{"data":{"id":"us-ky/krs-61.565","jurisdiction":"us-ky","citation":"KRS 61.565","heading":"Employer's contributions -- Computation of normal cost contribution and","body":"accrued liability -- Contribution -- Notification of change in employer\ncontribution rate -- Costs for employer pay credits -- Employers to pay full\ncontribution.\n(1) (a) Each employer participating in the State Police Retirement System as\nprovided for in KRS 16.505 to 16.652 and the Kentucky Employees\nRetirement System as provided for in KRS 61.510 to 61.705 shall contribute\nannually to the respective retirement system an amount determined by the\nactuarial valuation completed in accordance with KRS 61.670 and as\nspecified by this section. Employer contributions for each respective\nretirement system shall be equal to the sum of the \"normal cost contribution\"\nand the \"actuarially accrued liability contribution.\"\n(b) For purposes of this section, the normal cost contribution shall be computed\nas a percentage of pay and shall be an annual amount that is sufficient when\ncombined with employee contributions to fund benefits earned during the year\nin the respective system. The amount shall be:\n1. Paid as a percentage of creditable compensation reported for each\nemployee participating in the system and accruing benefits; and\n2. The same percentage of pay for all employees who are par ticipating in\nthe same retirement system, except that separate percentage rates shall\nbe developed in each system for those employers whose employees are\nparticipating in hazardous duty retirement coverage as provided by KRS\n61.592.\n(c) For purposes of thi s section, the actuarially accrued liability contribution for\nall employers, except for contributions paid by nonhazardous employers in the\nKentucky Employees Retirement System on or after July 1, 2021, shall be:\n1. Computed by amortizing the total unfunde d actuarially accrued liability\nof each system over a closed period of thirty (30) years beginning with\nthe 2019 actuarial valuation using the level percentage of payroll\namortization method, except that any increase or decrease in the\nunfunded actuarially accrued liability occurring after the completion of\nthe 2019 actuarial valuation shall be amortized over a closed period of\ntwenty (20) years beginning with the actuarial valuation in which the\nincrease or decrease in the unfunded actuarially accrued liab ility is\nrecognized. An increase or decrease in the unfunded actuarially accrued\nliability may result from, but not be limited to, legislative changes to\nbenefits, changes in actuarial methods or assumptions, or actuarial gains\nor losses;\n2. Paid as a perc entage of payroll on the creditable compensation reported\nfor each employee participating in the system and accruing benefits; and\n3. The same percentage of pay for all employees who are participating in\nthe same retirement system, except that separate per centage rates shall\nbe developed in each system for those employers whose employees are\nparticipating in hazardous duty retirement coverage as provided by KRS\n61.592.\n(d) 1. For purposes of this section, the actuarially accrued liability contribution\nfor nonhazardous employers in the Kentucky Employees Retirement\nSystem on or after July 1, 2021:\na. Shall be an annual dollar amount that is sufficient to amortize the\ntotal unfun ded actuarially accrued liability of the system over a\nclosed period of thirty (30) years beginning with the 2019 actuarial\nvaluation using the level percentage of payroll amortization\nmethod, except that any increase or decrease in the unfunded\nactuarially accrued liability occurring after the completion of the\n2019 actuarial valuation shall be amortized over a closed period of\ntwenty (20) years beginning with the actuarial valuation in which\nthe increase or decrease in the unfunded actuarially accrued\nliability is recognized. An increase or decrease in the unfunded\nactuarially accrued liability may result from but not be limited to\nlegislative changes to benefits, changes in actuarial methods or\nassumptions, or actuarial gains or losses;\nb. Shall be prorated to each individual nonhazardous employer in the\nKentucky Employees Retirement System by multiplying the\nannual dollar amount of the actuarially accrued liability\ncontribution for the system as determined by subdivision a. of this\nsubparagraph by the ind ividual employer's percentage of the\nsystem's total actuarially accrued liability as of the June 30, 2019,\nactuarial valuation which shall be determined solely by the\nsystem's consulting actuary and assigned to each employer based\nupon the last participating employer of the member or retiree as of\nJune 30, 2019. The individual employer's percentage of the\nsystem's total actuarially accrued liability as of the June 30, 2019,\nactuarial valuation shall be used to determine the individual\nemployer's prorated do llar amount of the system's actuarially\naccrued liability contribution in all future fiscal years of the\namortization period or periods, except that the employer's\npercentage shall be adjusted to reflect any employer who\nvoluntarily or involuntarily ceases  participation as provided by\nKRS 61.522 and except as provided by subparagraphs 4. and 5. of\nthis paragraph. For purposes of this subdivision, all executive\nbranch departments, program cabinets and their respective\ndepartments, and administrative bodies e numerated in KRS\n12.020, and any other executive branch agencies administratively\nattached to a department, program cabinet, or administrative body\nenumerated in KRS 12.020, shall be considered a single individual\nemployer and only one (1) value shall be c omputed for these\nexecutive branch employers. For purposes of this subdivision, all\nemployers of the legislative branch, including the Legislative\nResearch Commission and the General Assembly that covers\nlegislators and staff who participate in the Kentuck y Employees\nRetirement System, shall be considered a single individual\nemployer and only one (1) value shall be computed for these\nemployers. For purposes of this subdivision, all employers of the\njudicial branch, including the Administrative Office of the  Courts,\nthe Judicial Form Retirement System, and all master\ncommissioners, shall be considered a single individual employer\nand only one (1) value shall be computed for these employers.