UNOFFICIAL COPY 25 RS BR 1078
Page 1 of 79
XXXX 1/7/2025 2:52 PM Jacketed
AN ACT relating to the Teachers' Retirement System and declaring an emergency. 1
Be it enacted by the General Assembly of the Commonwealth of Kentucky: 2
Section 1. KRS 161.155 is amended to read as follows: 3
(1) As used in this section: 4
(a) "Teacher" shall mean any person for whom certification is required as a basis 5
of employment in the common schools of the state; 6
(b) "Employee" shall mean any person, other than a teacher, employed in the 7
public schools, whether on a full or part-time basis; 8
(c) "Immediate family" shall mean the teacher's or employee's spouse, children 9
including stepchildren and foster children, grandchildren, daughters-in-law 10
and sons-in law, brothers and sisters, parents and spouse's parents, and 11
grandparents and spouse's grandparents, without reference to the location or 12
residence of said relative, and any other blood relative who resides in the 13
teacher's or employee's home; 14
(d) "Sick leave bank" shall mean an aggregation of sick leave days contributed by 15
teachers or employees for use by teachers or employees who have exhausted 16
all sick leave and other available paid leave days; and 17
(e) "Assault" shall mean an act that intentionally causes injury so significant that 18
the victim is determined to be, by certification of a physician or surgeon duly 19
qualified under KRS Chapter 342, incapable of performing the duties of his or 20
her job. 21
(2) Each district board of education shall allow to each teacher and full-time employee 22
in its common school system not less than ten (10) days of sick leave during each 23
school year, without deduction of salary. Sick leave shall be granted to a teacher or 24
employee if he or she presents a personal statement or a certificate of a physician 25
stating that the teacher or employee was ill, that the teacher or employee was absent 26
for the purpose of attending to a member of his or her immediate family who was 27 UNOFFICIAL COPY 25 RS BR 1078
Page 2 of 79
XXXX 1/7/2025 2:52 PM Jacketed
ill, or for the purpose of mourning a member of his or her immediate family. The 1
ten (10) days of sick leave granted in this subsection may be taken by a teacher or 2
employee on any ten (10) days of the school year and shall be granted in addition to 3
accumulated sick leave days that have been credited to the teacher or employee 4
under the provisions of subsection (4) of this section. 5
(3) A school district shall coordinate among the income and benefits from workers' 6
compensation, temporary disability retirement, and district payroll and benefits so 7
that there is no loss of income or benefits to a teacher or employee for work time 8
lost because of an assault while performing the teacher's or employee's assigned 9
duties for a period of up to one (1) year after the assault. In the event a teacher or 10
employee suffers an assault while performing his or her assigned duties that results 11
in injuries that qualify the teacher or employee for workers' compensation benefits, 12
the district shall provide leave to the teacher or employee for up to one (1) year 13
after the assault with no loss of income or benefits under the following conditions: 14
(a) The district shall pay the salary of the teacher or employee between the time 15
of the assault and the time the teacher's or employee's workers' compensation 16
income benefits take effect, or the time the teacher or employee is certified to 17
return to work by a physician or surgeon duly qualified under KRS Chapter 18
342, whichever is sooner; 19
(b) The district shall pay, for up to one (1) year from the time of the assault, the 20
difference between the salary of the teacher or employee and any workers' 21
compensation income benefits received by the teacher or employee resulting 22
from the assault. Payments by the district shall include payments for 23
intermittent work time missed as a result of the assault during the one (1) year 24
period. If the teacher's or employee's workers' compensation income benefits 25
cease during the one (1) year period after the assault, the district shall also 26
cease to make payments under this paragraph; 27 UNOFFICIAL COPY 25 RS BR 1078
Page 3 of 79
XXXX 1/7/2025 2:52 PM Jacketed
(c) The Commonwealth, through the Kentucky Department of Education, shall 1
make the employer's health insurance contribution during the period that the 2
district makes payments under paragraphs (a) and (b) of this subsection; 3
(d) The Commonwealth, through the Kentucky Department of Education, shall 4
make the employer's contribution to the retirement system in which the 5
teacher or employee is a member during the period that the district makes 6
payments under paragraphs (a) and (b) of this subsection; and 7
(e) Payments to a teacher or employee under paragraphs (a) and (b) of this 8
subsection shall be coordinated with workers' compensation benefits under 9
KRS Chapter 342, disability retirement benefits for teachers under KRS 10
161.661 to 161.663, and disability retirement benefits for employees under 11
KRS 61.600 to 61.621 and 78.5522, 78.5524, 78.5526, 78.5528, and 78.5530 12
so that the teacher or employee receives income equivalent to his or her full 13
contracted salary, but in no event shall the combined payments exceed one 14
hundred percent (100%) of the teacher's or employee's full contracted salary. 15
(4) Days of sick leave not taken by an employee or a teacher during any school year 16
shall accumulate without limitation and be credited to that employee or teacher. 17
Accumulated sick leave may be taken in any school year. Any district board of 18
education may, in its discretion, allow employees or teachers in its common school 19
system sick leave in excess of the number of days prescribed in this section and 20
may allow school district employees and teachers to use up to three (3) days' sick 21
leave per school year for emergency leave pursuant to KRS 161.152(3). Any 22
accumulated sick leave days credited to an employee or a teacher shall remain so 23
credited in the event he or she transfers his or her place of employment from one (1) 24
school district to another within the state or to the Kentucky Department of 25
Education or transfers from the Department of Education to a school district. 26
(5) Accumulated days of sick leave shall be granted to a teacher or employee if, prior to 27 UNOFFICIAL COPY 25 RS BR 1078
Page 4 of 79
XXXX 1/7/2025 2:52 PM Jacketed
the opening day of the school year, a statement or a certificate of a physician is 1
presented to the district board of education, stating that the teacher or employee is 2
unable to commence his or her duties on the opening day of the school year, but 3
will be able to assume his or her duties within a period of time that the board 4
determines to be reasonable. 5
(6) Any school teacher or employee may repurchase previously used sick leave days 6
with the concurrence of the local school board by paying to the district an amount 7
equal to the total of all costs associated with the used sick leave. 8
(7) A district board of education may adopt a plan for a sick leave bank. The plan may 9
include limitations upon the number of days a teacher or employee may annually 10
contribute to the bank and limitations upon the number of days a teacher or 11
employee may annually draw from the bank. Only those teachers or employees who 12
contribute to the bank may draw upon the bank. Days contributed will be deducted 13
from the days available to the contributing teacher or employee. The sick leave 14
bank shall be administered in accordance with a policy adopted by the board of 15
education. 16
(8) (a) A district board of education shall establish a sick leave donation program to 17
permit teachers or employees to voluntarily contribute sick leave to teachers 18
or employees in the same school district who are in need of an extended 19
absence from school. A teacher or employee who has accrued more than 20
fifteen (15) days' sick leave may request the board of education to transfer a 21
designated amount of sick leave to another teacher or employee who is 22
authorized to receive the sick leave donated. A teacher or employee may not 23
request an amount of sick leave be donated that reduces his or her sick leave 24
balance to less than fifteen (15) days. 25
(b) A teacher or employee may receive donations of sick leave if: 26
1. a. The teacher or employee or a member of his or her immediate 27 UNOFFICIAL COPY 25 RS BR 1078
Page 5 of 79
XXXX 1/7/2025 2:52 PM Jacketed
family suffers from a medically certified illness, injury, 1
impairment, or physical or mental condition that has caused or is 2
likely to cause the teacher or employee to be absent for at least ten 3
(10) days; or 4
b. The teacher or employee suffers from a catastrophic loss to his or 5
her personal or real property, due to either a natural disaster or fire, 6
that either has caused or will likely cause the employee to be 7
absent for at least ten (10) consecutive working days; 8
2. The teacher's or employee's need for the absence and use of leave are 9
certified by a licensed physician for leave requested under subparagraph 10
1.a. of this subsection; 11
3. The teacher or employee has exhausted his or her accumulated sick 12
leave, personal leave, and any other leave granted by the school district; 13
and 14
4. The teacher or employee has complied with the school district's policies 15
governing the use of sick leave. 16
(c) While a teacher or employee is on sick leave provided by this section, he or 17
she shall be considered a school district employee, and his or her salary, 18
wages, and other employee benefits shall not be affected. 19
(d) Any sick leave that remains unused, is not needed by a teacher or employee, 20
and will not be needed in the future shall be returned to the teacher or 21
employee donating the sick leave. 22
(e) The board of education shall adopt policies and procedures necessary to 23
implement the sick leave donation program. 24
(9) A teacher or employee may use up to thirty (30) days of sick leave following the 25
birth or adoption of a child or children. Additional days may be used when the need 26
is verified by a physician's statement. 27 UNOFFICIAL COPY 25 RS BR 1078
Page 6 of 79
XXXX 1/7/2025 2:52 PM Jacketed
(10) (a) After July 1, 1982, a district board of education may compensate, at the time 1
of retirement or upon the death of a member in active contributing status at 2
the time of death who was eligible to retire by reason of service, an employee 3
or a teacher, or the estate of an employee or teacher, for each unused sick 4
leave day. The rate of compensation for each unused sick leave day shall be 5
based on a percentage of the daily salary rate calculated from the employee's 6
or teacher's last annual salary, not to exceed thirty percent (30%). 7
(b) [Except as provided in paragraph (c) of this subsection, ]Payment for unused 8
sick leave days under this subsection shall be incorporated into the annual 9
salary of the final year of service for inclusion in the calculation of the 10
employee's or teacher's retirement allowance only at the time of his or her 11
initial retirement, provided that the member makes the regular retirement 12
contribution for members on the sick leave payment. The accumulation of 13
these days includes unused sick leave days held by the employee or teacher at 14
the time of implementation of the program. 15
(c)[ For a teacher or employee who becomes a nonuniversity member of the 16
Teachers' Retirement System on or after January 1, 2022, as provided by KRS 17
161.220, payment for unused sick leave days under this subsection shall not 18
be incorporated into the annual compensation used to calculate the teacher's or 19
employee's retirement allowance in the foundational benefit component as 20
described by KRS 161.633 but may be deposited into the nonuniversity 21
member's supplemental benefit component as provided by KRS 161.635. 22
(d)] For a teacher or employee who begins employment with a local school district 23
on or after July 1, 2008, the maximum amount of unused sick leave days a 24
district board of education may recognize in calculating the payment of 25
compensation to the teacher or employee under this subsection shall not 26
exceed three hundred (300) days. 27 UNOFFICIAL COPY 25 RS BR 1078
Page 7 of 79
XXXX 1/7/2025 2:52 PM Jacketed
(11) Any statute to the contrary notwithstanding, employees and teachers who 1
transferred from the Department of Education to a school district, from a school 2
district to the Department of Education, or from one (1) school district to another 3
school district after July 15, 1981, shall receive credit for any unused sick leave to 4
which the employee or teacher was entitled on the date of transfer. This credit shall 5
be for the purposes set forth in subsection (10) of this section. 6
(12) The death benefit provided in subsection (10) of this section may be cited as the 7
Baughn Benefit. 8
Section 2. KRS 161.220 is amended to read as follows: 9
As used in KRS 161.220 to 161.716 and 161.990: 10
(1) "Retirement system" means the arrangement provided for in KRS 161.220 to 11
161.716 and 161.990 for payment of allowances to members; 12
(2) "Retirement allowance" means the amount annually payable during the course of 13
his or her natural life to a member who has been retired by reason of service; 14
(3) "Disability allowance" means the amount annually payable to a member retired by 15
reason of disability; 16
(4) "Member" means the commissioner of education, deputy commissioners, associate 17
commissioners, and all division directors in the State Department of Education, 18
employees participating in the system pursuant to KRS 196.167(3)(b)1., and any 19
full-time teacher or professional occupying a position requiring certification or 20
graduation from a four (4) year college or university, as a condition of employment, 21
and who is employed by public boards, institutions, or agencies as follows: 22
(a) Local boards of education and public charter schools if the public charter 23
school satisfies the criteria set by the Internal Revenue Service to participate 24
in a governmental retirement plan; 25
(b) Eastern Kentucky University, Kentucky State University, Morehead State 26
University, Murray State University, Western Kentucky University, and any 27 UNOFFICIAL COPY 25 RS BR 1078
Page 8 of 79
XXXX 1/7/2025 2:52 PM Jacketed
community colleges established under the control of these universities; 1
(c) State-operated secondary area vocational education or area technology 2
centers, Kentucky School for the Blind, and Kentucky School for the Deaf; 3
(d) Other public education agencies as created by the General Assembly and 4
those members of the administrative staff of the Teachers' Retirement System 5
of the State of Kentucky whom the board of trustees may designate by 6
administrative regulation; 7
(e) Regional cooperative organizations formed by local boards of education or 8
other public educational institutions listed in this subsection, for the purpose 9
of providing educational services to the participating organizations; 10
(f) All full-time members of the staffs of the Kentucky Association of School 11
Administrators, Kentucky Education Association, Kentucky Vocational 12
Association, Kentucky High School Athletic Association, Kentucky 13
Academic Association, and the Kentucky School Boards Association who 14
were members of the Kentucky Teachers' Retirement System or were 15
qualified for a position covered by the system at the time of employment by 16
the association in the event that the board of directors of the respective 17
association petitions to be included. The board of trustees of the Kentucky 18
Teachers' Retirement System may designate by resolution whether part-time 19
employees of the petitioning association are to be included. The state shall 20
make no contributions on account of these employees, either full-time or part-21
time. The association shall make the employer's contributions, including any 22
contribution that is specified under KRS 161.550. The provisions of this 23
paragraph shall be applicable to persons in the employ of the associations on 24
or subsequent to July 1, 1972; 25
(g) Employees of the Council on Postsecondary Education who were employees 26
of the Department for Adult Education and Literacy and who were members 27 UNOFFICIAL COPY 25 RS BR 1078
Page 9 of 79
XXXX 1/7/2025 2:52 PM Jacketed
of the Kentucky Teachers' Retirement System at the time the department was 1
transferred to the council pursuant to Executive Order 2003-600; 2
(h) The Office of Career and Technical Education; 3
(i) The Office of Vocational Rehabilitation; 4
(j) The Kentucky Educational Collaborative for State Agency Children; 5
(k) The Governor's Scholars Program; 6
(l) Any person who is retired for service from the retirement system and is 7
reemployed by an employer identified in this subsection in a position that the 8
board of trustees deems to be a member[, except that any person who becomes 9
a member on or after January 1, 2022, and subsequently draws a monthly 10
lifetime retirement allowance, shall upon reemployment after retirement not 11
earn a second retirement account]; 12
(m) Employees of the former Cabinet for Workforce Development who are 13
transferred to the Kentucky Community and Technical College System and 14
who occupy positions covered by the Kentucky Teachers' Retirement System 15
shall remain in the Teachers' Retirement System. New employees occupying 16
these positions, as well as newly created positions qualifying for Teachers' 17
Retirement System coverage that would have previously been included in the 18
former Cabinet for Workforce Development, shall be members of the 19
Teachers' Retirement System; 20
(n) Effective January 1, 1998, employees of state community colleges who are 21
transferred to the Kentucky Community and Technical College System shall 22
continue to participate in federal old age, survivors, disability, and hospital 23
insurance, and a retirement plan other than the Kentucky Teachers' Retirement 24
System offered by Kentucky Community and Technical College System. New 25
employees occupying positions in the Kentucky Community and Technical 26
College System as referenced in KRS 164.5807(5) that would not have 27 UNOFFICIAL COPY 25 RS BR 1078
Page 10 of 79
XXXX 1/7/2025 2:52 PM Jacketed
previously been included in the former Cabinet for Workforce Development, 1
shall participate in federal old age, survivors, disability, and hospital 2
insurance and have a choice at the time of employment of participating in a 3
retirement plan provided by the Kentucky Community and Technical College 4
System, including participation in the Kentucky Teachers' Retirement System, 5
on the same basis as faculty of the state universities as provided in KRS 6
161.540 and 161.620; 7
(o) Employees of the Office of General Counsel, the Office of Budget and 8
Administrative Services, and the Office of Quality and Human Resources 9
within the Office of the Secretary of the former Cabinet for Workforce 10
Development and the commissioners of the former Department for Adult 11
Education and Literacy and the former Department for Technical Education 12
who were contributing to the Kentucky Teachers' Retirement System as of 13
July 15, 2000; 14
(p) Employees of the Kentucky Department of Education only who are graduates 15
of a four (4) year college or university, notwithstanding a substitution clause 16
within a job classification, and who are serving in a professional job 17
classification as defined by the department; 18
(q) The Governor's School for Entrepreneurs Program; 19
(r) Employees of the Office of Adult Education within the Department of 20
Workforce Development in the Education and Labor Cabinet who were 21
employees of the Council on Postsecondary Education, Kentucky Adult 22
Education Program and who were members of the Kentucky Teachers' 23
Retirement System at the time the Program was transferred to the cabinet 24
pursuant to Executive Orders 2019-0026 and 2019-0027; and 25
(s) Employees of the Education Professional Standards Board who were 26
