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AN ACT relating to employers of the Teachers' Retirement System. 1
Be it enacted by the General Assembly of the Commonwealth of Kentucky: 2
ď˘Section 1. KRS 161.220 is amended to read as follows: 3
As used in KRS 161.220 to 161.716 and 161.990: 4
(1) "Retirement system" means the arrangement provided for in KRS 161.220 to 5
161.716 and 161.990 for payment of allowances to members; 6
(2) "Retirement allowance" means the amount annually payable during the course of 7
his or her natural life to a member who has been retired by reason of service; 8
(3) "Disability allowance" means the amount annually payable to a member retired by 9
reason of disability; 10
(4) "Member" means the commissioner of education, deputy commissioners, associate 11
commissioners, and all division directors in the State Department of Education, 12
employees participating in the system pursuant to KRS 196.167(3)(b)1., and any 13
full-time teacher or professional occupying a position requiring certification or 14
graduation from a four (4) year college or university, as a condition of employment, 15
and who is employed by public boards, institutions, or agencies as follows: 16
(a) Local boards of education and public charter schools if the public charter 17
school satisfies the criteria set by the Internal Revenue Service to participate 18
in a governmental retirement plan; 19
(b) Eastern Kentucky University, Kentucky State University, Morehead State 20
University, Murray State University, Western Kentucky University, and any 21
community colleges established under the control of these universities; 22
(c) State-operated secondary area vocational education or area technology 23
centers, Kentucky School for the Blind, and Kentucky School for the Deaf; 24
(d) Other public education agencies as created by the General Assembly and 25
those members of the administrative staff of the Teachers' Retirement System 26
of the State of Kentucky whom the board of trustees may designate by 27 UNOFFICIAL COPY 25 RS BR 804
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administrative regulation; 1
(e) Regional cooperative organizations formed by local boards of education or 2
other public educational institutions listed in this subsection, for the purpose 3
of providing educational services to the participating organizations; 4
(f) All full-time members of the staffs of the Kentucky Association of School 5
Administrators, Kentucky Education Association, Kentucky Vocational 6
Association, Kentucky High School Athletic Association, Kentucky 7
Academic Association, and the Kentucky School Boards Association who 8
were members of the Kentucky Teachers' Retirement System or were 9
qualified for a position covered by the system at the time of employment by 10
the association in the event that the board of directors of the respective 11
association petitions to be included. The board of trustees of the Kentucky 12
Teachers' Retirement System may designate by resolution whether part-time 13
employees of the petitioning association are to be included. The state shall 14
make no contributions on account of these employees, either full-time or part-15
time. The association shall make the employer's contributions, including any 16
contribution that is specified under KRS 161.550. The provisions of this 17
paragraph shall be applicable to persons in the employ of the associations on 18
or subsequent to July 1, 1972; 19
(g) Employees of the Council on Postsecondary Education who were employees 20
of the Department for Adult Education and Literacy and who were members 21
of the Kentucky Teachers' Retirement System at the time the department was 22
transferred to the council pursuant to Executive Order 2003-600; 23
(h) The Office of Career and Technical Education; 24
(i) The Office of Vocational Rehabilitation; 25
(j) The Kentucky Educational Collaborative for State Agency Children; 26
(k) The Governor's Scholars Program; 27 UNOFFICIAL COPY 25 RS BR 804
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(l) Any person who is retired for service from the retirement system and is 1
reemployed by an employer identified in this subsection in a position that the 2
board of trustees deems to be a member, except that any person who becomes 3
a member on or after January 1, 2022, and subsequently draws a monthly 4
lifetime retirement allowance, shall upon reemployment after retirement not 5
earn a second retirement account; 6
(m) Employees of the former Cabinet for Workforce Development who are 7
transferred to the Kentucky Community and Technical College System and 8
who occupy positions covered by the Kentucky Teachers' Retirement System 9
shall remain in the Teachers' Retirement System. New employees occupying 10
these positions, as well as newly created positions qualifying for Teachers' 11
Retirement System coverage that would have previously been included in the 12
former Cabinet for Workforce Development, shall be members of the 13
Teachers' Retirement System; 14
(n) Effective January 1, 1998, employees of state community colleges who are 15
transferred to the Kentucky Community and Technical College System shall 16
continue to participate in federal old age, survivors, disability, and hospital 17
insurance, and a retirement plan other than the Kentucky Teachers' Retirement 18
System offered by Kentucky Community and Technical College System. New 19
employees occupying positions in the Kentucky Community and Technical 20