\nUpon request by any nonhazardous employer covered by this\nparagraph, the system shall, within ninety (90) days of the\nemployer's request, provide the requesting employer with any:\ni. Identifying, demographic, financial, or any other information\nthat was provided to the system's actuary to determine the\nemployer's share of the system's total actuarially accrued\nliability, including individual data provided to the actuary on\neach member, retiree, or recipient whose cost was assigned\nto the employer. The data shall also include identifying\ninformation that will allow the emplo yer to match its records\nto the members, retirees, and recipients that resulted in the\ncost that has been assigned to the employer; and\nii. Calculations produced by the actuary on each member,\nretiree, or recipient during the completion of the valuation\nthat resulted in the cost assigned to the employer under this\nparagraph. The data shall include identifying information\nthat will allow the employer to match its records to the\nmembers, retirees, and recipients that resulted in the cost that\nhas been assigned to the employer;\nc. Shall be payable by an individual employer in equal monthly\ndollar installments during the fiscal year in accordance with the\nreporting requirements specified by KRS 61.675 so that the\nindividual employer pays its full prorated dolla r amount of the\nactuarially accrued liability contribution as determined by\nsubdivision b. of this subparagraph; and\nd. Notwithstanding subdivision b. of this subparagraph for those\nindividual participating employers who are local and district health\ndepartments governed by KRS Chapter 212, community mental\nhealth centers, and employers whose employees are not subject to\nKRS 18A.005 to 18A.200, who received or were eligible to\nreceive a distribution of general fund appropriations in the 2018 -\n2020 biennial e xecutive branch budget to assist in paying\nretirement costs under 2018 Ky. Acts ch. 169, Part I, G., 4., (5);\n2018 Ky. Acts ch. 169, Part I, G., 5., (2); or 2018 Ky. Acts ch.\n169, Part I, G., 9., (2), shall not, once the initial dollar amounts are\nestablished in accordance with this paragraph, be adjusted in terms\nof dollars paid by the individual employer, except that adjustments\nshall be made by the system upon completion of an actuarial\ninvestigation as provided by KRS 61.670, so long as at least four\n(4) years have passed since the last adjustment to the actuarially\naccrued liability contribution for these employers. The provisions\nof this subdivision shall not be interpreted to mean that employers\ndescribed by this subdivision may continue paying the dollar value\nof contributions or employer contribution rates established or paid\nby the employer in budget periods occurring prior to July 1, 2021.\n2. Individual employers, solely for purposes of collecting employer\ncontributions from various fund sources du ring the fiscal year, may\nconvert the actuarially accrued liability contribution established by this\nparagraph to a percentage of pay and may adjust the percent of pay\nduring the fiscal year in order to pay the required dollar value of\nactuarially accrued liability contribution required by this paragraph. No\nprovision of this subparagraph shall be construed to reduce an individual\nemployer's actuarially accrued liability contribution as otherwise\nprovided by this paragraph.\n3. The provisions of this paragraph shall not apply to those employers who\ncease participation as provided by KRS 61.522.\n4. In the event an individual Kentucky Employees Retirement System\nnonhazardous employer who is required to pay an actuarially accrued\nliability contribution as provid ed by this paragraph and as calculated\nfrom the 2019 actuarial valuation or subsequent valuations, merges with\nanother employer or entity, forms a new or separate employer or entity,\nor splits or separates operations into multiple employers or entities, th e\nsystem shall, except for those employers or entities who pay the costs to\ncease participation as provided by KRS 61.522, have full authority to\nassign a portion or all of the total actuarially accrued liability\ncontribution to the merged, new, split, or separate employers or entities,\nregardless of whether or not the merged, new, split, or separate\nemployers or entities participate in the system. In the case of a district\nhealth department established pursuant to KRS Chapter 212, which\nceases to operate o r which has a county or counties that withdraw from\nthe district health department, the systems shall assign the total\nactuarially accrued liability contribution based upon the proportion of\ntaxable property of each county as certified by the Department fo r\nPublic Health in the Cabinet for Health and Family Services in\naccordance with KRS 212.132. The system shall establish by\nadministrative regulations the process of assigning actuarially accrued\nliability contributions as authorized by this subparagraph.