members of the Kentucky Teachers' Retirement System at the time the 27 UNOFFICIAL COPY 25 RS BR 1078
Page 11 of 79
XXXX 1/7/2025 2:52 PM Jacketed
employees were transferred to the Kentucky Department of Education 1
pursuant to Executive Order 2020-590; 2
(5) "Present teacher" means any teacher who was a teacher on or before July 1, 1940, 3
and became a member of the retirement system created by 1938 (1st Extra. Sess.) 4
Ky. Acts ch. 1, on the date of the inauguration of the system or within one (1) year 5
after that date, and any teacher who was a member of a local teacher retirement 6
system in the public elementary or secondary schools of the state on or before July 7
1, 1940, and continued to be a member of the system until he or she, with the 8
membership of the local retirement system, became a member of the state Teachers' 9
Retirement System or who becomes a member under the provisions of KRS 10
161.470(4); 11
(6) "New teacher" means any member not a present teacher; 12
(7) "Prior service" means the number of years during which the member was a teacher 13
in Kentucky prior to July 1, 1941, except that not more than thirty (30) years' prior 14
service shall be allowed or credited to any teacher; 15
(8) "Subsequent service" means the number of years during which the teacher is a 16
member of the Teachers' Retirement System after July 1, 1941; 17
(9) "Final average salary" means the average of the five (5) highest annual salaries 18
which the member has received for service in a covered position and on which the 19
member has made contributions, or on which the public board, institution, or 20
agency has picked-up member contributions pursuant to KRS 161.540(2), or the 21
average of the five (5) years of highest salaries as defined in KRS 61.680(2)(a), 22
which shall include picked-up member contributions. Additionally, the board of 23
trustees may approve a final average salary based upon the average of the three (3) 24
highest salaries for[ individuals who become] members[ prior to January 1, 2022,] 25
who are at least fifty-five (55) years of age and have a minimum of twenty-seven 26
(27) years of Kentucky service credit. However, if any of the five (5) or three (3) 27 UNOFFICIAL COPY 25 RS BR 1078
Page 12 of 79
XXXX 1/7/2025 2:52 PM Jacketed
highest annual salaries used to calculate the final average salary was paid within the 1
three (3) years immediately prior to the date of the member's retirement[ for 2
individuals who become members prior to January 1, 2022, or within the five (5) 3
years immediately prior to the date of the member's retirement for individuals who 4
become members on or after January 1, 2022], the amount of salary to be included 5
for each of those three (3) years [or five (5) years, as applicable, ]for the purpose of 6
calculating the final average salary shall be limited to the lesser of: 7
(a) The member's actual salary; or 8
(b) The member's annual salary that was used for retirement purposes during each 9
of the prior three (3) years [or five (5) years, as applicable, ]plus a percentage 10
increase equal to the percentage increase received by all other members 11
employed by the public board, institution, or agency, or for members of 12
school districts, the highest percentage increase received by members on any 13
one (1) rank and step of the salary schedule of the school district. The increase 14
shall be computed on the salary that was used for retirement purposes. The 15
board of trustees may promulgate an administrative regulation in accordance 16
with KRS Chapter 13A to establish a methodology for measuring the 17
limitation so that the combined increases in salary for each of the last three (3) 18
full years of salary prior to retirement shall not exceed the total permissible 19
percentage increase received by other members of the employer for the same 20
three (3) year period. 21
For individuals who became members of the retirement system prior to July 1, 22
2021, this limitation shall not apply if the member receives an increase in salary in a 23
percentage exceeding that received by the other members, and this increase was 24
accompanied by a corresponding change in position or in length of employment. 25
The board of trustees may promulgate an administrative regulation in accordance 26
with KRS Chapter 13A to provide definitions for a corresponding change in 27 UNOFFICIAL COPY 25 RS BR 1078
Page 13 of 79
XXXX 1/7/2025 2:52 PM Jacketed
position or in length of employment. This limitation shall also not apply to the 1
payment to a member for accrued annual leave if the individual becomes a member 2
before July 1, 2008, or accrued sick leave which is authorized by statute and which 3
shall[, for individuals subject to KRS 161.155(10) who became nonuniversity 4
members of the system prior to January 1, 2022,] be included as part of a retiring 5
member's annual compensation for the member's last year of active service as 6
provided by Section 1 of this Act; 7
(10) "Annual compensation" means the total salary received by a member as 8
compensation for all services performed in employment covered by the retirement 9
system during a fiscal year. Annual compensation shall not include payment for any 10
benefit or salary adjustments made by the public board, institution, or agency to the 11
member or on behalf of the member which is not available as a benefit or salary 12
adjustment to other members employed by that public board, institution, or agency. 13
Annual compensation shall not include the salary supplement received by a member 14
under KRS 157.197(2)(c), 158.6455, or 158.782 on or after July 1, 1996. Under no 15
circumstances shall annual compensation include compensation that is earned by a 16
member while on assignment to an organization or agency that is not a public 17
board, institution, or agency listed in subsection (4) of this section. In the event that 18
federal law requires that a member continue membership in the retirement system 19
even though the member is on assignment to an organization or agency that is not a 20
public board, institution, or agency listed in subsection (4) of this section, the 21
member's annual compensation for retirement purposes shall be deemed to be the 22
annual compensation, as limited by subsection (9) of this section, last earned by the 23
member while still employed solely by and providing services directly to a public 24
board, institution, or agency listed in subsection (4) of this section. The board of 25
trustees shall determine if any benefit or salary adjustment qualifies as annual 26
compensation. For an individual who becomes a member on or after July 1, 2008, 27 UNOFFICIAL COPY 25 RS BR 1078
Page 14 of 79
XXXX 1/7/2025 2:52 PM Jacketed
annual compensation shall not include lump-sum payments upon termination of 1
employment for accumulated annual or compensatory leave; 2
(11) "Age of member" means the age attained on the first day of the month immediately 3
following the birthdate of the member. This definition is limited to retirement 4
eligibility and does not apply to tenure of members; 5
(12) "Employ," and derivatives thereof, means relationships under which an individual 6
provides services to an employer as an employee, as an independent contractor, as 7
an employee of a third party, or under any other arrangement as long as the services 8
provided to the employer are provided in a position that would otherwise be 9
covered by the Kentucky Teachers' Retirement System and as long as the services 10
are being provided to a public board, institution, or agency listed in subsection (4) 11
of this section; 12
(13) "Regular interest" means: 13
(a) For an individual who becomes a member prior to July 1, 2008, interest at 14
three percent (3%) per annum; and[:] 15
(b) For an individual who becomes a member on or after July 1, 2008, [but prior 16
to January 1, 2022, ]interest at two and one-half percent (2.5%) per annum for 17
purposes of crediting interest to the teacher savings account or any other 18
contributions made by the employee that are refundable to the employee upon 19
termination of employment[; and 20
(c) For an individual who becomes a member on or after January 1, 2022, the 21
rolling five (5) year yield on a thirty (30) year United States Treasury bond as 22
of the end of May prior to the most recently completed fiscal year, except 23
that: 24
1. Once the member has at least sixty (60) months of service in the system 25
it shall mean interest at two and one-half percent (2.5%) per annum for 26
purposes of crediting interest to employee contributions in the 27 UNOFFICIAL COPY 25 RS BR 1078
Page 15 of 79
XXXX 1/7/2025 2:52 PM Jacketed
foundational benefit component or any other contributions made by the 1
employee to the foundational benefit component that are refundable to 2
the employee upon termination of employment; and 3
2. The board shall have the authority to adjust the regular interest rate for 4
individuals who become members on or after January 1, 2022, in 5
accordance with KRS 161.633 and 161.634]; 6
(14) "Accumulated contributions" means the contributions of a member to the teachers' 7
savings fund, including picked-up member contributions as described in KRS 8
161.540(2), plus accrued regular interest; 9
(15) "Annuitant" means a person who receives a retirement allowance or a disability 10
allowance; 11
(16) "Local retirement system" means any teacher retirement or annuity system created 12
in any public school district in Kentucky in accordance with the laws of Kentucky; 13
(17) "Fiscal year" means the twelve (12) month period from July 1 to June 30. The 14
retirement plan year is concurrent with this fiscal year. A contract for a member 15
employed by a local board of education may not exceed two hundred sixty-one 16
(261) days in the fiscal year; 17
(18) "Public schools" means the schools and other institutions mentioned in subsection 18
(4) of this section; 19
(19) "Dependent" as used in KRS 161.520 and 161.525 means a person who was 20
receiving, at the time of death of the member, at least one-half (1/2) of the support 21
from the member for maintenance, including board, lodging, medical care, and 22
related costs; 23
(20) "Active contributing member" means a member currently making contributions to 24
the Teachers' Retirement System, who made contributions in the next preceding 25
fiscal year, for whom picked-up member contributions are currently being made, or 26
for whom these contributions were made in the next preceding fiscal year; 27 UNOFFICIAL COPY 25 RS BR 1078
Page 16 of 79
XXXX 1/7/2025 2:52 PM Jacketed
(21) "Full-time" means employment in a position that requires services on a continuing 1
basis equal to at least seven-tenths (7/10) of normal full-time service on a fiscal 2
year basis; 3
(22) "Full actuarial cost," when used to determine the payment that a member must pay 4
for service credit means the actuarial value of all costs associated with the 5
enhancement of a member's benefits or eligibility for benefit enhancements, 6
including health insurance supplement payments made by the retirement system. 7
The actuary for the retirement system shall determine the full actuarial value costs 8
and actuarial cost factor tables as provided in KRS 161.400; 9
(23) "Last annual compensation" means the annual compensation, as defined by 10
subsection (10) of this section and as limited by subsection (9) of this section, 11
earned by the member during the most recent period of contributing service, either 12
consecutive or nonconsecutive, that is sufficient to provide the member with one (1) 13
full year of service credit in the Kentucky Teachers' Retirement System, and which 14
compensation is used in calculating the member's initial retirement allowance, 15
excluding bonuses, retirement incentives, payments for accumulated sick leave, 16
annual, personal, and compensatory leave, and any other lump-sum payment. For 17
an individual who becomes a member on or after July 1, 2008, payments for annual 18
or compensatory leave shall not be included in determining the member's last 19
annual compensation; 20
(24) "Participant" means a member, as defined by subsection (4) of this section, or an 21
annuitant, as defined by subsection (15) of this section; 22
(25) "Qualified domestic relations order" means any judgment, decree, or order, 23
including approval of a property settlement agreement, that: 24
(a) Is issued by a court or administrative agency; and 25
(b) Relates to the provision of child support, alimony payments, or marital 26
property rights to an alternate payee; 27 UNOFFICIAL COPY 25 RS BR 1078
Page 17 of 79
XXXX 1/7/2025 2:52 PM Jacketed
(26) "Alternate payee" means a spouse, former spouse, child, or other dependent of a 1
participant, who is designated to be paid retirement benefits in a qualified domestic 2
relations order; 3
(27) "University member" means an individual who becomes a member through 4
employment with an employer specified in subsection (4)(b) and (n) of this section; 5
(28) "Nonuniversity member" means an individual who becomes a member through 6
employment with an employer specified under subsection (4) of this section, except 7
for those members employed by an employer specified in subsection (4)(b) and (n) 8
of this section; and 9
(29) ["Accumulated employer contribution" means the employer contribution deposited 10
to a member's account through the supplemental benefit component and regular 11
interest credited on such amounts as provided by KRS 161.635 for nonuniversity 12
members and KRS 161.636 for university members; 13
(30) ]"Accumulated account balance" means[: 14
(a) For members who began participating in the system prior to January 1, 2022,] 15
the member's accumulated contributions[; or 16
(b) For members who began participating in the system on or after January 1, 17
2022, the combined sum of the member's accumulated contributions and the 18
member's accumulated employer contributions; 19
(31) "Foundational benefit component" means the benefits provided by KRS 161.220 to 20
161.716 to individuals who become members on or after January 1, 2022, except 21
for the supplemental benefit component and retiree health benefits set forth in KRS 22
161.675; and 23
(32) "Supplemental benefit component" means: 24
(a) The benefit established pursuant to KRS 161.635 for individuals who become 25
nonuniversity members on or after January 1, 2022; or 26
(b) The benefit established pursuant to KRS 161.636 for individuals who become 27 UNOFFICIAL COPY 25 RS BR 1078
Page 18 of 79
XXXX 1/7/2025 2:52 PM Jacketed
university members on or after January 1, 2022]. 1
Section 3. KRS 161.540 is amended to read as follows: 2
(1) (a) Each individual who is[becomes] a contributing nonuniversity member [prior 3
to January 1, 2022, ]shall contribute to the retirement system twelve and eight 4
hundred fifty-five thousandths percent (12.855%) of annual compensation, of 5
which: 6
1. Nine and one hundred five thousandths percent (9.105%) of annual 7
compensation shall be used to fund pension benefits; and 8
2. Three and three-quarters percent (3.75%) of annual compensation shall 9
be used to fund retiree health benefits. 10
(b) Each individual who is[becomes] a contributing university member [prior to 11
January 1, 2022, ]shall contribute to the retirement system ten and four-tenths 12
percent (10.4%) of annual compensation, of which: 13
1. Seven and six hundred twenty-five thousandths percent (7.625%) of 14
annual compensation shall be used to fund pension benefits; and 15
2. Two and seven hundred seventy-five thousandths percent (2.775%) of 16
annual compensation shall be used to fund retiree health benefits. 17
(c) [Each individual who becomes a contributing nonuniversity member on or 18
after January 1, 2022, shall contribute to the retirement system fourteen and 19
three-quarters percent (14.75%) of annual compensation, of which: 20
1. Nine percent (9%) of annual compensation shall be used to fund pension 21
benefits in the foundational benefit component as described by KRS 22
161.633. The contribution provided by this subparagraph shall not be 23
used to fund the supplemental benefit account as provided by KRS 24
161.635; 25
2. Two percent (2%) of annual compensation shall fund the required 26
employee contribution in the supplemental benefit component in KRS 27 UNOFFICIAL COPY 25 RS BR 1078
Page 19 of 79
XXXX 1/7/2025 2:52 PM Jacketed
161.635, except that the board may direct these contributions on a 1
prospective basis into the pension and life insurance funds to contain 2
costs of the foundational benefit component within the provisions of 3
KRS 161.633; and 4
3. Three and three-quarters percent (3.75%) of annual compensation shall 5
be used to fund retiree health benefits. 6
(d) Each individual who becomes a contributing university member on or after 7
January 1, 2022, shall contribute to the retirement system nine and seven 8
hundred seventy-five thousandths percent (9.775%) of annual compensation, 9
of which: 10
1. Five percent (5%) of annual compensation shall be used to fund pension 11
benefits in the foundational benefit component as described by KRS 12
161.634. The contribution provided by this subparagraph shall not be 13
used to fund the supplemental benefit account as provided by KRS 14
161.636; 15
2. Two percent (2%) of annual compensation shall fund the required 16
employee contribution in the supplemental benefit component in KRS 17
161.636, except that the board may direct these contributions on a 18
prospective basis into the pension and life insurance funds to contain 19
costs of the foundational benefit component within the provisions of 20
KRS 161.634; and 21
3. Two and seven hundred and seventy-five thousandths percent (2.775%) 22
of annual compensation shall be used to fund retiree health benefits. 23
(e) ]When the medical insurance fund established under KRS 161.420(5) 24
achieves a sufficient prefunded status as determined by the retirement 25
system's actuary, the board of trustees shall recommend to the General 26
Assembly that the contributions required under paragraph (a)2. or[,] (b)2.[, 27 UNOFFICIAL COPY 25 RS BR 1078
Page 20 of 79
XXXX 1/7/2025 2:52 PM Jacketed
(c)3., or (d)3.] of this subsection shall, in an actuarially accountable manner, 1
be either decreased, suspended, or eliminated. 2
(d)[(f)] Payments authorized by statute that are made to retiring members, who 3
became members of the system before July 1, 2008, for not more than sixty 4
(60) days of unused accrued annual leave shall, subject to KRS 161.220(10), 5
be considered as part of the member's annual compensation, and shall be used 6
only for the member's final year of active service. Notwithstanding the 7
provisions of this subsection or any other statute to the contrary, for 8
retirement calculation purposes, members may only be credited for payment 9
of annual leave under the following conditions: 10
1. Payment by an employer for annual leave shall be equally available to 11
all members serving under contracts requiring the same number of 12
worked days and greater; and 13
2. At least two (2) members of the employer shall receive payment for 14
annual leave. 15
(e)[(g)] The contribution of members shall not exceed the applicable 16
percentages on annual compensation as set forth in this section or as where 17
otherwise limited by statute. When a member retires, if it is determined that 18
he or she has made contributions on a salary in excess of the amount to be 19
included for the purpose of calculating his or her final average salary, any 20
excess contribution shall be refunded in a lump sum to the member's 21
employer for distribution to the member. 22
(2) Each public board, institution, or agency listed in KRS 161.220(4) shall, solely for 23
the purpose of compliance with Section 414(h) of the United States Internal 24
Revenue Code, pick up the member contributions required by this section for all 25
compensation earned after August 1, 1982, and the contributions so picked up shall 26
be treated as employer contributions in determining tax treatment under the United 27 UNOFFICIAL COPY 25 RS BR 1078
Page 21 of 79
XXXX 1/7/2025 2:52 PM Jacketed
States Internal Revenue Code and KRS 141.010. The picked-up member 1
