61.645 Kentucky Retirement Systems board of trustees -- Powers -- Members --
4,734 words·~22 min read·
/ky/61-645A research copy — for the controlling text, always check the official state or federal source. Not legal advice.
Chief executive officer, general counsel, and other employees -- Appeals --
Other duties -- Limitation on Governor's authority -- Annual Comprehensive
Financial Report -- Trustee education program -- Information made available
to public.
(1)The Kentucky Employees Retirement System and State Police Retirement System
shall be administered by the board of trustees of the Kentucky Retirement Systems
composed of nine
(9)members, who shall be selected as follows:
(a)One
(1)trustee, who shall be a member or retired from the State Police
Retirement System, elected by the members and retired members of the State
Police Retirement System;
(b)Two
(2)trustees, who shall be members or retired from the Kentucky
Employees Retirement System, elected by the members and retired members
of the Kentucky Employees Retirement System;
(c)Six
(6)trustees, appointed by the Governor of the Commonwealth, subject to
Senate confirmation in accordance with KRS 11.160 for each appointment or
reappointment. Of the six
(6)trustees appointed by the Governor, three
trustees shall have investment experience and three
(3)trustees shall have
retirement experience;
(d)For purposes of paragraph
(c)of this subsection, a trustee with "investment
experience" means an individual who does not have a conflict of interest, as
provided by KRS 61.655, and who has at least ten
(10)years of experience in
one
(1)of the following areas of expertise:
1. A portfolio manager acting in a fiduciary capacity;
2. A professional securities analyst or investment consultant;
3. A current or retired employee or principal of a trust institution,
investment or finance organization, or endowment fund acting in an
investment-related capacity;
4. A chartered financial analyst in good standing as determined by the
CFA Institute; or
5. A university professor, teaching investment-related studies; and
(e)For purposes of paragraph
(c)of this subsection, a trustee with "retirement
experience" means an individual who does not have a conflict of interest, as
provided by KRS 61.655, and who has at least ten
(10)years of experience in
one
(1)of the following areas of expertise:
1. Experience in retirement or pension plan management;
2. A certified public accountant with relevant experience in retirement or
pension plan accounting;
3. An actuary with relevant experience in retirement or pension plan
consulting;
4. An attorney licensed to practice law in the Commonwealth of Kentucky
with relevant experience in retirement or pension plans; or
5. A current or former university professor whose primary area of
emphasis is economics or finance.
(2)The board is hereby granted the powers and privileges of a corporation, including
but not limited to the following powers:
(a)To sue and be sued in its corporate name;
(b)To make bylaws not inconsistent with the law;
(c)To conduct the business and promote the purposes for which it was formed;
(d)Except as provided in KRS 61.650(6), to contract for investment counseling,
auditing, medical, and other professional or technical services as required to
carry out the obligations of the board subject to KRS Chapters 45, 45A, 56,
and 57. Actuarial consulting services shall be provided by a firm hired by the
Kentucky Public Pensions Authority;
(e)To purchase fiduciary liability insurance;
(f)Except as provided in KRS 61.650(6), to acquire, hold, sell, dispose of,
pledge, lease, or mortgage, the goods or property necessary to exercise the
board's powers and perform the board's duties subject to KRS Chapters 45,
45A, and 56; and
(g)The board shall reimburse any trustee, officer, or employee for any legal
expense resulting from a civil action arising out of the performance of his or
her official duties. The hourly rate of reimbursement for any contract for legal
services under this paragraph shall not exceed the maximum hourly rate
provided in the Legal Services Duties and Maximum Rate Schedule
promulgated by the Government Contract Review Committee established
pursuant to KRS 45A.705, unless a higher rate is specifically approved by the
secretary of the Finance and Administration Cabinet or his or her designee.
(a)Notwithstanding the provisions of subsection
(1)of this section, each trustee
shall serve a term of four
(4)years or until his or her successor is duly
qualified except as otherwise provided in this section. An elected trustee or a
trustee appointed by the Governor under subsection (1)(c) of this section, shall
not serve more than three
(3)consecutive four
(4)year terms. An elected
trustee or a trustee appointed by the Governor under subsection (1)(c) of this
section, who has served three
(3)consecutive terms may be elected or
appointed again after an absence of four
(4)years from the board.
(b)The term limits established by paragraph
(a)of this subsection shall apply to
trustees serving on or after July 1, 2012, and all terms of office served prior to
July 1, 2012, shall be used to determine if the trustee has exceeded the term
limits provided by paragraph
(a)of this subsection.
(a)The trustees selected by the membership of each of the various retirement
systems shall be elected by ballot. For each trustee to be elected, the board
may nominate, not less than six
(6)months before a term of office of a trustee
is due to expire, three
(3)constitutionally eligible individuals.
(b)Individuals may be nominated by the retirement system members which are to
elect the trustee by presenting to the executive director, not less than four
months before a term of office of a trustee is due to expire, a petition, bearing
the name, last four
(4)digits of the Social Security number, and signature of
no less than one-tenth (1/10) of the number voting in the last election by the
retirement system members.