College System as referenced in KRS 164.5807(5) that would not have 21
previously been included in the former Cabinet for Workforce Development, 22
shall participate in federal old age, survivors, disability, and hospital 23
insurance and have a choice at the time of employment of participating in a 24
retirement plan provided by the Kentucky Community and Technical College 25
System, including participation in the Kentucky Teachers' Retirement System, 26
on the same basis as faculty of the state universities as provided in KRS 27 UNOFFICIAL COPY 25 RS BR 804
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161.540 and 161.620; 1
(o) Employees of the Office of General Counsel, the Office of Budget and 2
Administrative Services, and the Office of Quality and Human Resources 3
within the Office of the Secretary of the former Cabinet for Workforce 4
Development and the commissioners of the former Department for Adult 5
Education and Literacy and the former Department for Technical Education 6
who were contributing to the Kentucky Teachers' Retirement System as of 7
July 15, 2000; 8
(p) Employees of the Kentucky Department of Education only who are graduates 9
of a four (4) year college or university, notwithstanding a substitution clause 10
within a job classification, and who are serving in a professional job 11
classification as defined by the department; 12
(q) The Governor's School for Entrepreneurs Program; 13
(r) Employees of the Office of Adult Education within the Department of 14
Workforce Development in the Education and Labor Cabinet who were 15
employees of the Council on Postsecondary Education, Kentucky Adult 16
Education Program and who were members of the Kentucky Teachers' 17
Retirement System at the time the Program was transferred to the cabinet 18
pursuant to Executive Orders 2019-0026 and 2019-0027; [and] 19
(s) Employees of the Education Professional Standards Board who were 20
members of the Kentucky Teachers' Retirement System at the time the 21
employees were transferred to the Kentucky Department of Education 22
pursuant to Executive Order 2020-590; and 23
(t) WeLeadCS, the virtual computer science career academy established in 24
KRS 158.809; 25
(5) "Present teacher" means any teacher who was a teacher on or before July 1, 1940, 26
and became a member of the retirement system created by 1938 (1st Extra. Sess.) 27 UNOFFICIAL COPY 25 RS BR 804
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Ky. Acts ch. 1, on the date of the inauguration of the system or within one (1) year 1
after that date, and any teacher who was a member of a local teacher retirement 2
system in the public elementary or secondary schools of the state on or before July 3
1, 1940, and continued to be a member of the system until he or she, with the 4
membership of the local retirement system, became a member of the state Teachers' 5
Retirement System or who becomes a member under the provisions of KRS 6
161.470(4); 7
(6) "New teacher" means any member not a present teacher; 8
(7) "Prior service" means the number of years during which the member was a teacher 9
in Kentucky prior to July 1, 1941, except that not more than thirty (30) years' prior 10
service shall be allowed or credited to any teacher; 11
(8) "Subsequent service" means the number of years during which the teacher is a 12
member of the Teachers' Retirement System after July 1, 1941; 13
(9) "Final average salary" means the average of the five (5) highest annual salaries 14
which the member has received for service in a covered position and on which the 15
member has made contributions, or on which the public board, institution, or 16
agency has picked-up member contributions pursuant to KRS 161.540(2), or the 17
average of the five (5) years of highest salaries as defined in KRS 61.680(2)(a), 18
which shall include picked-up member contributions. Additionally, the board of 19
trustees may approve a final average salary based upon the average of the three (3) 20
highest salaries for individuals who become members prior to January 1, 2022, who 21
are at least fifty-five (55) years of age and have a minimum of twenty-seven (27) 22
years of Kentucky service credit. However, if any of the five (5) or three (3) highest 23
annual salaries used to calculate the final average salary was paid within the three 24
(3) years immediately prior to the date of the member's retirement for individuals 25
who become members prior to January 1, 2022, or within the five (5) years 26
immediately prior to the date of the member's retirement for individuals who 27 UNOFFICIAL COPY 25 RS BR 804
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become members on or after January 1, 2022, the amount of salary to be included 1
for each of those three (3) years or five (5) years, as applicable, for the purpose of 2
calculating the final average salary shall be limited to the lesser of: 3
(a) The member's actual salary; or 4
(b) The member's annual salary that was used for retirement purposes during each 5
of the prior three (3) years or five (5) years, as applicable, plus a percentage 6
increase equal to the percentage increase received by all other members 7
employed by the public board, institution, or agency, or for members of 8
school districts, the highest percentage increase received by members on any 9
one (1) rank and step of the salary schedule of the school district. The increase 10
shall be computed on the salary that was used for retirement purposes. The 11
board of trustees may promulgate an administrative regulation in accordance 12