contribution shall satisfy all obligations to the retirement system satisfied prior to 2
August 1, 1982, by the member contribution, and the picked-up member 3
contribution shall be in lieu of a member contribution. Each employer shall pay 4
these picked-up member contributions from the same source of funds which is used 5
to pay earnings to the member. The member shall have no option to receive the 6
contributed amounts directly instead of having them paid by the employer to the 7
system. Member contributions picked-up after August 1, 1982, shall be treated for 8
all purposes of KRS 161.220 to 161.714 in the same manner and to the same extent 9
as member contributions made prior to August 1, 1982. 10
Section 4. KRS 161.550 is amended to read as follows: 11
(1) Each employer, except as provided under KRS 161.555, shall contribute annually to 12
the Teachers' Retirement System a permanent employer contribution rate on behalf 13
of each employee it employs equal to: 14
(a) Thirteen and one hundred five thousandths percent (13.105%) of the total 15
annual compensation of nonuniversity members who become members prior 16
to July 1, 2008. Of this permanent employer contribution rate: 17
1. Twelve and three hundred fifty-five thousandths percent (12.355%) of 18
the total annual compensation shall be used to fund pension and life 19
insurance benefits; and 20
2. Three-quarters of a percent (0.75%) of annual compensation shall be 21
used to provide funding to the medical insurance fund as provided under 22
KRS 161.420(5). If the board of trustees establishes a trust fund under 23
26 U.S.C. sec. 115, the board may deposit the employer contribution 24
provided in this subparagraph in that trust fund; 25
(b) Fourteen and one hundred five thousandths percent (14.105%) of the total 26
annual compensation of nonuniversity members who become members on or 27 UNOFFICIAL COPY 25 RS BR 1078
Page 22 of 79
XXXX 1/7/2025 2:52 PM Jacketed
after July 1, 2008[, but prior to January 1, 2022]. Of this permanent employer 1
contribution rate: 2
1. Thirteen and three hundred fifty-five thousandths percent (13.355%) of 3
the total annual compensation shall be used to fund pension and life 4
insurance benefits; and 5
2. Three-quarters of a percent (0.75%) of annual compensation shall be 6
used to provide funding to the medical insurance fund as provided under 7
KRS 161.420(5). If the board of trustees establishes a trust fund under 8
26 U.S.C. sec. 115, the board may deposit the employer contribution 9
provided in this subparagraph in that trust fund; and 10
(c) Thirteen and sixty-five hundredths percent (13.65%) of the total annual 11
compensation of university members[ who become members prior to January 12
1, 2022]. Of this permanent employer contribution rate: 13
1. Ten and eight hundred seventy-five thousandths percent (10.875%) of 14
the total annual compensation shall be used to fund pension and life 15
insurance benefits; and 16
2. Two and seven hundred seventy-five thousandths percent (2.775%) of 17
annual compensation shall be used to provide funding to the medical 18
insurance fund as provided under KRS 161.420(5). If the board of 19
trustees establishes a trust fund under 26 U.S.C. sec. 115, the board may 20
deposit the employer contribution provided in this subparagraph in that 21
trust fund[; 22
(d) Ten and three-quarters percent (10.75%) of the total annual compensation of 23
nonuniversity members who become members on or after January 1, 2022. Of 24
this permanent employer contribution rate: 25
1. Eight percent (8%) of the total annual compensation shall be used to 26
fund pension and life insurance benefits. The contribution provided by 27 UNOFFICIAL COPY 25 RS BR 1078
Page 23 of 79
XXXX 1/7/2025 2:52 PM Jacketed
this subparagraph shall not be used to fund the supplemental benefit 1
account as provided by KRS 161.635; 2
2. Two percent (2%) of the total annual compensation shall be used to fund 3
the mandatory employer contribution of the supplemental benefit 4
component, except that the board may direct these contributions on a 5
prospective basis into the pension and life insurance funds to contain 6
costs within the provisions of KRS 161.633; and 7
3. Three-quarters of one percent (0.75%) of annual compensation shall be 8
used to provide funding to the medical insurance fund as provided under 9
KRS 161.420(5). If the board of trustees establishes a trust fund under 10
26 U.S.C. sec. 115, the board may deposit the employer contribution 11
provided in this subdivision in that trust fund; and 12
(e) Nine and seven hundred seventy-five thousandths percent (9.775%) of total 13
annual compensation of university members who become members on or after 14
January 1, 2022. Of this permanent employer contribution rate: 15
1. Five and seven hundred seventy-five thousandths percent (5.775%) of 16
the total annual compensation shall be used to fund pension and life 17
insurance benefits. The contribution provided by this subparagraph shall 18
not be used to fund the supplemental benefit account as provided by 19
KRS 161.636; 20
2. Two percent (2%) of the total annual compensation shall be used to fund 21
the mandatory employer contribution of the supplemental benefit 22
component, except that the board may direct these contributions on a 23
prospective basis into the pension and life insurance funds to contain 24
costs within the provisions of KRS 161.634; and 25
3. Two percent (2%) of annual compensation shall be used to provide 26
funding to the medical insurance fund as provided under KRS 27 UNOFFICIAL COPY 25 RS BR 1078
Page 24 of 79
XXXX 1/7/2025 2:52 PM Jacketed
161.420(5). If the board of trustees establishes a trust fund under 26 1
U.S.C. sec. 115, the board may deposit the employer contribution 2
provided in this subparagraph in that trust fund]. 3
(2) In addition to the required contributions in subsection (1) of this section, the state 4
shall contribute annually to the Teachers' Retirement System a percentage of the 5
total salaries of the state-funded and federally funded members it employs to pay 6
the cost of health insurance coverage for retirees who are not eligible for Medicare 7
and who retire on or after July 1, 2010, less the amounts that are otherwise required 8
to be paid by the retirees under KRS 161.675. The board shall deposit funds in the 9
medical insurance fund unless the board of trustees has established a trust fund 10
under 26 U.S.C. sec. 115 for this purpose. In this case, the board may deposit the 11
employer contribution in that trust fund. This contribution shall be known as the 12
state medical insurance fund stabilization contribution. The percentage to be 13
contributed by the state under this subsection: 14
(a) Shall be determined by the retirement system's actuary for each biennial 15
budget period; 16
(b) May be suspended or adjusted by the General Assembly if in its judgment the 17
welfare of the Commonwealth so demands; and 18
(c) Shall not exceed the lesser of the actual benefit cost for retirees not eligible 19
for Medicare who retire on or after July 1, 2010, or the amount contributed by 20
employers under subsection (3) of this section. 21
(3) All employers who employ nonuniversity members shall make a contribution for 22
each payroll on behalf of their active employees who participate in the Teachers' 23
Retirement System in an amount equal to three percent (3%) of payroll of those 24
active employees. The contribution specified by this subsection shall be used to 25
fund retiree health benefits. 26
(4) When the medical insurance fund established under KRS 161.420(5) achieves a 27 UNOFFICIAL COPY 25 RS BR 1078
Page 25 of 79
XXXX 1/7/2025 2:52 PM Jacketed
sufficient prefunded status as determined by the Teachers' Retirement System's 1
actuary, the board of trustees shall recommend to the General Assembly that the 2
contributions required under subsections (1)(c)2.[ and (e)3.] and (3) of this section 3
shall, in an actuarially accountable manner, be either decreased, suspended, or 4
eliminated. The decrease, suspension, or elimination in contributions required 5
under subsection (1)(c)2. of this section shall not exceed two and twenty-five 6
thousandths percent (2.025%) of annual compensation.[ The decrease, suspension, 7
or elimination in contributions required under subsection (1)(e)3. of this section 8
shall not exceed one and twenty-five hundredths percent (1.25%) of annual 9
compensation.] 10
(5) Each employer shall remit the required employer contributions to the retirement 11
system under the terms and conditions specified for member contributions under 12
KRS 161.560. The state shall provide annual appropriations based upon estimated 13
funds needed to meet the requirements of KRS 161.155, 161.168, 161.507(4), 14
161.515, 161.545, 161.553, 161.605, 161.612, and 161.620(1), (3), (5), (6), and (7). 15
In the event an annual appropriation is less than the amount of these requirements, 16
the state shall make up the deficit in the next biennium budget appropriation to the 17
retirement system. Employer contributions to the retirement system are for the 18
exclusive purpose of providing benefits to members and annuitants and these 19
contributions shall be considered deferred compensation to the members.[ This 20
subsection shall not apply to costs applicable to individuals who become members 21
on or after January 1, 2022.] 22
Section 5. KRS 161.600 is amended to read as follows: 23
(1) [An individual who becomes ]A member of the retirement system [prior to January 24
1, 2022, ]may qualify for service retirement by meeting one (1) of the following 25
requirements: 26
(a) Attainment of age sixty (60) years and completion of five (5) years of 27 UNOFFICIAL COPY 25 RS BR 1078
Page 26 of 79
XXXX 1/7/2025 2:52 PM Jacketed
Kentucky service; 1
(b) 1. For an individual who becomes a member before July 1, 2008, 2
attainment of age fifty-five (55) years and completion of a minimum of 3
five (5) years of Kentucky service with an actuarial reduction of the 4
basic allowance of five percent (5%) for each year the member's age is 5
less than sixty (60) years or for each year the member's years of 6
Kentucky service credit is less than twenty-seven (27), whichever is the 7
lesser number; and 8
2. For an individual who becomes a member on or after July 1, 2008, 9
attainment of age fifty-five (55) years and completion of a minimum of 10
ten (10) years of Kentucky service with an actuarial reduction of the 11
basic retirement allowance of six percent (6%) for each year the 12
member's age is less than sixty (60) years or for each year the member's 13
years of Kentucky service credit is less than twenty-seven (27), 14
whichever is the lesser number; 15
(c) Completion of twenty-seven (27) years of Kentucky service. Out-of-state 16
service earned in accordance with the provisions of KRS 161.515(2) may be 17
used to meet this requirement; or 18
(d) Completion of the necessary years of service under provisions of KRS 19
61.559(2)(c) if the member is retiring under the reciprocity provisions of KRS 20
61.680. A member retiring under this paragraph who has not attained age 21
fifty-five (55) shall incur an actuarial reduction of the basic allowance 22
determined by the system's actuary for each year the member's service credit 23
is less than twenty-seven (27). 24
(2) [An individual who becomes a member of the retirement system on or after January 25
1, 2022, shall, except as adjusted by the board pursuant to KRS 161.633 or 161.634, 26
as applicable, be eligible to retire upon attainment of: 27 UNOFFICIAL COPY 25 RS BR 1078
Page 27 of 79
XXXX 1/7/2025 2:52 PM Jacketed
(a) Age sixty-five (65) and completion of a minimum of five (5) years of Kentucky 1
service; 2
(b) Age sixty (60) and completion of a minimum of ten (10) years of Kentucky service; 3
(c) Age fifty-seven (57) and completion of a minimum of thirty (30) years of Kentucky 4
service; or 5
(d) Age fifty-seven (57) and completion of a minimum of ten (10) years of Kentucky 6
service with an actuarial reduction of the basic retirement allowance of six percent 7
(6%) for each year the member's age is less than sixty (60) years or for each year 8
the member's years of Kentucky service credit is less than thirty (30), whichever is 9
the lesser number. 10
(3) ]Any person who has been a member in Kentucky for twenty-seven (27) years or 11
more and who withdraws from covered employment may continue to pay into the 12
fund each year until the end of the fiscal year in which he or she reaches the age of 13
sixty-five (65) years, the current contribution rate based on the annual 14
compensation received during the member's last full year in covered employment, 15
less any payment received for accrued sick leave or accrued leave from an 16
employer. The member shall be entitled to receive a retirement allowance as 17
provided in KRS 161.620 at any time after withdrawing from covered employment 18
and payment of contributions under this subsection. No member shall make 19
contributions as provided for in this subsection if the member is at the same time 20
making contributions to another retirement system in Kentucky supported wholly or 21
in part by public funds. 22
(3)[(4)] Service credit in the Kentucky Employees Retirement System, the State 23
Police Retirement System, the Legislators' Retirement Plan, the County Employees 24
Retirement System, or the Judicial Retirement System may be used in meeting the 25
service requirements of subsection[subsections] (1)(a) to (c)[ and (2)] of this 26
section, provided the service is subsequent to July 1, 1956. 27 UNOFFICIAL COPY 25 RS BR 1078
Page 28 of 79
XXXX 1/7/2025 2:52 PM Jacketed
(4)[(5)] Upon death, disability, or service retirement, a member's accounts under all 1
state supported retirement systems shall be consolidated, as provided by this section 2
and by KRS 61.680, for the purpose of determining eligibility and amount of 3
benefits, which shall include medical benefits. Upon determination of benefits, each 4
system shall pay the applicable percentage of total benefits. The effective date of 5
retirement under this subsection shall be determined by each retirement system for 6
the portion of the payments that will be made. 7
(5)[(6)] No retirement annuity shall be effective until written application and option 8
election forms are filed with the retirement office in accordance with administrative 9
regulations of the board of trustees. A member may withdraw his or her retirement 10
application, postpone his or her effective retirement date, or change his or her 11
retirement option if these elections are made no later than the fifteenth day of the 12
month in which the member has made application for retirement. 13
(6)[(7)] The surviving spouse of an active contributing member, if named as 14
beneficiary of the member's account, may purchase retirement credit that the 15
member was eligible to purchase prior to the member's death. 16
Section 6. KRS 161.620 is amended to read as follows: 17
(1) The retirement allowance, in the form of a life annuity with refundable balance, of a 18
member retiring for service shall be calculated as follows: 19
(a) For retirements effective July 1, 1998, and thereafter, except as otherwise 20
provided by this section, the annual allowance for each year of service shall 21
be two percent (2%) of the final average salary for service performed prior to 22
July 1, 1983, and two and one-half percent (2.5%) of the final average salary 23
for service performed after July 1, 1983, for all nonuniversity members. 24
Except as otherwise provided by this section, the annual retirement allowance 25
for each year of service performed by members of the Teachers' Retirement 26
System who are university members shall be two percent (2%) of the final 27 UNOFFICIAL COPY 25 RS BR 1078
Page 29 of 79
XXXX 1/7/2025 2:52 PM Jacketed
average salary. Actuarial discounts due to age or service credit at retirement 1
may be applied as provided in this section; 2
(b) For individuals who become nonuniversity members of the Teachers' 3
Retirement System on or after July 1, 2002, and before July 1, 2008, who 4
upon retirement have earned less than ten (10) full years of service credit, the 5
retirement allowance shall be two percent (2%) of the member's final average 6
salary for each year of service. For individuals who become nonuniversity 7
members of the Teachers' Retirement System on or after July 1, 2002, and 8
before July 1, 2008, and who upon retirement have earned at least ten (10) full 9
years of service credit, the annual allowance for each year of service shall be 10
two and one-half percent (2.5%) of the member's final average salary; 11
(c) The board of trustees may approve for members who initially retire on or after 12
July 1, 2004, and who become nonuniversity members before July 1, 2008, a 13
retirement allowance of three percent (3%) of the member's final average 14
salary for each year or partial year of service credit earned in excess of thirty 15
(30) years. This three percent (3%) factor shall be in lieu of the two and one-16
half percent (2.5%) factor provided for in paragraph (b) of this subsection for 17
every year or fraction of a year of service in excess of thirty (30) years. Upon 18
approval of this three percent (3%) retirement factor, the board of trustees 19
may establish conditions of eligibility regarding the type of service credit that 20
will qualify for meeting the requirements of this subsection. This subsection is 21
optional with the board of trustees and shall not be subject to KRS 161.714; 22
(d) For individuals who become nonuniversity members of the Teachers' 23
Retirement System on or after July 1, 2008[, but prior to January 1, 2022], the 24
retirement allowance shall be: 25
1. a. One and seven-tenths percent (1.7%) of the member's final 26
average salary for each year of service if the member has earned 27 UNOFFICIAL COPY 25 RS BR 1078
Page 30 of 79
XXXX 1/7/2025 2:52 PM Jacketed
ten (10) or less years of service at retirement; 1
b. Two percent (2%) of the member's final average salary for each 2
year of service if the member has earned greater than ten (10) but 3
no more than twenty (20) years of service at retirement; 4
c. Two and three-tenths percent (2.3%) of the member's final average 5
salary for each year of service if the member has earned greater 6
than twenty (20) but no more than twenty-six (26) years of service 7
at retirement; or 8
d. Two and one-half percent (2.5%) of the member's final average 9
salary for each year of service if the member has earned greater 10
than twenty-six (26) but no more than thirty (30) years of service 11
at retirement; and 12
2. Three percent (3%) of the member's final average salary for each year or 13
partial year of service earned in excess of thirty (30) years of service at 14
retirement subject to the same terms and conditions as set forth in 15
paragraph (c) of this subsection; 16
(e) For individuals who become university members of the Teachers' Retirement 17
System on or after July 1, 2008[, but prior to January 1, 2022], the retirement 18
allowance shall be: 19
1. One and one-half percent (1.5%) of the member's final average salary 20
for each year of service if the member has earned ten (10) or less years 21
of service at retirement; 22
2. One and seven-tenths percent (1.7%) of the member's final average 23
salary for each year of service if the member has earned greater than ten 24
(10) but no more than twenty (20) years of service at retirement; 25
3. One and eighty-five hundredths percent (1.85%) of the member's final 26
average salary for each year of service if the member has earned greater 27 UNOFFICIAL COPY 25 RS BR 1078
Page 31 of 79
XXXX 1/7/2025 2:52 PM Jacketed
than twenty (20) but less than twenty-seven (27) years of service at 1
retirement; or 2
4. Two percent (2%) of the member's final average salary for each year of 3
service if the member has earned twenty-seven (27) or more years of 4
service at retirement; and 5
(f) [For individuals who become nonuniversity members of the Teachers' 6
Retirement System on or after January 1, 2022, the retirement allowance shall, 7
except as adjusted by the board pursuant to KRS 161.633, be the following 8
