental cost will exceed two hundred
thousand dollars ($200,000) shall be reported to the Capital Projects and Bond Oversight Committee in
the same format as set out in KRS 56.823(2).
(d) Notwithstanding KRS 56.813, a public college or university may pay for improvements to leased
property costing in excess of ten thousand dollars ($10,000) but less than one million dollars
($1,000,000) in a lump sum upon approval of its board using non-general fund appropriations and
without incurring debt.
(8) The governing board shall sell or otherwise dispose of all real or personal property of the institution which is
not needed or has become unsuitable for public use, or would be more suitable consistent with the public
interest for some other use, as determined by the board. The determination of the board shall be set forth in an
order, and shall be reached only after review of a written request by the institution desiring to dispose of the ACTS OF THE GENERAL ASSEMBLY 4
property. Such request shall describe the property and state the reasons why the institution believes disposal
should be effected. All instruments required by law to be recorded which convey any interest in any such real
property so disposed of shall be executed and signed by the appropriate officer of the board. Unless the board
deems it in the best interest of the institution to proceed otherwise, all such real or personal property shall be
sold either by invitation of sealed bids or by public auction; provided, however, that the selling price of any
interest in real property shall not be less than the fair market value thereof as determined by the Finance and
Administration Cabinet or the Transportation Cabinet for such requirements of that department.
(9) Real property or any interest therein may, subject to the provisions of KRS Chapter 45A, be purchased, leased,
or otherwise acquired from any officer or employee of any board of the institution, based upon a written
application by the grantor or lessor approved by the board, that the employee has not either himself or through
any other person influenced or attempted to influence either the board requesting the purchase of the property.
In any case in which such an acquisition is consummated, the said request and finding shall be recorded and
kept by the Secretary of State along with the other documents recorded pursuant to the provisions of KRS
Chapter 56.
(10) (a) As used in this section, "construction manager-agency," "construction management-at-risk," "design-
bid-build," "design-build," and "construction manager-general contractor" shall have the same meaning
as in KRS 45A.030.
(b) For capital construction projects, the procurement may be on a total design-bid-build basis, a design-
build basis, construction manager-general contractor basis, or construction management-at-risk basis,
whichever in the judgment of the board offers the best value to the taxpayer. Best value shall be
determined in accordance with KRS 45A.070. Proposals shall be reviewed by the institution's
engineering staff to assure quality and value, and compliance with procurement procedures. All
specifications shall be written to promote competition. Services for projects delivered on the design-
build basis, construction manager-general contractor basis, or construction management-at-risk basis
shall be procured in accordance with KRS 45A.180, KRS 45A.183, and the regulations promulgated in
accordance with KRS 45A.180. Nothing in this section shall prohibit the procurement of construction
manager-agency services.
(c) Notwithstanding KRS 45A.185, for all capital construction projects, bidder security for competitive
sealed bidding for construction contracts shall only be required when the price is estimated to exceed
one million dollars ($1,000,000).
(11) The governing board shall attempt in every practicable way to insure the institution's supplying its real needs
at the lowest possible cost. To accomplish this the board may enter into cooperative agreements with other
public or private institutions of education or health care.
(12) The governing board shall have control and supervision over all purchases of energy consuming equipment,
supplies, and related equipment purchased or acquired by the institution, and shall designate by regulation the
manner in which an energy consuming item will be purchased so as to promote energy conservation and
acquisition of energy efficient products.
(13) The governing board may negotiate directly for the purchase of contractual services, supplies, materials, or
equipment in bona fide emergencies regardless of estimated costs. The existence of the emergency must be
fully explained, in writing, by the vice president responsible for business affairs and such explanation must be
approved by the institution president. The letter and approval shall be filed with the record of all such
purchases. Where practical, standard specifications shall be followed in making emergency purchases. A good
faith effort shall be made to effect a competitively established price for emergency purchases.
(14) (a) All governing boards that purchase agricultural products, as defined by KRS 45A.630, shall, on or
before January 1 of each year, provide a report to the Legislative Research Commission and to the
Department of Agriculture describing the types, quantities, and costs of each product purchased. The
report shall be completed on a form provided by the department.
(b) If purchasing agricultural products, a governing board shall encourage the purchase of Kentucky-grown
agricultural products in accordance with KRS 45A.645. If a governing board purchases agricultural
products through a contract with a vendor or food service provider, the contract shall require that if
Kentucky-grown agricultural products are purchased, the products shall be purchased in accordance
with KRS 45A.645. Only contracts entered into or renewed after July 15, 2008, shall be required to
comply with the provisions of this subsection. CHAPTER 50
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(c) All governing boards that purchase Kentucky-grown agricultural products shall, on or before January 1
of each year, provide a report to the Legislative Research Commission and to the Department of
Agriculture describing the types, quantities, and costs of each product purchased. The report shall be
completed on a form provided by the department.
(15) Notwithstanding KRS 45.760, the governing board may authorize a capital construction project or a major
item of equipment even though it is not specifically listed in any branch budget bill, subject to the following
conditions and procedures:
(a) The full cost shall be funded solely by non-general fund appropriations;
(b) Moneys specifically budgeted and appropriated by the General Assembly for another purpose shall not
be allotted or reallotted for expenditure on the project or major item of equipment. Moneys utilized
shall not jeopardize any existing program and shall not require the use of any current general funds
specifically dedicated to existing programs; and
(c) The institution's president, or designee, shall submit the project or major item of equipment to the
Capital Projects and Bond Oversight Committee for review as provided by KRS 45.800.
(16) Governing boards shall apply the reciprocal resident bidder preference described in KRS 45A.494 prior to the
award of any contract.
(17) Governing boards may authorize the use of reverse auctions as defined in KRS 45A.070 for the procurement
of goods and leases.
[(18) (a) Notwithstanding KRS 56.070, the governing board may obtain private insurance to cover any state
property in the institution's possession against loss by fire and other hazards. The level of private
insurance coverage shall be commensurate with or greater than the insurance coverage provided
through the state fire and tornado insurance fund. An institution whose governing board elects to obtain
private insurance shall notify the secretary of the Finance and Administration Cabinet at least six (6)
months before terminating the institution's insurance coverage through the state fire and tornado
insurance fund.
(b) No later than January 1 of each year, an institution whose governing board elects to obtain private
insurance instead of insurance coverage provided through the state fire and tornado insurance fund shall
certify, in writing, to the secretary of the Finance and Administration Cabinet that the property is
insured in accordance with paragraph (a) of this subsection and shall attach a copy of the private
insurance policy.]
Signed by Governor April 4, 2024.