with KRS Chapter 13A to establish a methodology for measuring the 13
limitation so that the combined increases in salary for each of the last three (3) 14
full years of salary prior to retirement shall not exceed the total permissible 15
percentage increase received by other members of the employer for the same 16
three (3) year period. 17
For individuals who became members of the retirement system prior to July 1, 18
2021, this limitation shall not apply if the member receives an increase in salary in a 19
percentage exceeding that received by the other members, and this increase was 20
accompanied by a corresponding change in position or in length of employment. 21
The board of trustees may promulgate an administrative regulation in accordance 22
with KRS Chapter 13A to provide definitions for a corresponding change in 23
position or in length of employment. This limitation shall also not apply to the 24
payment to a member for accrued annual leave if the individual becomes a member 25
before July 1, 2008, or accrued sick leave which is authorized by statute and which 26
shall, for individuals subject to KRS 161.155(10) who became nonuniversity 27 UNOFFICIAL COPY 25 RS BR 804
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members of the system prior to January 1, 2022, be included as part of a retiring 1
member's annual compensation for the member's last year of active service; 2
(10) "Annual compensation" means the total salary received by a member as 3
compensation for all services performed in employment covered by the retirement 4
system during a fiscal year. Annual compensation shall not include payment for any 5
benefit or salary adjustments made by the public board, institution, or agency to the 6
member or on behalf of the member which is not available as a benefit or salary 7
adjustment to other members employed by that public board, institution, or agency. 8
Annual compensation shall not include the salary supplement received by a member 9
under KRS 157.197(2)(c), 158.6455, or 158.782 on or after July 1, 1996. Under no 10
circumstances shall annual compensation include compensation that is earned by a 11
member while on assignment to an organization or agency that is not a public 12
board, institution, or agency listed in subsection (4) of this section. In the event that 13
federal law requires that a member continue membership in the retirement system 14
even though the member is on assignment to an organization or agency that is not a 15
public board, institution, or agency listed in subsection (4) of this section, the 16
member's annual compensation for retirement purposes shall be deemed to be the 17
annual compensation, as limited by subsection (9) of this section, last earned by the 18
member while still employed solely by and providing services directly to a public 19
board, institution, or agency listed in subsection (4) of this section. The board of 20
trustees shall determine if any benefit or salary adjustment qualifies as annual 21
compensation. For an individual who becomes a member on or after July 1, 2008, 22
annual compensation shall not include lump-sum payments upon termination of 23
employment for accumulated annual or compensatory leave; 24
(11) "Age of member" means the age attained on the first day of the month immediately 25
following the birthdate of the member. This definition is limited to retirement 26
eligibility and does not apply to tenure of members; 27 UNOFFICIAL COPY 25 RS BR 804
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(12) "Employ," and derivatives thereof, means relationships under which an individual 1
provides services to an employer as an employee, as an independent contractor, as 2
an employee of a third party, or under any other arrangement as long as the services 3
provided to the employer are provided in a position that would otherwise be 4
covered by the Kentucky Teachers' Retirement System and as long as the services 5
are being provided to a public board, institution, or agency listed in subsection (4) 6
of this section; 7
(13) "Regular interest" means: 8
(a) For an individual who becomes a member prior to July 1, 2008, interest at 9
three percent (3%) per annum;: 10
(b) For an individual who becomes a member on or after July 1, 2008, but prior to 11
January 1, 2022, interest at two and one-half percent (2.5%) per annum for 12
purposes of crediting interest to the teacher savings account or any other 13
contributions made by the employee that are refundable to the employee upon 14
termination of employment; and 15
(c) For an individual who becomes a member on or after January 1, 2022, the 16
rolling five (5) year yield on a thirty (30) year United States Treasury bond as 17
of the end of May prior to the most recently completed fiscal year, except 18
that: 19
1. Once the member has at least sixty (60) months of service in the system 20
it shall mean interest at two and one-half percent (2.5%) per annum for 21
purposes of crediting interest to employee contributions in the 22
foundational benefit component or any other contributions made by the 23
employee to the foundational benefit component that are refundable to 24
the employee upon termination of employment; and 25
2. The board shall have the authority to adjust the regular interest rate for 26
individuals who become members on or after January 1, 2022, in 27 UNOFFICIAL COPY 25 RS BR 804
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accordance with KRS 161.633 and 161.634; 1