percentage of the member's final average salary for each year of service: 9
1. One and seven-tenths percent (1.7%), which shall be increased 10
incrementally each month the member's age at retirement is greater than 11
sixty (60) so that the incremental increase is four one-hundredths of one 12
percent (0.04%) for each complete additional year of age at retirement in 13
excess of sixty (60), not to exceed a value of one and nine-tenths percent 14
(1.9%) at age sixty-five (65) or greater; plus 15
2. a. One-quarter of one percent (0.25%), if the member has earned at 16
least twenty (20) but less than thirty (30) years of service at 17
retirement; or 18
b. One-half of one percent (0.50%), if the member has earned thirty 19
(30) or more years of service at retirement; 20
(g) For individuals who become university members of the Teachers' Retirement 21
System on or after January 1, 2022, the retirement allowance shall, except as 22
adjusted by the board pursuant to KRS 161.634, be the following percentage 23
of the member's final average salary for each year of service: 24
1. Seven-tenths of one percent (0.7%), which shall be increased 25
incrementally each month the member's age at retirement is greater than 26
sixty (60) so that the incremental increase is four one-hundredths of one 27 UNOFFICIAL COPY 25 RS BR 1078
Page 32 of 79
XXXX 1/7/2025 2:52 PM Jacketed
percent (0.04%) for each complete additional year of age in excess of 1
sixty (60), not to exceed a value of nine-tenths of one percent (0.9%) at 2
age sixty-five (65) or greater; plus 3
2. a. One-quarter of one percent (0.25%), if the member has earned at 4
least twenty (20) but less than thirty (30) years of service at 5
retirement; or 6
b. One-half of one percent (0.50%), if the member has earned thirty 7
(30) or more years of service at retirement; and 8
(h) ]The retirement allowance of a member at retirement, as measured on a life 9
annuity, shall not exceed the member's last yearly salary or the member's final 10
average salary, whichever is the greater amount. For purposes of this section, 11
"yearly salary" means the compensation earned by a member during the most 12
recent period of contributing service, either consecutive or nonconsecutive, 13
preceding the member's effective retirement date and shall be subject to the 14
provisions of KRS 161.220(9) and (10)[. This paragraph shall not apply to the 15
supplemental benefit component]. 16
(2) Effective July 1, 2002, and annually on July 1 thereafter, the retirement allowance 17
of each retired member and of each beneficiary of a retirement option shall be 18
increased in the amount of one and one-half percent (1.5%), provided the retired 19
member had been retired for at least the full twelve (12) months immediately 20
preceding the date that the increase is effective. In the event that the retired member 21
had been retired for less than the full twelve (12) months immediately preceding the 22
date that the increase is effective, then the increase shall be reduced on a pro rata 23
basis by each month that the retired member had not been retired for the full twelve 24
(12) months immediately preceding the effective date of the increase[. This 25
subsection shall not apply to benefits from the supplemental benefit component, and 26
the board may adjust this value for individuals who become members on or after 27 UNOFFICIAL COPY 25 RS BR 1078
Page 33 of 79
XXXX 1/7/2025 2:52 PM Jacketed
January 1, 2022, as provided by KRS 161.633 or 161.634, as applicable]. 1
(3) Any member qualifying for retirement under a life annuity with refundable balance 2
shall be entitled to receive an annual allowance amounting to not less than four 3
hundred dollars ($400) effective July 1, 2002, and not less than four hundred forty 4
dollars ($440) effective July 1, 2003, multiplied by the service credit years of the 5
member. These minimums shall apply to the retired members receiving annuity 6
payments and to those members retiring on or subsequent to the effective dates 7
listed in this subsection, except the following: 8
(a) Individuals who become members of the Teachers' Retirement System on or 9
after July 1, 2008; or 10
(b) Members whose retirement allowance payment is reduced below the 11
minimum allowance as a result of its division in a qualified domestic relations 12
order or any other provision permitted under KRS 161.700. 13
(4) The minimum retirement allowance provided in this section shall apply in the case 14
of members retired or retiring under an option other than a life annuity with 15
refundable balance in the same proportion to the benefits of the member and his or 16
her beneficiary or beneficiaries as provided in the duly-adopted option tables at the 17
time of the member's retirement. 18
(5) Effective July 1, 2008, the monthly allowance of each retired member and each 19
recipient of a retirement option of the retired member may be increased in an 20
amount not to exceed three and one-half percent (3.5%) of the monthly allowance 21
in effect the previous month, provided the retired member had been retired for at 22
least the full twelve (12) months immediately preceding the date that the increase is 23
effective. In the event that the retired member had been retired for less than the full 24
twelve (12) months immediately preceding the date that the increase is effective, 25
then the increase shall be reduced on a pro rata basis by each month that the retired 26
member had not been retired for the full twelve (12) months immediately preceding 27 UNOFFICIAL COPY 25 RS BR 1078
Page 34 of 79
XXXX 1/7/2025 2:52 PM Jacketed
the effective date of the increase. The level of increase provided for in this 1
subsection shall be determined by the funding provided in the 2008-2010 biennium 2
budget appropriation. 3
(6) Effective July 1, 2009, the monthly allowance of each retired member and each 4
recipient of a retirement option of the retired member may be increased in an 5
amount not to exceed seven-tenths of one percent (0.7%) of the monthly allowance 6
in effect the previous month, provided the retired member had been retired for at 7
least the full twelve (12) months immediately preceding the date that the increase is 8
effective. In the event that the retired member had been retired for less than the full 9
twelve (12) months immediately preceding the date that the increase is effective, 10
then the increase shall be reduced on a pro rata basis by each month that the retired 11
member had not been retired for the full twelve (12) months immediately preceding 12
the effective date of the increase. The level of increase provided for in this 13
subsection shall be determined by the funding provided in the 2008-2010 biennium 14
budget appropriation. 15
(7) Effective July 1, 1990, monthly payments of two hundred dollars ($200) shall be 16
payable for the benefit of an adult child of a member retired for service when the 17
child's mental or physical condition is sufficient to cause dependency on the 18
member at the time of retirement. Eligibility for this payment shall continue for the 19
life of the child or until the time the mental or physical condition creating the 20
dependency no longer exists or the child marries. Benefits under this subsection 21
shall apply to legally adopted survivors provided the proceedings for the adoption 22
were initiated at least one (1) year prior to the death of the member. The board of 23
trustees shall be the sole judge of eligibility or dependency and may require formal 24
application or information relating thereto. 25
(8) Members of the Teachers' Retirement System shall be subject to the annuity income 26
limitations imposed by Section 415 of the Internal Revenue Service Code. 27 UNOFFICIAL COPY 25 RS BR 1078
Page 35 of 79
XXXX 1/7/2025 2:52 PM Jacketed
(9) Compensation in excess of the limitations imposed by Section 401(a)(17) of the 1
Internal Revenue Code shall not be used in determining a member's retirement 2
annuity. The limitation on compensation for eligible members shall not be less than 3
the amount which was allowed to be taken into account by the retirement system in 4
effect on July 1, 1993. For this purpose, an eligible member is an individual who 5
was a member of the retirement system before the first plan year beginning after 6
December 31, 1995. 7
Section 7. KRS 161.655 is amended to read as follows: 8
(1) Effective July 1, 2000, the Teachers' Retirement System shall: 9
(a) Provide a life insurance benefit in a minimum amount of five thousand dollars 10
($5,000) for its members who are retired for service or disability[, except that 11
the minimum amount for an individual who becomes a member on or after 12
January 1, 2022, and retires for service or disability shall be ten thousand 13
dollars ($10,000)]. This life insurance benefit shall be payable upon the death 14
of a member retired for service or disability to the member's estate or to a 15
party designated by the member on a form prescribed by the retirement 16
system; and 17
(b) Provide a life insurance benefit in a minimum amount of two thousand dollars 18
($2,000) for its active contributing members[, except that the minimum 19
amount for an individual who becomes a member on or after January 1, 2022, 20
and is an active contributing member shall be five thousand dollars ($5,000)]. 21
This life insurance benefit shall be payable upon the death of an active 22
contributing member to the member's estate or to a party designated by the 23
member on a form prescribed by the retirement system. 24
(2) (a) The member may name one (1) primary and one (1) contingent beneficiary for 25
receipt of the life insurance benefit. To the extent permitted by the Internal 26
Revenue Code, a trust may be designated as beneficiary for receipt of the life 27 UNOFFICIAL COPY 25 RS BR 1078
Page 36 of 79
XXXX 1/7/2025 2:52 PM Jacketed
insurance benefit. 1
(b) Members may designate as beneficiaries only presently identifiable and 2
existing individuals, or trusts where otherwise permitted, without contingency 3
instructions, on forms prescribed by the retirement system. 4
(c) In the event that a member fails to designate a beneficiary, or all designated 5
beneficiaries predecease the member, the member's estate shall be deemed to 6
be the beneficiary, unless the member is married at the time of his or her 7
death, in which case the spouse shall be deemed the beneficiary. 8
(d) 1. Any beneficiary designation made by the member, including the estate 9
should the estate become the beneficiary by default, shall remain in 10
effect until changed by the member on forms prescribed by the 11
retirement system, except in the event of subsequent marriage or 12
divorce. 13
2. A valid marriage license shall terminate any previously designated 14
beneficiary, even that of a trust, and establish the spouse as beneficiary 15
unless, subsequent proof of the marriage, the member or retired member 16
redesignates someone other than the new spouse as the beneficiary. 17
3. An individual who is married prior to becoming an active member or a 18
retired member of the retirement system and remains married at the time 19
of becoming an active or retired member of the retirement system shall 20
have his or her spouse considered the primary beneficiary, unless the 21
member designates another beneficiary. 22
4. A final divorce decree shall terminate the beneficiary status of an ex-23
spouse unless, subsequent to divorce, the member redesignates the 24
former spouse as a beneficiary. A final divorce decree shall not 25
terminate the designation of a trust as beneficiary regardless of who is 26
designated as beneficiary of the trust. 27 UNOFFICIAL COPY 25 RS BR 1078
Page 37 of 79
XXXX 1/7/2025 2:52 PM Jacketed
(e) The Teachers' Retirement System shall not acknowledge a beneficiary 1
designation unless the life insurance beneficiary form is received by the 2
Teachers' Retirement System prior to the member's death, or the life insurance 3
beneficiary form has been deposited in the mail with a postmark date no later 4
than the date of the member's death. 5
(3) Application for payment of life insurance proceeds shall be made to the Teachers' 6
Retirement System together with acceptable evidence of death and eligibility. The 7
reciprocal provisions of KRS 61.680(2)(a) shall not apply to the coverage and 8
payment of proceeds by the life insurance benefit under this section. 9
(4) Suit or civil action shall not be required for the collection of the proceeds of the life 10
insurance benefit provided for by this section, but nothing in this section shall 11
prevent the maintenance of suit or civil action against the beneficiary or legal 12
representative receiving the proceeds of the life insurance benefit. 13
(5) Upon the death of a member of the Teachers' Retirement System, the life insurance 14
provided pursuant to subsection (1) of this section may be assigned by the 15
designated beneficiary to a bank or licensed funeral home. 16
Section 8. KRS 161.400 is amended to read as follows: 17
(1) (a) The board of trustees shall designate as actuary a competent person who shall 18
be a fellow of the Conference of Consulting Actuaries or a member of the 19
American Academy of Actuaries. He or she shall be the technical adviser of 20
the board on matters regarding the operation of the funds of the system and 21
shall perform such other duties as are required in connection therewith. 22
(b) 1. At least once in each two (2) year period, the board shall cause an 23
actuarial investigation to be made of all of the economic experience 24
under the retirement system, including but not limited to the inflation 25
rate, investment return, and payroll growth assumptions, relative to the 26
economic assumptions and funding methods previously adopted by the 27 UNOFFICIAL COPY 25 RS BR 1078
Page 38 of 79
XXXX 1/7/2025 2:52 PM Jacketed
board. 1
2. At least once in each five (5) year period, the actuary shall make an 2
actuarial investigation into all of the demographic actuarial assumptions 3
used, including but not limited to mortality tables, withdrawal rates, and 4
retirement rate assumptions, relative to the demographic actuarial 5
assumptions previously adopted by the board. 6
3. Each actuarial investigation shall include at a minimum a summary of 7
the changes in actuarial assumptions and funding methods 8
recommended in the investigation and the projected impact of the 9
recommended changes on funding levels, unfunded liabilities, and 10
actuarially recommended contribution rates for employers over a thirty 11
(30) year period. 12
(c) At least annually the actuary shall make an actuarial valuation of the 13
retirement system. The valuation shall include: 14
1. A description of the actuarial assumptions used, and the assumptions 15
shall be reasonably related to the experience of the system and represent 16
the actuary's best estimate of anticipated experience; 17
2. A description of any funding methods utilized or required by state law in 18
the development of the actuarial valuation results; 19
3. A description of any changes in actuarial assumptions and methods from 20
the previous year's actuarial valuation; 21
4. The actuarially recommended contribution rate for employers for the 22
upcoming budget periods; 23
5. A thirty (30) year projection of the funding levels, unfunded liabilities, 24
and actuarially recommended contribution rates for employers based 25
upon the actuarial assumptions, funding methods, and experience of the 26
system as of the valuation date; and 27 UNOFFICIAL COPY 25 RS BR 1078
Page 39 of 79
XXXX 1/7/2025 2:52 PM Jacketed
6. A sensitivity analysis that evaluates the impact of changes in system 1
assumptions, including but not limited to the investment return 2
assumption, payroll growth assumption, and medical inflation rates, on 3
employer contribution rates, funding levels, and unfunded liabilities. 4
(d) On the basis of the results of the valuations, the board of trustees shall make 5
necessary changes in the retirement system within the provisions of law and 6
shall establish the contributions payable by employers and the state specified 7
in KRS 161.550[, including changes prescribed by KRS 161.633, 161.634, 8
161.635, and 161.636, as applicable]. 9
(e) For any change in actuarial assumptions, funding methods, retiree health 10
insurance premiums and subsidies, or any other decisions made by the board 11
that impact system liabilities and actuarially recommended contribution rates 12
for employers and that are not made in conjunction with the actuarial 13
investigations required by paragraph (b) of this subsection, an actuarial 14
analysis shall be completed showing the projected impact of the changes on 15
funding levels, unfunded liabilities, and actuarially recommended contribution 16
rates for employers over a thirty (30) year period. 17
(2) Actuarial factors and actuarial cost factor tables in use by the retirement system for 18
all purposes shall be determined by the actuary of the retirement system and 19
approved by the board of trustees by resolution and implemented without the 20
necessity of an administrative regulation. 21
(3) A copy of each actuarial investigation, actuarial analysis, and valuation required by 22
subsection (1) of this section shall be forwarded electronically to the Legislative 23
Research Commission no later than ten (10) days after receipt by the board, and the 24
Legislative Research Commission shall distribute the information received to the 25
committee staff and co-chairs of any committee that has jurisdiction over the 26
Teachers' Retirement System. The actuarial valuation required by subsection (1)(c) 27 UNOFFICIAL COPY 25 RS BR 1078
Page 40 of 79
XXXX 1/7/2025 2:52 PM Jacketed
of this section shall be submitted no later than November 15 following the close of 1
the fiscal year. 2
Section 9. KRS 161.420 is amended to read as follows: 3
All of the assets of the retirement system are for the exclusive purpose of providing 4
benefits to members and annuitants and defraying reasonable expenses of administering 5
the system. The board of trustees shall be the trustee of all funds of the system and shall 6
have full power and responsibility for administering the funds. All the assets of the 7
retirement system shall be credited according to the purpose for which they are held to 8
one (1) of the following funds: 9
(1) The expense fund shall consist of the funds set aside from year to year by the board 10
of trustees to defray the expenses of the administration of the retirement system. 11
Each fiscal year an amount not greater than four percent (4%) of the dividends and 12
interest income earned from investments during the immediate past fiscal year shall 13
be set aside into the expense fund or expended for the administration of the 14
retirement system; 15
(2) (a) The teachers' savings fund shall consist of [: 16
1. ]the contributions paid by members of the retirement system into this 17
fund and regular interest assigned by the board of trustees from the 18
guarantee fund[; and 19
2. For individuals who become members of the Teachers' Retirement 20
System on or after January 1, 2022, who are participating in the 21
supplemental benefit component, the employer contributions paid into 22
the supplemental benefit component and regular interest on those 23
contributions as provided by KRS 161.635 and 161.636 that is assigned 24
by the board of trustees from the guarantee fund. 25
For individuals who become members on or after January 1, 2022, the system 26
shall account for funds in the teachers' savings fund attributable to the 27 UNOFFICIAL COPY 25 RS BR 1078
Page 41 of 79
XXXX 1/7/2025 2:52 PM Jacketed
nonuniversity members foundational benefit component, nonuniversity 1
members supplemental benefit component, university members foundational 2
benefit component, and university members supplemental benefit 3
component]. 4
(b) A member may not borrow any amount of his or her accumulated account 5
balance in the teachers' savings fund, or any regular interest earned thereon. 6
(c) The accumulated contributions or accumulated account balance of a member 7
which are returned to him or her upon his or her withdrawal or paid to his or 8
