KRS 341.277: Financing benefits for employees of governmental entities.

(1) Any governmental entity which, pursuant to KRS 341.070(3), is or becomes a

subject employer shall pay contributions under the provisions of KRS 341.270,

unless it elects, in accordance with this section, to pay the cabinet for the fund an

amount equal to the amount of all regular benefits plus all extended benefits paid to

workers for compensable weeks of unemployment occurring on or after January 1,

1979, and for all regular benefits and one -half (1/2) of extended benefits paid to

workers for compensable w eeks of unemployment occurring prior to such date that

is attributable to service performed in covered employment in the employ of such

governmental entity during the effective period of such election but only if the

employer is the worker's most recent em ployer. No employer shall be deemed to be

the most recent employer unless the eligible worker to whom benefits are payable

shall have worked for that employer in each of ten (10) weeks whether or not

consecutive.

(a) Any governmental entity, which is or be comes a subject employer, may elect

to become liable for payment in lieu of contributions for a period of not less

than the calendar year in which such subjectivity begins and for the following

calendar year provided it files with the cabinet a written not ice of its election

within thirty (30) days immediately following the date of the determinations

of such subjectivity; or

(b) Any governmental entity which has paid contributions under the provisions of

KRS 341.270 may change to a reimbursable basis by fil ing with the cabinet a

written notice of its election not later than thirty (30) days prior to the

beginning of any calendar year to make payments in lieu of contributions for a

period of not less than two (2) calendar years following the effective date of

such election.

(c) Any governmental entity which elects to make payments in lieu of

contributions, in accordance with paragraph (a) or (b) of this subsection, shall

continue to be liable for payments in lieu of contributions until it files with the

secretary a written notice terminating its election not later than thirty (30) days

prior to the beginning of the calendar year for which such termination shall

become effective except that liability for payments in lieu of contributions

shall continue thereafter with respect to wages paid prior to the effective date

of such termination.

(d) The secretary may for good cause extend the period within which a notice of

election must be filed and may permit the effective date of such election to be

retroactive.

(e) The secretary shall notify each governmental entity of any determination made

as to its status as a subject employer, pursuant to KRS 341.070 and the

effective date of any election or termination made pursuant to this subsection

which determinations shall be subject to appeal and review in accordance with

the provisions of KRS 341.430(2).

(2) Payment in lieu of contributions shall be made in accordance with the provisions of

this subsection.

(a) At the end of each calendar quarter or at the end of any other period as

determined by the secretary, the cabinet shall bill each governmental entity (or

group of governmental entities) which has elected to make payments in lieu of

contributions an amount equal to all regular benefits and all extended benefits

paid during such quarter for compensable weeks occurring on or after January

1, 1979, plus any prior period adjustments which are attributable to service

performed in covered employment in the employ of such governmental entity

plus interest on the total amount b illed at the average rate of earnings in the

unemployment insurance fund for the prior calendar year. All interest

collected under this subsection shall be credited to the unemployment

insurance fund.

(b) Payment of any bill rendered under paragraph (a) of this subsection shall be

made not later than thirty (30) days after such bill was mailed to the last

known address of the governmental entity or was otherwise delivered to it,

unless there has been an application for review in accordance with paragraph

(d) of this subsection.

(c) Payments made by any governmental entity under the provisions of this

subsection shall not be deducted or deductible, in whole or in part, from the

remuneration of workers in the employ of the governmental entity.

(d) The amount due specified in any bill from the secretary shall be conclusive on

the governmental entity unless, not later than fifteen (15) days after the bill

was mailed to its last known address or otherwise delivered to it, the

governmental entity files an appeal to the commission, setting forth the

grounds for such appeal. Proceedings on appeal to the commission from the

amount of a bill rendered under this subsection shall be in accordance with the

provisions of KRS 341.430 and the decision of the commission shall be

subject to review under the provisions of KRS 341.460(1).

(e) Past-due payments of amounts in lieu of contributions shall be subject to the

same interest, penalties, and collection provisions that, pursuant to KRS

341.300, apply to past due contributions.

(3) (a) The secretary may, in accordance with regulations prescribed by the

commission, require any governmental entity that elects to become liable for

payments in lieu of contributions to deposit with the cabinet within thirty (30)

days after the effective date of its election as a condition thereof, money equal

to two percent (2%) of the governmental entity's total wages paid for

employment as defined in KRS 341.050(1)(d) for the four (4) calendar

quarters immediately preceding the effective date of such election. If the entity

did not pay wages in each of such four (4) quarters, the amount of deposit, if

required, shall be determined by the secretary.

(b) Provided, however, that the amount of money required to be deposited under

this paragraph shall not exceed the amount for which any contributing

employer would be liable if subject to the maximum contribution rate

applicable to the annual taxable payroll.

(c) Money deposited in accordance with this subsection shall be retained by the

cabinet in an escrow account until all possible liability to the fund under the

election is terminated, at which time it shall be returned to the governmental

entity, less any deductions as hereinafter provided. The cabinet may deduct

from the money deposited under this subsection by a governmental entity to

the extent necessary to satisfy any due and unpaid payments in lieu of

contributions and any applicable interest and penal ties provided for in

paragraph (e) of subsection (3) of this section. The secretary shall require the

governmental entity within thirty (30) days following any deduction from a

money deposit under the provisions of this subsection to deposit sufficient

additional money to make whole the governmental entity's deposit at the prior

level. The secretary may, at any time, review the adequacy of the deposit made

by any governmental entity. If, as a result of such review, he determines that

an adjustment is necess ary, he shall require the governmental entity to make

an additional deposit within thirty (30) days of written notice of his

determination or shall return to it such portion of the deposit as he no longer

considers necessary, whichever action is appropriate.

(d) If any governmental entity fails to make a deposit, or to increase or make

whole the amount of a previously made deposit, as provided under this

subsection, the secretary may terminate such governmental entity's election to

make payments in lieu of contributions and such termination shall continue

for not less than the remainder of that calendar year and the following

calendar year beginning with the quarter in which such termination becomes

effective; provided, that the secretary may extend for good cause the

applicable filing, deposit or adjustment period by not more than sixty (60)

days.

(4) If any governmental entity is delinquent in making payments in lieu of contributions

as required under subsection (3) of this section, the secretary may termin ate such

governmental entity's election to make payments in lieu of contributions as of the

beginning of the next calendar year, and such termination shall be effective for that

and the next calendar year.

(5) Notwithstanding any other section of this chap ter, no employing unit electing to

make payments in lieu of contributions under the provisions of this section shall be

entitled to relief of benefit charges.