(14) "Accumulated contributions" means the contributions of a member to the teachers' 2
savings fund, including picked-up member contributions as described in KRS 3
161.540(2), plus accrued regular interest; 4
(15) "Annuitant" means a person who receives a retirement allowance or a disability 5
allowance; 6
(16) "Local retirement system" means any teacher retirement or annuity system created 7
in any public school district in Kentucky in accordance with the laws of Kentucky; 8
(17) "Fiscal year" means the twelve (12) month period from July 1 to June 30. The 9
retirement plan year is concurrent with this fiscal year. A contract for a member 10
employed by a local board of education may not exceed two hundred sixty-one 11
(261) days in the fiscal year; 12
(18) "Public schools" means the schools and other institutions mentioned in subsection 13
(4) of this section; 14
(19) "Dependent" as used in KRS 161.520 and 161.525 means a person who was 15
receiving, at the time of death of the member, at least one-half (1/2) of the support 16
from the member for maintenance, including board, lodging, medical care, and 17
related costs; 18
(20) "Active contributing member" means a member currently making contributions to 19
the Teachers' Retirement System, who made contributions in the next preceding 20
fiscal year, for whom picked-up member contributions are currently being made, or 21
for whom these contributions were made in the next preceding fiscal year; 22
(21) "Full-time" means employment in a position that requires services on a continuing 23
basis equal to at least seven-tenths (7/10) of normal full-time service on a fiscal 24
year basis; 25
(22) "Full actuarial cost," when used to determine the payment that a member must pay 26
for service credit means the actuarial value of all costs associated with the 27 UNOFFICIAL COPY 25 RS BR 804
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enhancement of a member's benefits or eligibility for benefit enhancements, 1
including health insurance supplement payments made by the retirement system. 2
The actuary for the retirement system shall determine the full actuarial value costs 3
and actuarial cost factor tables as provided in KRS 161.400; 4
(23) "Last annual compensation" means the annual compensation, as defined by 5
subsection (10) of this section and as limited by subsection (9) of this section, 6
earned by the member during the most recent period of contributing service, either 7
consecutive or nonconsecutive, that is sufficient to provide the member with one (1) 8
full year of service credit in the Kentucky Teachers' Retirement System, and which 9
compensation is used in calculating the member's initial retirement allowance, 10
excluding bonuses, retirement incentives, payments for accumulated sick leave, 11
annual, personal, and compensatory leave, and any other lump-sum payment. For 12
an individual who becomes a member on or after July 1, 2008, payments for annual 13
or compensatory leave shall not be included in determining the member's last 14
annual compensation; 15
(24) "Participant" means a member, as defined by subsection (4) of this section, or an 16
annuitant, as defined by subsection (15) of this section; 17
(25) "Qualified domestic relations order" means any judgment, decree, or order, 18
including approval of a property settlement agreement, that: 19
(a) Is issued by a court or administrative agency; and 20
(b) Relates to the provision of child support, alimony payments, or marital 21
property rights to an alternate payee; 22
(26) "Alternate payee" means a spouse, former spouse, child, or other dependent of a 23
participant, who is designated to be paid retirement benefits in a qualified domestic 24
relations order; 25
(27) "University member" means an individual who becomes a member through 26
employment with an employer specified in subsection (4)(b) and (n) of this section; 27 UNOFFICIAL COPY 25 RS BR 804
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(28) "Nonuniversity member" means an individual who becomes a member through 1
employment with an employer specified under subsection (4) of this section, except 2
for those members employed by an employer specified in subsection (4)(b) and (n) 3
of this section; 4
(29) "Accumulated employer contribution" means the employer contribution deposited 5
to a member's account through the supplemental benefit component and regular 6
interest credited on such amounts as provided by KRS 161.635 for nonuniversity 7
members and KRS 161.636 for university members; 8
(30) "Accumulated account balance" means: 9
(a) For members who began participating in the system prior to January 1, 2022, 10
the member's accumulated contributions; or 11
(b) For members who began participating in the system on or after January 1, 12
2022, the combined sum of the member's accumulated contributions and the 13
member's accumulated employer contributions; 14
(31) "Foundational benefit component" means the benefits provided by KRS 161.220 to 15
161.716 to individuals who become members on or after January 1, 2022, except 16
for the supplemental benefit component and retiree health benefits set forth in KRS 17
161.675; and 18
(32) "Supplemental benefit component" means: 19
(a) The benefit established pursuant to KRS 161.635 for individuals who become 20
nonuniversity members on or after January 1, 2022; or 21
(b) The benefit established pursuant to KRS 161.636 for individuals who become 22
university members on or after January 1, 2022. 23