her estate or designated beneficiary in the event of his or her death shall be 9
paid from the teachers' savings fund. 10
(d) Any accumulated account balance in the teachers' savings fund forfeited by a 11
failure of a teacher or his or her estate to claim these contributions shall be 12
transferred from this fund to the guarantee fund. 13
(e) [Except as provided by paragraph (f) of this subsection, ]The accumulated 14
account balance of a member in the teachers' savings fund shall be transferred 15
from this fund to the allowance reserve fund in the event of retirement by 16
reason of service or disability[. 17
(f) For an individual who becomes a member of the Teachers' Retirement System 18
on or after January 1, 2022, who is participating in the supplemental benefit 19
component who elects to annuitize his or her accumulated account balance in 20
the supplemental benefit component as prescribed by KRS 161.635(5)(a) or 21
(b) or 161.636(5)(a) or (b), the member's accumulated account balance in the 22
supplemental benefit component shall be transferred from this fund to the 23
allowance reserve fund]; 24
(3) The state accumulation fund shall consist of funds paid by employers and 25
appropriated by the state for the purpose of providing annuities and survivor 26
benefits, including any sums appropriated for meeting unfunded liabilities, together 27 UNOFFICIAL COPY 25 RS BR 1078
Page 42 of 79
XXXX 1/7/2025 2:52 PM Jacketed
with regular interest assigned by the board of trustees from the guarantee fund. At 1
the time of retirement or death of a member there shall be transferred from the state 2
accumulation fund to the allowance reserve fund an amount which together with the 3
sum transferred from the teachers' savings fund will be sufficient to provide the 4
member a retirement allowance and provide for benefits under KRS 161.520 and 5
161.525[. There shall also be transferred from the state accumulation fund to the 6
teachers' savings fund, the amount needed to fund the mandatory employer 7
contributions required by KRS 161.635 and 161.636]; 8
(4) The allowance reserve fund shall be the fund from which shall be paid all 9
retirement allowances and benefits provided under KRS 161.520 and 161.525. In 10
addition, whenever a change in the status of a member results in an obligation on 11
this fund, there shall be transferred to this fund from the teachers' savings fund and 12
the state accumulation fund, the amounts as may be held in those funds for the 13
account or benefit of the member; 14
(5) (a) The medical insurance fund, which is an account established according to 26 15
U.S.C. sec. 401(h), shall consist of amounts accumulated for the purpose of 16
providing benefits as provided in KRS 161.675, including: 17
1. The member contributions required by KRS 161.540(1)(a)2. and[,] 18
(b)2.[, (c)3., and (d)3.]; 19
2. The employer contribution required by KRS 161.550(1)(a)2., (b)2., 20
(c)2., [(d)3., and (e)3. ]and (3); 21
3. State appropriations as set forth in KRS 161.550(2), unless the 22
contributions are made to a trust fund under 26 U.S.C. sec. 115 23
established by the board for this purpose; and 24
4. Interest income from the investments of the fund from contributions 25
received by the fund under subparagraphs 1. to 3. of this paragraph, and 26
from income earned on those investments. 27 UNOFFICIAL COPY 25 RS BR 1078
Page 43 of 79
XXXX 1/7/2025 2:52 PM Jacketed
(b) All claims for benefits under KRS 161.675 shall be paid from this fund or 1
from any trust fund under 26 U.S.C. sec. 115 as established by the board for 2
this purpose. Any amounts deposited to the fund that are not required to meet 3
current costs shall be maintained as a reserve in the fund for these benefits. 4
The board shall take the necessary and appropriate steps, including 5
promulgating administrative regulations and procedures to maintain the status 6
of the medical insurance fund as an account subject to 26 U.S.C. sec. 401(h); 7
(6) The guarantee fund shall be maintained to facilitate the crediting of uniform interest 8
on the amounts of the other funds, except the expense fund, to finance operating 9
expenses directly related to investment management services, and to provide a 10
contingent fund out of which special requirements of any of the other funds may be 11
covered. All income, interest, and dividends derived from the authorized deposits 12
and investments shall be paid into the guarantee fund. Any funds received from 13
gifts and bequests, which the board is hereby authorized to accept and expend 14
without limitation in a manner either expressed by the donor or deemed to be in the 15
best interest of the membership, shall be credited to the guarantee fund. Any funds 16
transferred from the teachers' savings fund by reason of lack of claimant or because 17
of a surplus in any fund and any other moneys whose disposition is not otherwise 18
provided for, shall also be credited to the guarantee fund. The interest allowed by 19
the board of trustees to each of the other funds shall be paid to these funds from the 20
guarantee fund. Any deficit occurring in any fund that would not be automatically 21
covered shall be met by the payments from the guarantee fund to that fund; 22
(7) The school employee annuity fund shall consist of those funds voluntarily 23
contributed under the provisions of Section 403(b) of the Internal Revenue Code by 24
a member of the Teachers' Retirement System with accounts that existed on or after 25
July 1, 1996. The contributions shall not be picked up as provided in KRS 26
161.540(2). Separate member accounts shall be maintained for each member. The 27 UNOFFICIAL COPY 25 RS BR 1078
Page 44 of 79
XXXX 1/7/2025 2:52 PM Jacketed
board of trustees may promulgate administrative regulations pursuant to KRS 1
Chapter 13A to manage this program; 2
(8) The supplemental retirement benefit fund shall consist of those funds contributed 3
by the employer for the purpose of constituting a qualified government excess 4
benefit plan as described in Section 415 of the Internal Revenue Code for accounts 5
that existed on or after July 1, 1996. The board of trustees shall promulgate 6
administrative regulations pursuant to KRS Chapter 13A to administer this 7
program; and 8
(9) The life insurance benefit fund shall consist of amounts accumulated for the 9
purpose of providing benefits provided under KRS 161.655. The board of trustees 10
may allocate to this fund a percentage of the employer and state contributions as 11
provided under KRS 161.550. The allocation to this fund will be in an amount that 12
the actuary determines necessary to fund the obligation of providing the benefits 13
provided under KRS 161.655[; and 14
(10) The stabilization reserve account shall consist of amounts in two (2) separate 15
accounts: 16
(a) One (1) that includes employer contributions as provided by KRS 161.550(1)(d)1. 17
and 2. that exceeds the combined actuarially required employer contribution for the 18
foundational benefit component and the mandatory employer contribution to the 19
supplemental benefit component as provided by KRS 161.633 and 161.635 for 20
those individuals who become nonuniversity members on or after January 1, 2022; 21
and 22
(b) One (1) that includes employer contributions as provided by KRS 161.550(1)(e)1. 23
and 2. that exceeds the combined actuarially required employer contribution for the 24
foundational benefit component and the mandatory employer contribution to the 25
supplemental benefit component as provided by KRS 161.634 and 161.636 for 26
those individuals who become university members on or after January 1, 2022. 27 UNOFFICIAL COPY 25 RS BR 1078
Page 45 of 79
XXXX 1/7/2025 2:52 PM Jacketed
Notwithstanding any other statute to the contrary, funds in these accounts shall only 1
be used to pay off the unfunded liability of the pension and life insurance funds]. 2
Section 10. KRS 161.470 is amended to read as follows: 3
(1) The membership of the retirement system shall consist of all new members, all 4
present teachers, and all persons participating under the retirement system as of 5
June 30, 1986, except as provided in Acts 1938 (1st Ex. Sess.), Ch. 1, paragraph 29. 6
The board of trustees of the Teachers' Retirement System shall be responsible for 7
final determination of membership eligibility and may direct employers to take 8
whatever action that may be necessary to correct any error relating to membership. 9
(2) Service credit shall be forfeited upon withdrawal. If a member again enters service 10
it shall be as a new member, except that any teacher who withdraws by claiming his 11
or her deposits may repay the system the amount withdrawn plus interest and 12
reestablish his or her service credit as provided in subsection (3) of this section. 13
(3) Effective July 1, 1988, and thereafter, an active contributing member of the 14
retirement system with contributing service equal to one (1) year may regain service 15
credit by depositing in the teachers' savings fund the amount withdrawn with 16
interest at the rate to be set by the board of trustees, and computed from the first of 17
the month of withdrawal and including the month of redeposit. 18
(4) Effective July 1, 1974, any active contributing member with at least two (2) years 19
of contributing service credit who declined membership as provided in Acts 1938 20
(1st Ex. Sess.), Ch. 1, paragraph 29, may secure service credit for prior service, and 21
for any subsequent service prior to date of membership, by depositing in the 22
teachers' savings fund contributions for each year of subsequent service prior to 23
date of membership, with interest at the rate of eight percent (8%) compounded 24
annually to the date of deposit. 25
(5) Membership in the retirement system shall be terminated: 26
(a) By retirement for service; 27 UNOFFICIAL COPY 25 RS BR 1078
Page 46 of 79
XXXX 1/7/2025 2:52 PM Jacketed
(b) By death; 1
(c) By withdrawal of the member's accumulated account balance; 2
(d) When a member, having less than five (5) years of Kentucky service is absent 3
from service for more than three (3) consecutive years; or 4
(e) For persons whose membership begins on or after August 1, 2000, when a 5
member is convicted, in any state or federal court of competent jurisdiction, of 6
a felony related to his or her employment as provided in subparagraphs 1. and 7
2. of this paragraph. 8
1. Notwithstanding any provision of law to the contrary, a person whose 9
membership begins on or after August 1, 2000, who is convicted, in any 10
state or federal court of competent jurisdiction, of a felony related to his 11
or her employment shall forfeit rights and benefits earned under the 12
retirement system, except for the return of his or her accumulated 13
contributions and interest credited on those contributions. 14
2. The payment of retirement benefits ordered forfeited shall be stayed 15
pending any appeal of the conviction. If the conviction is reversed on 16
final judgment, no retirement benefits shall be forfeited. 17
Except for paragraph (e) of this subsection, upon termination of member accounts 18
under this subsection, funds in the account shall be transferred to the guarantee 19
fund. Inactive members may apply for refunds of these funds at any time. The 20
terminated service shall be reinstated, if not withdrawn by the member, in the event 21
that the member returns to active contributing service. 22
(6) In case of withdrawal from service prior to eligibility for retirement, the board of 23
trustees shall on request of the member return all of his or her accumulated account 24
balance, including any payments made by the member to the state accumulation 25
fund, but the member shall have no claim on any contributions made by the state or 26
employer with a view to his or her retirement[, except as provided by KRS 161.635 27 UNOFFICIAL COPY 25 RS BR 1078
Page 47 of 79
XXXX 1/7/2025 2:52 PM Jacketed
and 161.636,] or to contributions made to the medical insurance fund. A member 1
who is withdrawing from service prior to retirement eligibility shall be entitled to a 2
refund following sixty (60) days after his or her last day of employment. If the 3
member is eligible for an immediate service retirement allowance as provided in 4
KRS 161.600, no withdrawal and refund shall be permitted, unless the allowance 5
would prohibit the member from qualifying for Social Security benefits or the 6
member elects to withdraw part or all of his or her service for the purpose of 7
obtaining service credit in another retirement plan. Requests for refund of 8
contributions by the member must be filed on forms prescribed by the Teachers' 9
Retirement System and the employer shall be financially responsible for all 10
information that is certified on the prescribed form. A member may not withdraw 11
any part of his or her accumulated account balance in the retirement system except 12
as provided by this subsection. 13
(7) Except as provided in KRS 161.520 and 161.525, in case of death prior to 14
retirement, the board of trustees shall pay to the estate of the deceased member, 15
unless a beneficiary was otherwise applicably designated by the deceased member, 16
then to the beneficiary, all of his or her accumulated account balance, including any 17
payments made by the member to the state accumulation fund, but the estate or 18
beneficiary shall have no claim on any contributions made by the state or employer 19
with a view to the retirement of the member[, except as provided by KRS 161.635 20
and 161.636,] or to contributions made to the medical insurance fund. 21
(8) Any active contributing member of the Kentucky Employees Retirement System, 22
the County Employees Retirement System, the State Police Retirement System, or 23
the Judicial Retirement System may use service, under that retirement system for 24
the purpose of meeting the service requirement of subsections (3) and (4) of this 25
section. 26
Section 11. KRS 161.507 is amended to read as follows: 27 UNOFFICIAL COPY 25 RS BR 1078
Page 48 of 79
XXXX 1/7/2025 2:52 PM Jacketed
(1) An active contributing member of the Teachers' Retirement System may receive 1
service credit for active service rendered in the uniformed services of the Armed 2
Forces of the United States, including the commissioned corps of the Public Health 3
Service, subject to the provisions of the Uniformed Services Employment and 4
Reemployment Rights Act of 1994 and the administrative regulations promulgated 5
by the board of trustees. Military service includes service in the uniformed services 6
that occurs before the employment of a member in a position covered by the 7
retirement system or where a member leaves covered employment without giving 8
advance written or verbal notice of performing duty in the uniformed services. 9
Service in the uniformed services also includes uniformed service that occurs after 10
employment in a position covered by the retirement system where the member has 11
given advance written or verbal notice of performing duty in the uniformed services 12
and the member returns directly from uniformed services to covered employment. 13
Military service may be credited only if discharge was honorable or was not 14
terminated upon the occurrence of any of the events listed in 38 U.S.C. sec. 4304. 15
Service shall be considered as Kentucky teaching service, except that service may 16
not be used for meeting the service requirements set forth in KRS 161.600(1)(a)[ or 17
(2)] or 161.661(1) unless the service occurred after the member gave written or 18
verbal notice of performing duty in the uniformed services and the member returned 19
directly from uniformed services to covered employment. A maximum of six (6) 20
years of military service may be credited, but in no case a greater number of years 21
than the actual years of contributing service in Kentucky. 22
(2) No credit shall be granted for military service which has been or will be used in 23
qualifying for annuity benefit payments from another retirement system financed 24
wholly or in part by public funds. 25
(3) A member having twenty (20) years or more of active duty in the military service, 26
and who is qualified for regular federal retirement benefits based on this military 27 UNOFFICIAL COPY 25 RS BR 1078
Page 49 of 79
XXXX 1/7/2025 2:52 PM Jacketed
service, may not receive credit for any military service in the Teachers' Retirement 1
System. This subsection shall apply to service presented for credit on July 1, 1975, 2
and after this date. 3
(4) (a) A member receiving retirement credit for active duty in the armed services of 4
the United States prior to employment in a position covered by the retirement 5
system or where the member leaves covered employment without giving 6
advance written or verbal notice of performing duty in the uniformed services 7
shall pay to the retirement system the full actuarial cost of the service credit 8
purchased as provided under KRS 161.220(22). These contributions shall not 9
be picked up, as described in KRS 161.540(2). In purchasing retirement credit 10
for active duty in the armed services, the latest years of service shall be 11
considered first in allowing credit toward retirement. The board of trustees 12
shall adopt a table of actuarial factors to be used in calculating the amount of 13
contribution required for crediting this service. 14
(b) If military service occurred after the member gave written or verbal notice of 15
performing duty in the uniformed services and the member returns directly 16
from uniformed services to covered employment, the member shall contribute 17
the regular member contribution required by KRS 161.540. The member may 18
make the payment of delayed contributions in a lump sum payment or in 19
installments not to exceed five (5) years beginning with the member's date of 20
reemployment. Interest at the rate of eight percent (8%) per annum shall be 21
charged for delayed contributions beginning with the member's date of 22
reemployment until paid[. Members participating in the supplemental benefit 23
component who make the regular member contribution required by this 24
paragraph, shall also receive the mandatory employer contributions in the 25
supplemental benefit component for the period of service purchased]. 26
(5) An active contributing member of the Teachers' Retirement System may receive 27 UNOFFICIAL COPY 25 RS BR 1078
Page 50 of 79
XXXX 1/7/2025 2:52 PM Jacketed
service credit for service in the military reserves of the United States or the National 1
Guard. The member may purchase one (1) month of service for each six (6) months 2
of service in the reserves or the National Guard. Notwithstanding any other statute, 3
regulation, or policy to the contrary, the system shall provide a member, upon 4
request, the estimated actuarial cost of the National Guard or military reserves 5
service purchase based upon the information available at the time of the request. 6
The member shall be entitled to enter into a contract with the system at the time of 7
the request to purchase the National Guard or military reserve service by paying to 8
the system the estimated actuarial cost, either by installments or in lump sum. The 9
member shall pay the full actuarial cost of this service in the military reserves or the 10
National Guard as provided in KRS 161.220(22). Service in the military reserves or 11
the National Guard shall be treated as service earned prior to participation in the 12
system and shall not be used for meeting the service requirements set forth in KRS 13
161.600(1)(a)[ or (2)] or 161.661(1). The payment shall not be picked up by the 14
employer, as described in KRS 161.540(2). 15
Section 12. KRS 161.520 is amended to read as follows: 16
Upon the death of an active contributing member or upon the death of a member retired 17
for disability, except as provided in KRS 161.661(6), the survivors of the deceased 18
member in the following named order, may elect to receive a survivor's benefit payable 19
as follows: 20
(1) Where there is a surviving widow or widower who is named as the primary 21
beneficiary of the member's retirement account, the benefit shall be: 22
