61.5991 Quasi-governmental employers participating in KERS -- Required reports
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-- 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:
(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 for
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 employee, 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 meet 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 frequency 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;
(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 provisions 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 falsified 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 Commission 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 dividing 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 required 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 Assembly 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 employer 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 employees 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 percent (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 provide
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 system, 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 facilities 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, assistive services at universities such as interpreters or sign language services, or delivery services.