\n5. a. An employer who is not in the executive, legislative, or judicial\nbranch of Kentucky state government as enumerated in\nsubparagraph 1.b. of this paragraph may on or before July 1, 2021,\nappeal to the board regarding any current or former employees or\nretirees the employer believes should not be used to determine the\nemployer's percentage of the system's total actuarially accrued\nliability. The only appeals that shall be submitted by the employer\nor considered by the board shall be potential errors whe re the last\nparticipating employer is in dispute, situations where employees of\nthe employer were hired through a contract between the executive\nbranch and the employer for the employee to provide services to\nthe executive branch, or situations where a com munity mental\nhealth center was contracted to provide services at a facility\npreviously operated by the executive branch. The employer shall\nsubmit the information required by the board to verify potential\nerrors or contract employees with employers.\nb. The board shall review and issue a final determination regarding\nany appeals by December 31, 2021. In situations where the board\ndetermines the last participating employer was incorrect and\nshould be assigned to another employer, the system shall, effective\nfor employer contributions payable on or after July 1, 2022, assign\nthe cost to the executive branch until such time ownership of the\nliability can be determined and assigned to the correct employer.\nIn situations where the board determines certain employe es of\nemployers were hired through a contract between the executive\nbranch and the employer for an employee or employees to provide\nservices to the executive branch, those liabilities shall, effective\nfor employer contributions payable on or after July 1, 2022, be\nassigned to the executive branch. In situations where the board\ndetermines the community mental health center was contracted to\nprovide services at a facility previously operated by the executive\nbranch, the liabilities for employees providing ser vices at that\nfacility shall, effective for employer contributions payable on or\nafter July 1, 2022, be assigned to the executive branch.\nc. No appeal shall be submitted by the employer or considered by the\nboard regarding the assumptions or methodology us ed by the\nactuary to determine a particular employer's percentage of the\nsystem's total actuarially accrued liability or the use of the last\nparticipating employer to assign liabilities to an employer, except\nas otherwise provided by this subparagraph.\nd. The board shall within thirty (30) days following the final\ndeterminations submit to the Public Pension Oversight Board the\nlist of appeals that were approved, the number of employees\ninvolved, and any costs that will be transferred to the executive\nbranch effective July 1, 2022.\n(e) The employer contributions computed under this section shall be determined\nusing:\n1. The entry age normal cost funding method;\n2. An asset smoothing method that smooths investment gains and losses\nover a five (5) year period; and\n3. Other funding methods and assumptions established by the board in\naccordance with KRS 61.670.\n(2) (a) Except as limited by subsection (1)(d)1.d. of this section as it relates to the\nKentucky Employees Retirement System, normal cost contribution rates  and\nthe actuarially accrued liability contribution shall be determined by the board\non the basis of the annual actuarial valuation last preceding the July 1 of a\nnew biennium.\n(b) The board shall not have the authority to amend contribution rates as of Ju ly 1\nof the second year of the biennium for the Kentucky Employees Retirement\nSystem and the State Police Retirement System.\n(3) (a) The system shall advise each employer prior to July 1 of any change in the\nemployer contribution rate.\n(b) Costs for the benefits provided under KRS 16.583(2)(b)2. and 16.584 shall be\nincluded in the employer contribution rate payable to the State Police\nRetirement System but shall be reported as a separate line item in the actuarial\nvaluation for purposes of KRS 16.584 and i n any correspondence to the\nDepartment of Kentucky State Police, the state budget director, and the\nLegislative Research Commission regarding employer costs for the State\nPolice Retirement System.\n(c) Based on the employer contribution rate, each employer shall include in the\nbudget sufficient funds to pay the employer contributions as determined by\nthe board under this section.\n(4) All employers, including the General Assembly, shall pay the full actua rially\nrequired contributions, as prescribed by this section, to the Kentucky Employees\nRetirement System and the State Police Retirement System in fiscal years occurring\non or after July 1, 2020, except as authorized for the program established by KRS\n16.583(2)(b)2. and 16.584.","path":["KRS Chapter 61"],"source_url":"https://apps.legislature.ky.gov/law/statutes/statute.aspx?id=53370","current_through":"Includes enactments through the 2026 Regular Session","vintage":"09/05/2026","retrieved_at":"2026-09-05T20:49:15Z","sha256":"90c06dbc6552e6c7e41194f24534e0db3e55caf2ffc46aee4dccda0f7eaffa29","source_id":"us-ky","stale":false,"prev":"us-ky/krs-61.560","next":"us-ky/krs-61.567"},"notice":"GroundRules: Original legal text. Not legal advice."}