(a) One hundred eighty dollars ($180) per month with no restriction on other 23
income; 24
(b) Two hundred forty dollars ($240) per month when the surviving widow or 25
widower's total income from all sources does not exceed six thousand six 26
hundred dollars ($6,600) per year or five hundred fifty dollars ($550) per 27 UNOFFICIAL COPY 25 RS BR 1078
Page 51 of 79
XXXX 1/7/2025 2:52 PM Jacketed
month; or 1
(c) If the deceased member has a minimum of ten (10) years of service credit 2
with the Teachers' Retirement System, the surviving widow or widower may 3
apply for an annuity actuarially equivalent to the annuity that would have 4
been paid to the deceased member when eligibility conditions were met. 5
Eligibility for payments would begin at the time the age of the deceased 6
member would have met the requirements of KRS 161.600(1)[ or (2), as 7
applicable]. In exercising this right, the surviving widow or widower shall be 8
entitled to receive an annuity for life. This subsection applies to surviving 9
spouses of members who die on or after July 1, 1978. A surviving widow or 10
widower of a member who dies after July 1, 1978, shall be eligible for benefit 11
payments provided under paragraphs (a) and (b) of this subsection until they 12
begin receiving payments under this provision; 13
(2) (a) Where there are surviving unmarried children under age eighteen (18) or 14
under age nineteen (19) if a full-time student in high school, the benefit shall 15
be two hundred dollars ($200) per month in the case of one (1) child, three 16
hundred forty dollars ($340) per month in the case of two (2) children, four 17
hundred dollars ($400) per month in the case of three (3) children, and four 18
hundred forty dollars ($440) per month in the case of four (4) or more 19
children. Benefits under this subsection shall apply in addition to benefits 20
which may be payable under subsections (1) and (3) of this section. 21
(b) Notwithstanding any provision of law to the contrary, the surviving spouse 22
may elect to receive a lump-sum refund of the member's accumulated account 23
balance in lieu of the survivorship benefits payable under this subsection and 24
subsection (1) of this section only if the surviving spouse is designated as the 25
primary beneficiary and: 26
1. Is a biological or adoptive parent of all children eligible for a benefit 27 UNOFFICIAL COPY 25 RS BR 1078
Page 52 of 79
XXXX 1/7/2025 2:52 PM Jacketed
under this subsection and has not had his or her parental rights 1
terminated; or 2
2. Has been appointed as legal guardian of all of the children eligible under 3
paragraph (a) of this subsection. 4
(c) To elect a lump-sum refund of the member's accumulated account balance 5
under paragraph (b) of this subsection, the surviving spouse who is designated 6
as the primary beneficiary must sign a waiver on forms prescribed by the 7
retirement system of his or her rights and the member's children's rights to the 8
survivorship benefits payable under this subsection and subsection (1) of this 9
section. The surviving spouse shall not waive the survivorship benefits 10
available under this subsection or subsections (1) and (6) of this section if any 11
of the member's children have attained age eighteen (18) or older unless all of 12
those children consent in writing on forms prescribed by the retirement 13
system to waive their survivorship benefits available under this subsection; 14
(3) (a) Where the survivor is a child age eighteen (18) or older whose mental or 15
physical condition is sufficient to cause his or her dependency on the deceased 16
member at the time of the member's death, the benefit shall be two hundred 17
dollars ($200) per month, payable for the life of the child or until the time as 18
the mental or physical condition creating the dependency no longer exists or 19
the child marries. The mental or physical condition of the adult child shall be 20
revealed by a competent examination by a licensed physician and shall be 21
approved by a majority of a medical review committee as defined in KRS 22
161.661(14). Benefits under this subsection shall apply in addition to benefits 23
which may be payable under subsections (1) and (2) of this section. 24
(b) Notwithstanding any provision of law to the contrary, the surviving spouse 25
shall not elect to receive a lump-sum refund of the member's accumulated 26
account balance in lieu of the survivorship benefits payable under this 27 UNOFFICIAL COPY 25 RS BR 1078
Page 53 of 79
XXXX 1/7/2025 2:52 PM Jacketed
subsection and subsection (1) of this section unless: 1
1. The surviving spouse is designated as the primary beneficiary; 2
2. The surviving spouse has been appointed by the court as guardian, 3
conservator, or other fiduciary with sufficient general or specific 4
authority to waive the survivorship benefits available under this 5
subsection for any child or children age eighteen (18) or older who have 6
been adjudicated incompetent to make decisions on their own behalf by 7
a court of law; and 8
3. Any child or children age eighteen (18) or older who are mentally 9
competent to make decisions on their own behalf consent in writing on 10
forms prescribed by the retirement system to waive their survivorship 11
benefits available under this subsection. 12
(c) If eligible to elect a lump-sum refund of the member's accumulated account 13
balance, the surviving spouse shall sign a waiver on forms prescribed by the 14
retirement system of his or her rights and the member's children's rights to the 15
survivorship benefits payable under this subsection and subsections (1) and 16
(2) of this section; 17
(4) Where the sole eligible survivors are dependent parents aged sixty-five (65) or over, 18
the benefit shall be two hundred dollars ($200) per month for one (1) parent or two 19
hundred ninety dollars ($290) per month for two (2) parents. Dependency of a 20
parent shall be established as of the date of the death of the member; 21
(5) Where the sole eligible survivor is a dependent brother or sister, the benefit shall be 22
one hundred sixty five dollars ($165) per month. In order to qualify, the brother or 23
sister must have been a resident of the deceased member's household for at least 24
one (1) full year prior to the member's death or must have been receiving care in a 25
hospital, nursing home, or other institution at the member's expense for same 26
period; 27 UNOFFICIAL COPY 25 RS BR 1078
Page 54 of 79
XXXX 1/7/2025 2:52 PM Jacketed
(6) The benefit to a child as defined in subsection (2) of this section shall terminate 1
upon the attainment of age eighteen (18) or upon reaching age nineteen (19), if a 2
full-time student in high school, or upon marriage, except that benefits shall 3
continue until the attainment of age twenty-three (23) for an unmarried child who is 4
a full-time student in a recognized educational program beyond the high school 5
level. The benefit to a dependent parent or dependent brother or sister or dependent 6
child age eighteen (18) or older shall terminate upon marriage, or upon termination 7
of the condition creating the dependency; 8
(7) The board of trustees shall be the sole judge of eligibility or dependency of any 9
beneficiary, and may require formal application or information relating to eligibility 10
or dependency, including proof of annual income satisfactory to the board. The 11
board of trustees may subpoena records and individuals whenever it deems this 12
action necessary; 13
(8) No payment of benefits shall be made unless the board of trustees authorizes the 14
payment. The board shall promulgate administrative regulations for the 15
administration of the provisions in this section and in every case the decision of the 16
board of trustees shall be final as to eligibility, dependency, or disability, and the 17
amount of benefits payable; 18
(9) In the event that there are no eligible survivors as defined in subsections (1) to (5) 19
of this section, or in the event that the surviving spouse elects not to receive 20
survivorship benefits on his or her own behalf or on behalf of any of the member's 21
children as permitted under subsections (2) and (3) of this section, the board of 22
trustees shall pay to the estate or the designated beneficiaries of the deceased 23
member a refund of his or her accumulated account balance as provided in KRS 24
161.470(7). If the benefits paid or payable under subsections (1) to (5) of this 25
section and KRS 161.661 shall amount to a sum less than the member's 26
accumulated account balance at the time of death, the board of trustees shall pay to 27 UNOFFICIAL COPY 25 RS BR 1078
Page 55 of 79
XXXX 1/7/2025 2:52 PM Jacketed
the estate or designated beneficiaries of the deceased member the balance of the 1
accumulated account balance; 2
(10) Any person who is receiving benefits and becomes disqualified from receiving 3
those benefits under this section shall immediately notify the Teachers' Retirement 4
System of this disqualification in writing and shall return all benefits paid after the 5
date of disqualification. Failure to comply with these provisions shall create an 6
indebtedness of that person to the Teachers' Retirement System. Interest at the rate 7
of eight percent (8%) per annum shall be charged if the debt is not repaid within 8
sixty (60) days after the date of disqualification. Failure to repay this debt creates a 9
lien in favor of the Teachers' Retirement System upon all property of the person 10
who improperly receives benefits and does not repay those benefits; and 11
(11) Benefits under subsections (2) and (3) of this section shall apply to a child who is a 12
legally adopted survivor at the time of the death of the member. This provision shall 13
be retroactive to include a child who was born after January 1, 1990, and is a legally 14
adopted survivor of a member whose death occurred prior to July 15, 2008. 15
Section 13. KRS 161.548 is amended to read as follows: 16
A member of the Teachers' Retirement System who is in an active contributing status 17
with the system, and who was formerly employed in a regional community service 18
program for mental health and individuals with an intellectual disability, organized and 19
operated under the provisions of KRS 210.370 to 210.480, which does not participate in a 20
state-administered retirement system, may obtain credit for the period of his or her 21
service in the regional community program for mental health and individuals with an 22
intellectual disability by paying to the Teachers' Retirement System the full actuarial cost 23
of the service credit purchased, as provided in KRS 161.220(22). The service credit 24
purchased may not be used for meeting the service requirements set forth in KRS 25
161.600(1)(a)[ or (2)] or 161.661(1). The payment shall not be picked up, as described in 26
KRS 161.540(2), and the entire payment shall be placed in the teachers' savings fund. 27 UNOFFICIAL COPY 25 RS BR 1078
Page 56 of 79
XXXX 1/7/2025 2:52 PM Jacketed
Section 14. KRS 161.549 is amended to read as follows: 1
A member of the Teachers' Retirement System who is in an active contributing status 2
with the system, and who was formerly employed by a Federal Head Start agency, 3
operated under 42 U.S.C. secs. 9831 et seq., which does not participate in a state-4
administered retirement system, may obtain credit for the period of the member's service 5
in the Head Start program by purchasing this service credit under the same conditions 6
that out-of-state service credit may be purchased under KRS 161.515. The service credit 7
purchased may not be used for meeting the service requirements set forth in KRS 8
161.600(1)(a)[ or (2)] or 161.661(1). Payment for the service credit purchased may be 9
made in installments in lieu of a lump-sum payment. The payment shall not be picked up, 10
as described in KRS 161.540(2), and the entire payment shall be placed in the teachers' 11
savings fund. 12
Section 15. KRS 161.605 is amended to read as follows: 13
Any member retired by reason of service may return to work in a position covered by the 14
Kentucky Teachers' Retirement System and continue to receive his or her retirement 15
allowance under the following conditions: 16
(1) Any member who is retired with thirty (30) or more years of service may return to 17
work in a full-time or a part-time position, or in a position providing substitute 18
teaching service, covered by the Teachers' Retirement System and earn up to a 19
maximum of seventy-five percent (75%) of the member's last annual compensation 20
measured on a daily rate to be determined by the board of trustees. For purposes of 21
determining whether the salary of a member returning to work is seventy-five 22
percent (75%) or less of the member's last annual compensation, all remuneration 23
paid and benefits provided to the member, on an actual dollar or fair market value 24
basis as determined by the retirement system, excluding employer-provided medical 25
insurance required under subsection (5) of this section, shall be considered. 26
Members who were retired on or before June 30, 2002, shall be entitled to return to 27 UNOFFICIAL COPY 25 RS BR 1078
Page 57 of 79
XXXX 1/7/2025 2:52 PM Jacketed
work under the provisions of this section as if they had retired with thirty (30) years 1
of service. Nonqualified service credit purchased under the provisions of KRS 2
161.5465 or elsewhere with any state-administered retirement system shall not be 3
used to meet the thirty (30) year requirement set forth in this subsection. Out-of 4
state teaching service provided in public schools for kindergarten through grade 5
twelve (12) may count toward the thirty (30) year requirement set forth in this 6
subsection even if it is not purchased as service credit, if the member obtains from 7
his or her out-of-state employer certification of this service on forms prescribed by 8
the retirement system; 9
(2) Any member who is retired with less than thirty (30) years of service after June 30, 10
2002, may return to work in a full-time or part-time position, or in a position 11
providing substitute teaching service, covered by the Teachers' Retirement System 12
and earn up to a maximum of sixty-five percent (65%) of the member's last annual 13
compensation measured on a daily rate to be determined by the board of trustees. 14
For purposes of determining whether the salary of a member returning to work is 15
sixty-five percent (65%) or less of the member's last annual compensation, all 16
remuneration paid and benefits provided to the member, on an actual dollar or fair 17
market value basis as determined by the retirement system, excluding employer-18
provided medical insurance required under subsection (5) of this section, shall be 19
considered; 20
(3) Reemployment of a retired member under subsection (1) or (2) of this section in a 21
full-time teaching or nonteaching position in a local school district shall be 22
permitted only if the employer certifies to the Kentucky Teachers' Retirement 23
System that there are no other qualified applicants available to fill the teaching or 24
nonteaching position. The employer may use any source considered reliable, 25
including but not limited to data provided by the Education Professional Standards 26
Board and the Department of Education, to determine whether other qualified 27 UNOFFICIAL COPY 25 RS BR 1078
Page 58 of 79
XXXX 1/7/2025 2:52 PM Jacketed
applicants are available to fill the teaching or nonteaching position. The Kentucky 1
Board of Education shall promulgate administrative regulations to establish 2
procedures to determine whether other qualified applicants are available to fill a 3
teaching or nonteaching position and, if not, for filling the position with a retired 4
member who will then be permitted to return to work in that position under 5
subsection (1) or (2) of this section. The administrative regulations shall ensure that 6
a retired member shall not be hired in a teaching or nonteaching position by a local 7
school district until the superintendent of the school district assures the Kentucky 8
Teachers' Retirement System that every reasonable effort has been made to recruit 9
other qualified applicants for the position on an annual basis; 10
(4) Under this section, an employer may employ full-time a number of retired members 11
not to exceed three percent (3%) of the membership actively employed full-time by 12
that employer. The board of trustees may reduce this three percent (3%) cap upon 13
recommendation of the retirement system's actuary if a reduction is necessary to 14
maintain the actuarial soundness of the retirement system. The board of trustees 15
may increase the three percent (3%) cap upon a determination that an increase is 16
warranted to help address a shortage in the number of available teachers and upon 17
the determination of the retirement system's actuary that the proposed cap increase 18
allows the actuarial soundness of the retirement system to be maintained. For 19
purposes of this subsection, "full-time" means the same as defined by KRS 20
161.220(21). A local school district may exceed the quota established by this 21
subsection by making an annual written request to the Kentucky Department of 22
Education which the department may approve on a year-by-year basis if the 23
statewide quota has not been met. A district's written request to exceed its quota 24
shall be submitted no sooner than two (2) weeks after the start of the school year; 25
(5) (a) Except as provided by subsection (10) of this section, a member returning to 26
work in a full-time or part-time position, or in a position providing substitute 27 UNOFFICIAL COPY 25 RS BR 1078
Page 59 of 79
XXXX 1/7/2025 2:52 PM Jacketed
teaching service, under subsection (1) or (2) of this section shall contribute to 1
an account with the retirement system that shall be administered 2
independently from and with no reciprocal impact with the member's original 3
retirement account, or any other account from which the member is eligible to 4
draw a retirement allowance. 5
(b) Except as provided by subsection (10) of this section, a member returning to 6
work under subsection (1) or (2) of this section shall make contributions to the 7
retirement system at the rate provided under KRS 161.540. The new account 8
shall independently meet all vesting requirements as well as all other 9
conditions set forth in KRS 161.600(1)[ or (2), as applicable,] before any 10
retirement allowance is payable from this account. The retirement allowance 11
accruing under this new account shall be calculated pursuant to KRS 161.620. 12
This new account shall not entitle the member to a duplication of the benefits 13
offered under KRS 161.620(7) or 161.675, nor shall this new account provide 14
the benefits offered by KRS 161.520, 161.525, 161.620(3), 161.655, 161.661, 15
or 161.663. 16
(c) A member returning to work under subsection (1) or (2) of this section shall 17
waive his or her medical insurance with the Teachers' Retirement System 18
during the period of reemployment and shall receive the medical insurance 19
coverage that is generally provided by the member's active employer to the 20
other members of the retirement system that the active employer employs. If 21
medical insurance coverage is not available from the employer, the Kentucky 22
Teachers' Retirement System may provide coverage for the member. 23
(d) A member returning to work under subsection (1) or (2) of this section shall 24
not be eligible to purchase service credit for any service provided after the 25
member's effective date of retirement but prior to the date that the member 26
returns to work. A member returning to work under subsection (1) or (2) of 27 UNOFFICIAL COPY 25 RS BR 1078
Page 60 of 79
XXXX 1/7/2025 2:52 PM Jacketed
this section shall not be eligible to purchase service credit that the member 1
would have otherwise been eligible to purchase prior to the member's initial 2
retirement. 3
(e) A member who returns to work under subsection (1) or (2) of this section, or 4
in the event of the death of the member, the member's estate or applicably 5
designated beneficiary, shall be entitled, within ninety (90) days of the posting 6
