KRS 61.5991: Quasi-governmental employers participating in KERS -- Required reports

-- Audits -- Legislative intent regarding future appropriations to subsidize

retirement costs -- Non-core services independent contractor.

Except as otherwise provided by this section, the following shall apply to nonhazardous

employers in the Kentucky Employees Retirement System, who contributed to the system

in fiscal year 2019-2020 except in the case of county attorneys, who are local and district

health departments governed by KRS Chapter 212, state -supported universities and

community colleges, county attorneys, mental health/mental retardation boards, domestic

violence shelters, rape crisis centers, child advocacy centers, or any other agency that is

eligible to voluntarily cease participation in the Kentucky Employees Retirement System

as provided by KRS 61.522:

(1) (a) Each employer, except for county attorneys, shall report to the Authority for

each fiscal year occurring on or after July 1, 2021, the following persons fo r

which no employer contributions were paid by the employer to the system

during the fiscal year for services provided to the employer:

1. Except as provided by paragraph (b)3. of this subsection, persons

employed as an independent contractor, a leased emp loyee, or via any

other employment arrangement as determined by the Authority, who if

employed directly by the employer would qualify as a regular full -time

employee in accordance with KRS 61.510(21); and

2. Persons employed directly by the employer who me et the definition of a

regular full-time employee in accordance with KRS 61.510(21), who are

not being reported to the system in accordance with KRS 61.675.

(b) The reporting required by this paragraph shall:

1. Be reported in a format, detail, and frequen cy as determined solely by

the Authority;

2. Except as provided by subparagraph 3. of this paragraph, include

persons providing services to the employer as an independent contractor,

a leased employee, or via any other employment arrangement as

determined by the Authority, and those services have historically been

provided or are currently being provided by employees eligible to

participate in the system through the employer; and

3. Exclude:

a. Contracts for professional services that have not historically been

provided by employees of the employer;

b. Any contracts entered into prior to January 1, 2021, with a person

or company to provide services as an independent contractor, a

leased employee, or other employment arrangement as determined

by the Authority, but only for the duration of the original contract,

excluding any renewal periods, and only for those services and

persons included in the original contract, except as provided in

subdivision c. of this subparagraph; and

c. Contracts providing services through a non -core services

independent contractor as defined in subsection (9) of this section,

regardless of whether or not the contract was initiated before

January 1, 2021, or on or after January 1, 2021.

(c) In any case of doubt, the Authority shall determine whether data should be

reported on a specific person providing services to the employer and the

Authority may by promulgation of administrative regulation provide guidance

on which persons should be included for reporting purposes;

(2) (a) Notwithstanding any other provision of statute to the contrary, the Authority

shall:

1. Have full power, including any authority under KRS 61.685, to audit an

employer who is subject to the provision s of this section to ensure

compliance and accuracy of the data required to be reported by the

employer in accordance with this section; and

2. Perform audits on a percentage of employers who are subject to the

reporting requirements of this subsection, as determined by the board,

for the purpose of ensuring that all eligible employees are being reported

and contributions are being paid in accordance with KRS 61.510 to

61.705. The system shall have full power and authority, including any

authority and power granted under KRS 61.675 and 61.685, to

accomplish the audits required by this subparagraph. An audit time

frame and schedule shall be adopted by the board, made available to

impacted employers, and reported to the Public Pension Oversight

Board.

(b) If the Authority determines an employer has knowingly falsified data required

to be reported under this section:

1. The Authority shall indicate in the annual report submitted in

accordance with subsection (3) of this section that the employer has

knowingly fa lsified data and shall include a brief summary of the

reasons for the Authority's determination;

2. The employer shall no longer be eligible to receive any future

appropriations or subsidies from the state to assist in paying employer

contributions to the system; and

3. The employer shall be required to pay back to the state any

appropriations or subsidies provided in the biennial executive branch

budget that were used to directly assist the employer in paying employer

contributions to the system on or after July 1, 2021.

(c) If an employer fails to submit the information required by this section or does

not comply with requests from the Authority regarding this subsection and

subsection (1) of this section to verify or audit the employer's information:

1. The Authority shall indicate in the annual report submitted in

accordance with subsection (3) of this section that the employer is

noncompliant with the Authority's requests and shall include a brief

summary of the reasons for the Authority's determination; and

2. The employer may lose eligibility to receive any future appropriations or

subsidies from the state to assist in paying employer contributions to the

system, except that if an employer does not comply with requests from

the Authority pursuant to an audit conducted in accordance with

paragraph (a)2. of this subsection the employer shall lose eligibility to

receive any future appropriations or subsidies from the state to assist in

paying employer contributions to the system until such time as the

employer complies with the audit;

(3) The Authority shall within sixty (60) days following the close of each fiscal year

occurring on or after July 1, 2021, determine and report the following to the state

budget director's office and the Legislative Research Co mmission for each

employer subject to this section, except for county attorneys:

(a) The number of regular full -time employees of the employer who were

reported to the system during the prior fiscal year for which contributions

were reported in accordance with KRS 61.675;

(b) The number of persons providing services to the employer under subsection

(1) of this section during the prior fiscal year who were not reported to the

system and for which no contributions were reported;

(c) A percentage computed by d ividing the number of employees reported in

paragraph (a) of this subsection by the combined sum of the number of

employees and persons reported in paragraphs (a) and (b) of this subsection

and multiplying by one hundred (100); and

(d) The information requ ired by subsection (2) of this section for any employer

who has been determined by the Authority to have knowingly falsified data or

is noncompliant in submitting the data required by this section to the

Authority;

(4) It is the intent of the General Assem bly in fiscal years occurring on or after July 1,

2021, to provide appropriations for county attorneys for retirement costs in the

Kentucky Employees Retirement System that is equal to the difference between the

dollar value of actual contributions paid by the employer in fiscal year 2019 -2020

to the system and the dollar value of contributions projected to be paid by the

employer to the system in fiscal year 2021-2022;

(5) For fiscal year 2021 -2022, it is the intent of the General Assembly to provide a

subsidy towards the retirement costs of employers covered by this section, except

for county attorneys who are provided a subsidy by subsection (4) of this section,

that is equal to the difference between the dollar value of actual contributions paid

by the e mployer to the system in fiscal year 2019 -2020 and the dollar value of

contributions projected to be paid by the employer to the system in fiscal year 2021-

2022;

(6) It is the intent of the General Assembly that for fiscal years occurring on or after

July 1, 2022:

(a) To provide a subsidy towards the retirement costs of each employer subject to

this section, except for county attorneys who are provided a subsidy by

subsection (4) of this section, who has made efforts to increase or maintain the

number of em ployees reported to the system. Specifically, it is the intent of

the General Assembly to provide subsidies only to those employers who have

a percentage of employees reported to the system as specified by subsection

(3)(c) of this section, equal to or greater than:

1. Sixty percent (60%) for any subsidies provided in fiscal years occurring

on or after July 1, 2022, to June 30, 2024; and

2. Eighty pe rcent (80%) for any subsidies provided in fiscal years

occurring on or after July 1, 2024.

Eligibility for a subsidy provided in each fiscal year of the budget shall be

based upon the most recent percentage of employees reported by the

Authority;

(b) For those employers eligible for a subsidy under paragraph (a) of this

subsection, to provide a subsidy that is equal to the dollar value of the subsidy

provided to the employer in fiscal year 2021-2022 multiplied by the following

percentage:

1. For local and district health departments governed by KRS Chapter 212,

state-supported universities and community colleges, and any other

employer subject to this section that has taxing or fee authority:

a. Ninety percent (90%) in fiscal year 2022-2023;

b. Eighty percent (80%) in fiscal year 2023-2024;

c. Seventy percent (70%) in fiscal year 2024-2025;

d. Sixty percent (60%) in fiscal year 2025-2026; and

e. Fifty percent (50%) in fiscal years occurring on or after July 1,

2026; and

2. For any other employer who does not have taxing or fee authority:

a. Ninety percent (90%) in fiscal years 2022-2024; and

b. Seventy-five percent (75%) in fiscal years occurring on or after

July 1, 2024; and

(c) The subsidy provided by this subsection shall be adjusted to reflect the

assignment of liabilities based upon the appeal process in KRS

61.565(1)(d)5.;

(7) The Council on State Governments (CSG), the Kentucky Educational Television

(KET) Foundation, Association of Commonwealth's Attorneys, the Kentucky High

School Athletic Association (KHSAA), the Municipal Power Association of

Kentucky, the Kentucky Office of Bar Admissions, the Nursing Home

Ombudsman, the Kentucky Association of Regional Programs (KARP), and the

Kentucky Association of Sexual Assault Programs are, notwithstanding the

provisions of subsections (1) to (6) of this section, exempt from the reporting

requirements and from receiving a subsidy to assist in paying employer contribution

rates;

(8) The provisions of this section shall not obligate the General Assembly to provid e

any specific level of subsidy to assist in paying employer contributions of any

employer covered by this section, and employers shall be responsible for any and

all future retirement contributions payable by the employer regardless of the actual

amount of subsidy included in future executive branch budgets; and

(9) For purposes of this section, "non -core services independent contractor" means a

company or business that is not owned or controlled, in whole or in part, by an

employer participating in the sy stem, whose business is not limited to providing

services to one (1) or more employers participating in the system, but instead also

provides services to the general public or other public agencies not participating in

the system, which are limited to faci lities services, grounds services, custodial

services, bookstore services, dining services, construction services, trade or

maintenance services, health services for university students and employees of the

employer, information technology services, public relation services, photography

services, design services, safety services at universities, hospitality services,

entertainment production services, mail services, printing and copier services,

sports arena and stadium management, farrier services, assisti ve services at

universities such as interpreters or sign language services, or delivery services.