of the annual report submitted by the employer, to a refund of contributions as 7
permitted and limited by KRS 161.470; 8
(6) The board of trustees may annually, on July 1, adjust the current daily rate of a 9
member's last annual compensation, for each full twelve (12) month period that has 10
elapsed subsequent to the member earning his or her last annual compensation, by 11
the percentage increase in the annual average of the consumer price index for all 12
urban consumers for the calendar year preceding the adjustment as published by the 13
Federal Bureau of Labor Statistics, not to exceed five percent (5%) annually. Each 14
annual adjustment shall become part of the member's daily rate base. Failure to 15
comply with the salary limitations set forth in subsections (1) and (2) of this section 16
as may be adjusted by this subsection shall result in a reduction of the member's 17
retirement allowance or any other benefit to which the member would otherwise be 18
entitled on a dollar-for-dollar basis for each dollar that the member exceeds these 19
salary limitations, and the member shall be refunded his or her retirement 20
contributions made on the compensation that exceeds these salary limitations. 21
Notwithstanding any other provision of law to the contrary, a member retiring from 22
a local school district who returns to work for a local school district under 23
subsection (1) or (2) of this section shall be entitled, without any reduction to his or 24
her retirement allowance or any other retirement benefit, to earn a minimum 25
amount equal to one hundred seventy dollars ($170) per day; 26
(7) (a) A retired member returning to work under subsection (1) or (2) of this section 27 UNOFFICIAL COPY 25 RS BR 1078
Page 61 of 79
XXXX 1/7/2025 2:52 PM Jacketed
shall have separated from service for a period of at least one (1) year if 1
returning to work for the same employer on a full-time basis, and at least three 2
(3) months if returning to work for a different employer on a full-time basis. 3
A retired member returning to work under subsection (1) or (2) of this section 4
on a part-time basis shall have separated from service for a period of at least 5
three (3) months before returning to work for any employer. 6
(b) As an alternative to the separation-from-service requirements in paragraph (a) 7
of this subsection, a retired member who is returning to work for the same 8
employer in a full-time position under subsections (1) and (2) of this section 9
may elect a separation-from-service of not less than two (2) months followed 10
by a forfeiture of the retired member's retirement allowance on a month-to-11
month basis for each month that the member has separated from service for 12
less than twelve (12) full months. A retired member returning to work for the 13
same employer in a part-time position, or for a different employer in a full-14
time position, may elect an alternative separation-from-service requirement of 15
at least two (2) months followed by a forfeiture of the member's retirement 16
allowance for one (1) month. During the period that the member forfeits his or 17
her retirement allowance and thereafter, member and employer contributions 18
shall be made to the retirement system as a result of employment in any 19
position subject to membership in the retirement system. The member shall 20
contribute to an account with the retirement system subject to the conditions 21
set forth in subsection (5) of this section. 22
(c) A retired member who is returning to work for an employer that has 23
employees who participate in the Teachers' Retirement System shall comply 24
with the separation-from-service requirements in this subsection before 25
performing any service for the employer, regardless of whether the retired 26
member is providing service in a position covered by the Teachers' 27 UNOFFICIAL COPY 25 RS BR 1078
Page 62 of 79
XXXX 1/7/2025 2:52 PM Jacketed
Retirement System. 1
(d) The starting date for any separation from service required under this 2
subsection shall be the effective date of the member's retirement. 3
(e) The separation-from-service requirements of this subsection are not met if 4
there is a prearranged agreement between the member and an employer that 5
has employees who participate in the Teachers' Retirement System prior to 6
retirement for the member to work for the employer after retirement. 7
(f) The Teachers' Retirement System may require the member and the employer 8
for which the member is returning to work to certify in writing on a form 9
prescribed by the Teachers' Retirement System that no prearranged agreement 10
was or will be entered into between the member and employer prior to 11
retirement for the member to work for the employer after retirement. 12
(g) Failure to comply with the separation-from-service requirements in this 13
subsection voids a member's retirement and the member shall be required to 14
return all the retirement benefits he or she received, with interest, for the 15
period of time that the member returned to work without a sufficient 16
separation from service; 17
(8) (a) Effective July 1, 2004, local school districts may employ retired members in 18
full-time or part-time teaching or administrative positions without limitation 19
on the compensation of the retired members that is otherwise required by 20
subsections (1) and (2) of this section. Under provisions of this subsection, a 21
local school district may only employ retired members to fill critical shortage 22
positions for which there are no other qualified applicants as determined by 23
the local superintendent. The number of retired members that a local school 24
district may employ under this subsection shall be no more than two (2) 25
members per local school district or one percent (1%) of the total active 26
members employed by the local school district on a full-time basis as defined 27 UNOFFICIAL COPY 25 RS BR 1078
Page 63 of 79
XXXX 1/7/2025 2:52 PM Jacketed
under KRS 161.220(21), whichever number is greater. Retired members 1
returning to work under this subsection shall be subject to the separation-2
from-service requirements set forth in subsection (7) of this section. Retired 3
members returning to work under this subsection shall waive their medical 4
insurance coverage with the retirement system during their period of 5
reemployment and receive medical insurance coverage that is offered to other 6
full-time members employed by the local school district. Retired members 7
returning to work under this subsection shall contribute to an account subject 8
to the conditions set forth in subsection (5) of this section. Retired members 9
returning to work under this subsection shall make contributions to the 10
retirement system at the rate provided under KRS 161.540. The employer 11
shall make contributions at the rate provided under KRS 161.550. Local 12
school districts shall make annual payments to the retirement system on the 13
compensation paid to the reemployed retirees at the rates determined by the 14
retirement system's actuary that reflect any accrued liability resulting from the 15
reemployment of these members. 16
(b) The Department of Education may employ retired members in full-time or 17
part-time teaching or nonteaching positions without the limitations on 18
compensation otherwise required by subsections (1) and (2) of this section to 19
fill critical shortage areas in the schools it operates, including the Kentucky 20
School for the Blind, the Kentucky School for the Deaf, and the Kentucky 21
Virtual High School, and to serve on audit teams. The department shall be 22
subject to the same requirements as local school districts as provided in 23
paragraph (a) of this subsection, except the Teachers' Retirement System shall 24
determine the maximum number of employees that may be employed under 25
this paragraph; 26
(9) The return-to-work limitations set forth in this section shall apply to retired 27 UNOFFICIAL COPY 25 RS BR 1078
Page 64 of 79
XXXX 1/7/2025 2:52 PM Jacketed
members who are returning to work in the same position from which they retired, or 1
a position substantially similar to the one from which they retired, or a position 2
described in KRS 161.046 or any position listed in KRS 161.220(4) which requires 3
membership in the retirement system. Positions which generally require 4
certification or graduation from a four (4) year college or university as a condition 5
of employment which are created, or changed to remove the position from coverage 6
under KRS 161.220(4) are also subject to the return to work limitations set forth in 7
this section. The board of trustees shall determine whether employment in a 8
nonteaching position is subject to this subsection; 9
(10) [(a) Notwithstanding the provisions of this section, individuals who become 10
members on or after January 1, 2022, who subsequently retire and begin 11
drawing a monthly lifetime retirement allowance from the Teachers' 12
Retirement System, who following retirement are reemployed with an 13
employer participating in the Teachers' Retirement System, shall not be 14
eligible to contribute to or earn benefits in a second retirement account in the 15
Teachers' Retirement System during the period of reemployment. 16
(b) ]The provisions of subsections (1) to (8) of this section are not subject to KRS 17
161.714; 18
(11) Any member retired by reason of service may waive his or her annuity and return to 19
full-time employment in a position covered by the Teachers' Retirement System 20
under the following conditions: 21
(a) The member shall receive no annuity payments while employed in a covered 22
position, shall waive his or her medical insurance coverage with the Teachers' 23
Retirement System during the period of reemployment, and shall receive the 24
medical insurance coverage that is generally offered by the member's active 25
employer to the other members of the retirement system employed by the 26
active employer. The member's estate or, if there is a beneficiary applicably 27 UNOFFICIAL COPY 25 RS BR 1078
Page 65 of 79
XXXX 1/7/2025 2:52 PM Jacketed
designated by the member, then the beneficiary, shall continue to be eligible 1
for life insurance benefits as provided in KRS 161.655. Service subsequent to 2
retirement shall not be used to improve an annuity, except as provided in 3
paragraphs (b) and (c) of this subsection; 4
(b) Any member who waives regular annuity benefits and returns to teaching or 5
covered employment shall be entitled to make contributions on the salaries 6
received for this service and have his or her retirement annuity recalculated as 7
provided in the regular retirement formula in KRS 161.620(1), less any 8
applicable actuarial discount applied to the original retirement allowance due 9
to the election of a joint and last survivor option. Retirement option and 10
beneficiary designation on original retirement shall not be altered by 11
postretirement employment, and dependents and spouses of the members shall 12
not become eligible for benefits under KRS 161.520, 161.525, or 161.661 13
because of postretirement employment; 14
(c) When a member returns to full-time teaching or covered employment as 15
provided in subsection (b) of this section, the employer is required to withhold 16
and remit regular retirement contributions. The member must be employed 17
full-time for at least one (1) consecutive contract year to be eligible to 18
improve an annuity. The member shall be returned to the annuity rolls on July 19
1 following completion of the contract year or on the first day of the month 20
following the month of termination of service if full-time employment 21
exceeds one (1) consecutive contract year. A member shall not be returned to 22
the annuity rolls until after he or she has filed a retirement application in 23
compliance with KRS 161.600(5)[(6)]. Any discounts applied at the time of 24
the original retirement due to service or age may be reduced or eliminated due 25
to additional employment if full-time employment is for one (1) consecutive 26
contract year or longer; and 27 UNOFFICIAL COPY 25 RS BR 1078
Page 66 of 79
XXXX 1/7/2025 2:52 PM Jacketed
(d) A member retired by reason of service who has been employed the equivalent 1
of twenty-five (25) days or more during a school year under KRS 161.605 2
may waive the member's retirement annuity and return to regular employment 3
covered by the Teachers' Retirement System during that school year a 4
maximum of one (1) time during any five (5) year period, beginning with that 5
school year; 6
(12) Retired members may be employed in a part-time teaching capacity by an agency 7
described in KRS 161.220(4)(b) or (n), not to exceed the equivalent of twelve (12) 8
teaching hours in any one (1) fiscal year. Retired members may be employed for a 9
period not to exceed the equivalent of one hundred (100) days in any one (1) fiscal 10
year in a part-time administrative or nonteaching capacity by an agency described 11
in KRS 161.220(4)(b) or (n) in a position that would otherwise be covered by the 12
retirement system. Except as otherwise provided by this subsection, the return to 13
work provisions set forth in subsections (1) to (8) of this section shall not apply to 14
retired members who return to work solely for an agency described in KRS 15
161.220(4)(b) or (n). Calculation of the number of days and teaching hours for part-16
time teaching, substitute teaching, or part-time employment in a nonteaching 17
capacity under this section shall not exceed the ratio between a school year and the 18
actual months of retirement for the member during that school year. The board of 19
trustees by administrative regulation may establish fractional equivalents of a day 20
of teaching service. Any member who exceeds the twelve (12) hour or one hundred 21
(100) day limitations of this subsection shall be subject to having his or her 22
retirement voided and be required to return all retirement allowances and other 23
benefits paid to the member or on the member's behalf since the effective date of 24
retirement. In lieu of voiding a member's retirement, the system may reduce the 25
member's retirement allowance or any other benefit to which the member would 26
otherwise be entitled on a dollar-for-dollar basis for each dollar of compensation 27 UNOFFICIAL COPY 25 RS BR 1078
Page 67 of 79
XXXX 1/7/2025 2:52 PM Jacketed
that the member earns in employment exceeding twelve (12) hours, one hundred 1
(100) days, or any apportionment of the two (2) combined. Retired members 2
returning to work for an employer described in KRS 161.220(4)(b) or (n) shall 3
comply with the separation-from-service requirements of subsection (7) of this 4
section; 5
(13) When a retired member returns to employment in a part-time teaching capacity or 6
in a nonteaching capacity as provided in subsection (12) of this section, the 7
employer shall contribute annually to the retirement system on the compensation 8
paid to the retired member at rates determined by the retirement system actuary that 9
reflect accrued liability for retired members who return to work under subsection 10
(12) of this section; and 11
(14) For retired members who return to work during any one (1) fiscal year in both a 12
position described in KRS 161.220(4)(b) or (n) and in a position described under 13
another provision under KRS 161.220(4), and for retired members who return to 14
work in a position described under KRS 161.220(4)(b) or (n) in both a teaching and 15
an administrative or nonteaching capacity, the board of trustees shall adopt a 16
methodology for a pro rata apportionment of days and hours that the retired 17
member may work in each position. 18
Section 16. KRS 161.612 is amended to read as follows: 19
Effective July 1, 2002, any individual occupying a position on a part-time basis that 20
requires certification or graduation from a four (4) year college or university as a 21
condition of employment and any individual providing part-time or substitute teaching 22
services that are the same or similar to those teaching services provided by certified, full-23
time teachers shall be a member of the Teachers' Retirement System, according to the 24
conditions and only to the extent set forth in this section, if the individual is employed by 25
one (1) of the public boards, institutions, or agencies set forth in KRS 161.220, excluding 26
those public boards, institutions, and agencies described in KRS 161.220(4)(b) and (n). 27 UNOFFICIAL COPY 25 RS BR 1078
Page 68 of 79
XXXX 1/7/2025 2:52 PM Jacketed
Members providing part-time and substitute services shall participate in the retirement 1
system as follows: 2
(1) Members providing part-time and substitute services shall accrue service credit as 3
provided under KRS 161.500 and be entitled to a retirement allowance upon 4
meeting the service retirement conditions of KRS 161.600. The board of trustees 5
shall adopt a methodology for accrediting service credit to these members on a pro 6
rata basis. The methodology adopted by the board of trustees may be amended as 7
necessary to ensure its actuarial soundness. The retirement allowance for members 8
providing part-time and substitute services shall be calculated pursuant to KRS 9
161.620[ and 161.635 or 161.636, as applicable], except that the provisions of KRS 10
161.620(3) shall not apply. Members providing part-time and substitute services 11
who meet the service retirement conditions of KRS 161.600 may also be eligible to 12
participate as approved by the board of trustees in the medical insurance program 13
provided by the retirement system under KRS 161.675. Members providing part-14
time and substitute services shall make contributions to the Teachers' Retirement 15
System at the rate provided under KRS 161.540. A member who provides part-time 16
or substitute services, or in the event of the death of the member, the member's 17
estate or applicably designated beneficiary, will be entitled, within ninety (90) days 18
of the posting of the annual report submitted by the member's employer, to a refund 19
of contributions as permitted and limited by KRS 161.470; 20
(2) (a) 1. The board of trustees shall adopt eligibility conditions under which 21
members providing part-time and substitute services may participate in 22
the benefits provided under KRS 161.520, 161.655, 161.661, and 23
161.663. 24
2. For all disability retirement applications filed with the Teachers' 25
Retirement System on or after July 1, 2021, disability retirement 26
payments and any other recurring payments payable by any other state-27 UNOFFICIAL COPY 25 RS BR 1078
Page 69 of 79
XXXX 1/7/2025 2:52 PM Jacketed
administered retirement system to members providing part-time or 1
substitute services shall be applied to reduce, on a dollar-for-dollar 2
basis, the minimum monthly disability retirement allowance of five 3
hundred dollars ($500) provided for under KRS 161.661(6). 4
3. Effective July 1, 2021, members providing part-time or substitute 5
services shall not be eligible to apply for a disability retirement 6
allowance if they are eligible for a service retirement allowance that is 7
not subject to an actuarial reduction required under KRS 161.600(1)(b) 8
or (d). 9
(b) The board of trustees may permit members providing part-time or substitute 10
services to participate in other benefits offered by the retirement system by 11
promulgating administrative regulations that establish eligibility conditions 12
for participation in these benefits. All eligibility conditions adopted by the 13
board of trustees pursuant to this subsection may be amended as necessary to 14
ensure their actuarial soundness; 15
(3) In addition to the pro rata methodology adopted by the board of trustees under 16
subsection (1) of this section, members providing part-time and substitute services 17
shall be subject to all limitations and conditions regarding the accrual, retention, 18
accreditation, and use of service credit that apply to members providing full-time 19
services. In addition to the eligibility conditions set forth by the board of trustees 20
under subsection (2) of this section, members providing part-time and substitute 21
services shall be subject to all limitations and conditions regarding both the 22
eligibility to participate and the extent of participation in any benefit offered under 23
KRS 161.220 to 161.716 that apply to members providing full-time services; 24
(4) Notwithstanding any other provisions of this section to the contrary, instructional 25
assistants who provide teaching services in the local school districts on a full-time 26
basis in positions covered by the County Employees Retirement System who are 27 UNOFFICIAL COPY 25 RS BR 1078
Page 70 of 79
XXXX 1/7/2025 2:52 PM Jacketed
used as substitute teachers on an emergency basis for five (5) days or less during 1
any one (1) fiscal year shall not be considered members of the Teachers' Retirement 2
System during that period in which they are serving as substitute teachers for five 3
(5) days or less; 4
(5) The board of trustees may adopt a pro rata methodology to determine the annual 5
compensation of members providing part-time and substitute services in order to 6
determine benefits provided under KRS 161.661 and 161.663. Members providing 7
part-time and substitute services who had retirement contributions posted to their 8
accounts during the previous fiscal year and who have not had those contributions 9
refunded to them are eligible to vote for the board of trustees; 10
(6) The board of trustees of the Teachers' Retirement System shall be responsible for 11
final determination of membership eligibility and may direct employers to take 12
whatever action that may be necessary to correct any error relating to membership; 13
and 14
(7) The provisions of this section are not subject to KRS 161.714. 15
Section 17. KRS 161.630 is amended to read as follows: 16
(1) (a) A member, upon retirement, shall receive a retirement allowance in the form 17
of a life annuity, with refundable balance, as provided in KRS 161.620, unless 18
an election is made before the effective date of retirement to receive 19
actuarially equivalent benefits under options which the board of trustees 20
approves. 21
(b) [An individual who is participating in the supplemental benefit component as 22
provided by KRS 161.635 or 161.636 may, before the effective date of 23
retirement, elect to receive his or her accumulated account balance accrued in 24
the supplemental benefit component annuitized into a monthly payment under 25
one (1) of the actuarial equivalent payment options approved by the board of 26
trustees. 27 UNOFFICIAL COPY 25 RS BR 1078
Page 71 of 79
XXXX 1/7/2025 2:52 PM Jacketed
(c) ]No option shall provide for a benefit with an actuarial value at the age of 1
retirement greater than that provided in KRS 161.620[, 161.635(5)(a), or 2
161.636(5)(a), as applicable]. This section does not apply to disability 3
allowances as provided in KRS 161.661(1). 4
(2) The retirement option chosen by a retiree at the time of service retirement shall 5
remain in force unless the retiree elects to make a change under the following 6
conditions: 7
(a) A divorce, annulment, or marriage dissolution following retirement shall, at 8
the election of the retiree, cancel any optional plan selected at retirement that 9
provides indefinitely continuing benefits to a spousal beneficiary and return 10
the retiree to a single lifetime benefit equivalent as determined by the board; 11
or 12
(b) Following marriage or remarriage, or the death of the designated beneficiary, 13
a retiree may elect a new optional plan of payment based on the actuarial 14
equivalent of a single lifetime benefit at the time of the election, as 15
determined by the board. The plan shall become effective the first of the 16
month following receipt of an application on a form approved by the board. 17
(3) Except as otherwise provided in this section, a beneficiary designation shall not be 18
changed after the effective date of retirement except for retirees who elect the life 19
annuity with refundable balance or the predetermined years certain and life 20
thereafter option. A member may remove a beneficiary at any time, but shall not 21
designate a substitute beneficiary. If a member elects to remove a beneficiary, the 22
member's retirement allowance shall not change regardless of the retirement option 23
selected by the member, even if the removed beneficiary predeceases the member. 24
(4) A member who experiences a qualifying event under subsection (2) of this section 25
and who elects a new optional plan of payment shall make that election within sixty 26
(60) days of the qualifying event. 27 UNOFFICIAL COPY 25 RS BR 1078
Page 72 of 79
XXXX 1/7/2025 2:52 PM Jacketed
Section 18. KRS 161.661 is amended to read as follows: 1
(1) (a) Any member who is accredited by the Teachers' Retirement System for five 2
(5) or more years of service in Kentucky after July 1, 1941, may retire for 3
disability and be granted a disability allowance if found to be eligible as 4
provided in this section. Application for disability benefits shall be made 5
within one (1) year of the last contributing service in Kentucky, and the 6
disability must have occurred during the most recent period of employment in 7
a position covered by the Teachers' Retirement System and subsequent to the 8
accreditation by the Teachers' Retirement System of five (5) years of 9
retirement system service credit in Kentucky. A disability occurring during 10
the regular vacation immediately following the last period of active service in 11
Kentucky or during an official leave for which the member is entitled to make 12
regular contributions to the retirement system, shall be considered as having 13
occurred during a period of active service. 14
(b) The annual disability allowance shall be equal to sixty percent (60%) of the 15
member's final average salary. 16
(c) The following individuals shall not be eligible for disability benefits under 17
this section: 18
1. Members with twenty-seven (27) or more years of service credit; and 19
2. Individuals who become members on or after July 1, 2021, who are 20
eligible for an unreduced benefit under KRS 161.600(1)(b)2. or (d). 21
(2) The provisions of KRS 161.520, 161.525, and subsections (3), (4), and (5) of this 22
section shall not apply to disability retirees whose benefits were calculated on the 23
service retirement formula nor to survivors of these members. 24
(3) Members shall earn one (1) year of entitlement to disability retirement, at sixty 25
percent (60%) of the member's final average salary, for each four (4) years of 26
service in a covered position, but any member meeting the service requirement for 27 UNOFFICIAL COPY 25 RS BR 1078
Page 73 of 79
XXXX 1/7/2025 2:52 PM Jacketed
disability retirement shall be credited with no less than five (5) years of eligibility. 1
(4) A member retired by reason of disability shall continue to earn service credit at the 2
rate of one (1) year for each year retired for disability. This service shall be credited 3
to the member's account at the expiration of entitlement as defined in subsection (3) 4
of this section, or when the member's eligibility for disability benefits is terminated 5
upon recommendation of a medical review committee, and this service shall be 6
used in calculating benefits as provided in subsection (5) of this section, but under 7
no circumstances shall this service be used to provide the member with more than 8
twenty-seven (27) years of total service credit. The service credit shall be valued at 9
the same level as service earned by active members as provided under KRS 161.600 10
or 161.620. 11
(5) Any member retired by reason of disability and remaining disabled at the expiration 12
of the entitlement period shall have his or her disability benefits recalculated using 13
the service retirement formula with service credit earned as set out in subsection (4) 14
of this section. The retirement allowance shall be calculated as set forth in KRS 15
161.620, except that those persons less than sixty (60) years of age shall be 16
considered as sixty (60) years of age. Members having their disability benefits 17
recalculated under this subsection shall not be entitled to a benefit based upon an 18
average of their three (3) highest salaries as set forth in KRS 161.220(9), unless 19
approved otherwise by the board of trustees. 20
(6) Members who have their disability retirement allowance recalculated at the 21
expiration of the entitlement period shall continue to have coverage under the post-22
retirement medical insurance program. Restrictions on employment shall remain in 23
effect until the member attains age seventy (70) or until the member's eligibility is 24
discontinued. KRS 161.520 and 161.525 shall not apply to survivors of disability 25
retirees whose retirement allowances have been recalculated at the expiration of the 26
entitlement period. Members who have their disability retirement allowance 27 UNOFFICIAL COPY 25 RS BR 1078
Page 74 of 79
XXXX 1/7/2025 2:52 PM Jacketed
recalculated at the expiration of their entitlement period shall be entitled to a 1
minimum monthly allowance of five hundred dollars ($500) as the basic straight 2
life annuity. The minimum allowance shall be effective July 1, 1992, and shall 3
apply to those members who have had their allowance recalculated prior to that date 4
and to disability retirees who will have their benefit allowance recalculated on or 5
after that date. For individuals who become members on or after July 1, 2021, 6
disability retirement payments and any other recurring payments payable by any 7
other state-administered retirement system shall be applied to reduce, on a dollar-8
for-dollar basis, the minimum monthly disability retirement allowance payable 9
under this subsection. 10
(7) Effective July 1, 1992, members retired for disability prior to July 1, 1964, shall be 11
entitled to a minimum monthly allowance of five hundred dollars ($500) as their 12
basic straight life annuity and their surviving spouse shall be eligible for survivor 13
benefits as provided in KRS 161.520(1)(a) and (b). 14
(8) Any member retired by reason of disability may voluntarily waive disability 15
benefits and return to teaching or any member, who is age sixty (60) years or older, 16
may elect to waive disability benefits and retire for service on the basis of service 17
credited to the member on the effective date of the disability retirement. 18
(9) In order to qualify for retirement by reason of disability a member must suffer from 19
a physical or mental condition presumed to be permanent in duration and of a 20
nature as to render the member incapable of being gainfully employed in a covered 21
position. The incapability must be revealed by a competent examination by a 22
licensed physician or physicians and must be approved by a majority of a medical 23
review committee. 24
(10) A member retired by reason of disability shall be required to undergo periodic 25
examinations at the discretion of the board of trustees to determine whether the 26
disability allowance shall be continued. When examination and recommendation of 27 UNOFFICIAL COPY 25 RS BR 1078
Page 75 of 79
XXXX 1/7/2025 2:52 PM Jacketed
a medical review committee indicate the disability no longer exists, the allowance 1
shall be discontinued. 2
(11) Eligibility for payment shall begin on the first day of the month following receipt of 3
the application in the Teachers' Retirement System office, or the first of the month 4
next following the last payment of salary or sick leave benefits by the employer, 5
whichever is the later date. 6
(12) No person who receives a disability allowance may be employed in a position that 7
entails duties or qualification requirements similar to positions subject to 8
participation in the retirement system either within or without the State of 9
Kentucky. So doing shall constitute a misdemeanor and shall result in loss of the 10
allowance from the first date of this service. For purposes of this subsection and 11
subsection (13) of this section, "employment" and "occupation," and derivatives 12
thereof, mean any activity engaged in by the member receiving disability allowance 13
from which income is earned. A member who applies for and is approved for 14
disability retirement on or after July 1, 2002, and whose annual disability benefit is 15
less than forty thousand dollars ($40,000) may earn income in any occupation other 16
than covered employment only to the extent that the annual income from the other 17
employment when added to the annual disability benefit does not exceed forty 18
thousand dollars ($40,000). For any member who exceeds this limit as a result of 19
income from other employment, the Kentucky Teachers' Retirement System shall 20
reduce the member's disability benefit on a dollar-for-dollar basis for each dollar 21
that the member's combined annual disability benefit and annual income from other 22
employment exceeds forty thousand dollars ($40,000). The board of trustees may 23
annually increase the forty thousand dollar ($40,000) limit by the percentage 24
increase in the annual average of the consumer price index for all urban consumers 25
for the most recent calendar year as published by the Federal Bureau of Labor 26
Statistics, not to exceed five percent (5%). The retirement system may require 27 UNOFFICIAL COPY 25 RS BR 1078
Page 76 of 79
XXXX 1/7/2025 2:52 PM Jacketed
income verification from the member, including but not limited to copies of tax 1
returns and federal forms W-2 and W-4P. 2
(13) All members who applied for disability retirement before July 1, 2002, and were 3
approved as a result of that application shall be subject to the income limitations as 4
they existed on June 30, 2002, until July 1, 2006. Effective July 1, 2006, the 5
twenty-seven thousand dollar ($27,000) limitation shall be increased to forty 6
thousand dollars ($40,000) and may be adjusted by the board of trustees by the 7
consumer price index in the manner described in subsection (12) of this section. 8
The recipient of a disability allowance who engages in any gainful occupation other 9
than covered employment must make a report of the duties involved, compensation 10
received, and any other pertinent information required by the board of trustees. The 11
retirement system may require income verification from the member, including but 12
not limited to copies of tax returns and federal forms W-2 and W-4P. 13
(14) The board of trustees shall designate medical review committees, each consisting of 14
three (3) licensed physicians. A medical review committee shall pass upon all 15
applications for disability retirement and upon all applicant statements, medical 16
certifications, and examinations submitted in connection with disability 17
applications. The disposition of each case shall be recommended by a medical 18
review committee in writing to the retirement system. Members of a medical review 19
committee shall follow administrative regulations regarding procedures as the board 20
of trustees may enact and shall be paid reasonable fees and expenses as authorized 21
by the board of trustees in compliance with the provisions of KRS 161.330 and 22
161.340. The retirement system may secure additional medical examinations and 23
information as it deems necessary. A member may appeal any final agency decision 24
denying his or her disability retirement application pursuant to the provisions of 25
KRS 161.250(2). 26
(15) A disability may be presumed to be permanent if the condition creating the 27 UNOFFICIAL COPY 25 RS BR 1078
Page 77 of 79
XXXX 1/7/2025 2:52 PM Jacketed
disability may be reasonably expected to continue for one (1) year or more from the 1
date of application for disability benefits. 2
(16) Any member who has voluntarily waived disability benefits or whose disability 3
benefits have been discontinued on recommendation of a medical review 4
committee, may apply for reinstatement of disability benefits. The application for 5
reinstatement must be made to the retirement system within twelve (12) months of 6
the date disability benefits terminated. If the termination of benefits were voluntary, 7
the reinstatement may be made without medical examination if application is made 8
within three (3) months of the termination date. Other applications for reinstatement 9
will be processed in the same manner as new applications for benefits. 10
(17) No person who is receiving disability benefits under this section may be employed 11
in a position which qualifies the person for membership in a retirement system 12
financed wholly or in part with public funds. Employment in a position prohibited 13
by this subsection shall result in disqualification for those disability benefits from 14
the date of employment in the prohibited position. 15
(18) Any person who is receiving benefits and becomes disqualified from receiving 16
those benefits under this section, or becomes disqualified from receiving a portion 17
of those benefits due to income from other than covered employment, shall 18
immediately notify the Teachers' Retirement System of this disqualification in 19
writing and shall return all benefits paid after the date of disqualification. Failure to 20
comply with these provisions shall create an indebtedness of that person to the 21
Teachers' Retirement System. Interest at the rate of eight percent (8%) per annum 22
shall be charged if the debt is not repaid within sixty (60) days after the date of 23
disqualification. Failure to repay this debt creates a lien in favor of the Teachers' 24
Retirement System upon all property of the person who improperly receives 25
benefits and does not repay those benefits. The Teachers' Retirement System may, 26
in order to collect an outstanding debt, reduce or terminate any benefit that a 27 UNOFFICIAL COPY 25 RS BR 1078
Page 78 of 79
XXXX 1/7/2025 2:52 PM Jacketed
member is otherwise entitled to receive. 1
[(19) Notwithstanding any other provision of this section to the contrary, individuals who 2
become members on or after January 1, 2022, shall be eligible for an actuarially 3
determined disability benefit as prescribed by the board of trustees via 4
administrative regulations promulgated by the board. The board of trustees shall 5
arrange by appropriate contract or on a self-insured basis a disability plan to 6
provide the disability benefits and may adjust the benefits in accordance with KRS 7
161.633(3) or 161.634(3).] 8
Section 19. The following KRS sections are repealed: 9
161.633 Foundational component for persons who became nonuniversity members on or 10
after January 1, 2022 -- Valuation assessment -- Adjustments to maintain funding 11
level and contain costs -- Construction. 12
161.634 Foundational component for persons who became university members on or 13
after January 1, 2022 -- Valuation assessment -- Adjustments to maintain funding 14
level and contain costs -- Construction. 15
161.635 Supplemental component for persons who became nonuniversity members on 16
or after January 1, 2022 -- Benefit -- Contributions -- Election upon termination of 17
employment and upon retirement -- Plans authorized under Internal Revenue 18
Code. 19
161.636 Supplemental component for persons who became university members on or 20
after January 1, 2022 -- Benefit -- Contributions -- Election upon termination of 21
employment and upon retirement -- Plans authorized under Internal Revenue 22
Code. 23
Section 20. Individuals who became members of the Teachers' Retirement 24
System on or after January 1, 2022, but prior to the effective date of this Act, who would 25
have otherwise been eligible for the benefits and rights provided by 2021 Ky. Acts ch. 26
157, shall be provided the benefits and rights that were applicable to individuals who 27 UNOFFICIAL COPY 25 RS BR 1078
Page 79 of 79
XXXX 1/7/2025 2:52 PM Jacketed
became members of the Teachers' Retirement System immediately prior to January 1, 1
2022. 2
Section 21. Whereas recruiting and retaining the best and brightest teachers to 3
educate and inspire future generations of Kentuckians is crucial to the success, health, 4
and financial well-being of all citizens of the Commonwealth, an emergency is declared 5
to exist, and this Act takes effect upon its passage and approval by the Governor or upon 6
its otherwise becoming a law. 7