(c)Within four
(4)months of the nominations made in accordance with
paragraphs
(a)and
(b)of this subsection, the executive director shall cause to
be prepared an official ballot. The ballot shall include the name, address, and
position title of each individual nominated by the board and by petition.
Provisions shall also be made for write-in votes.
(d)Except as provided by paragraph
(j)of this subsection, the ballots shall be
distributed to the eligible voters by mail to their last known residence address
on file with the Kentucky Public Pensions Authority. Ballots shall not be
distributed by mail to member addresses reported as invalid to the Kentucky
Public Pensions Authority.
(e)The ballots shall be addressed to the Kentucky Retirement Systems in care of
a predetermined box number at a United States Post Office or submitted
electronically or by telephone as provided by paragraph
(j)of this subsection.
Access to this post office box shall be limited to the board's contracted firm.
The individual receiving a plurality of votes shall be declared elected.
(f)The eligible voter shall cast his or her ballot by selecting the candidate of his
or her choice. He or she shall sign and mail the ballot or cast the ballot online,
by telephone, or by any other electronic means made available by the
Authority at least thirty
(30)days prior to the date the term to be filled is due
to expire. The latest mailing date, or date to cast telephonic or electronic
ballots, shall be provided on the ballot.
(g)The board's contracted firm shall report in writing the outcome to the chair of
the board of trustees. Cost of an election shall be payable from the funds of
the system for which the trustee is elected.
(h)For purposes of this subsection, an eligible voter shall be a person who was a
member of the retirement system on December 31 of the year preceding the
election year.
(i)Each individual who submits a request to be nominated by the board under
paragraph
(a)of this subsection and each individual who is nominated by the
membership under paragraph
(b)of this subsection shall:
1. Complete an application developed by the retirement systems which
shall include but not be limited to a disclosure of any prior felonies and
any conflicts of interest that would hinder the individual's ability to
serve on the board;
2. Submit a resume detailing the individual's education and employment
history and a cover letter detailing the member's qualifications for
serving as trustee to the board; and
3. Authorize the systems to have a criminal background check performed.
The criminal background check shall be performed by the Department
of Kentucky State Police.
(j)In lieu of the ballots mailed to members and retired members as provided by
this subsection, the systems may by promulgation of administrative regulation
pursuant to KRS Chapter 13A conduct trustee elections using electronic
ballots or by telephone, except that the systems shall mail a paper ballot upon
request of any eligible voter.
(a)Any vacancy which may occur in an appointed position during a term of
office shall be filled in the same manner which provides for the selection of
the particular trustee, and any vacancy which may occur in an elected position
during a term of office shall be filled by appointment by a majority vote of the
remaining elected trustees with a person selected from the system in which the
vacancy occurs; however, any vacancy shall be filled only for the duration of
the unexpired term. In the event of a vacancy of an elected trustee during a
term of office, Kentucky Retirement Systems shall notify members of the
system in which the vacancy occurs of the vacancy and the opportunity to be
considered for the vacant position. Any vacancy during a term of office shall
be filled within ninety
(90)days of the position becoming vacant.
(b)Any appointments or reappointments to an appointed position on the board
shall be made no later than thirty
(30)days prior to an appointed member's
term of office ending.
(a)Membership on the board of trustees shall not be incompatible with any other
office unless a constitutional incompatibility exists. No trustee shall serve in
more than one
(1)position as trustee on the board; and if a trustee holds more
than one
(1)position as trustee on the board, he or she shall resign a position.
(b)A trustee shall be removed from office upon conviction of a felony or for a
finding of a violation of any provision of KRS 11A.020 or 11A.040 by a court
of competent jurisdiction.
(c)A current or former employee of Kentucky Retirement Systems, County
Employees Retirement System, or the Kentucky Public Pensions Authority
shall not be eligible to serve as a member of the board.
(7)Trustees who do not otherwise receive a salary from the State Treasury shall
receive a per diem of eighty dollars ($80) for each day they are in session or on
official duty, and they shall be reimbursed for their actual and necessary expenses
in accordance with state administrative regulations and standards.
(a)The board shall meet at least once in each quarter of the year and may meet in
special session upon the call of the chair or the chief executive officer.
(b)The board shall elect a chair and a vice chair. The chair shall not serve more
than four
(4)consecutive years as chair or vice-chair of the board. The vice-
chair shall not serve more than four
(4)consecutive years as chair or vice-
chair of the board. A trustee who has served four
(4)consecutive years as
chair or vice-chair of the board may be elected chair or vice-chair of the board
after an absence of two
(2)years from the positions.
(c)A majority of the trustees shall constitute a quorum and all actions taken by
the board shall be by affirmative vote of a majority of the trustees present.
(a)The board of trustees shall appoint or contract for the services of a chief
executive officer and general counsel and fix the compensation and other
terms of employment for these positions without limitation of the provisions
of KRS Chapters 18A and 45A and KRS 64.640. The chief executive officer
shall serve as the legislative and executive adviser to the board. The general
counsel shall serve as legal adviser to the board. The chief executive officer
and general counsel shall work with the executive director of the Kentucky
Public Pensions Authority to carry out the provisions of KRS 16.505 to
16.652 and 61.510 to 61.705. The executive director of the Kentucky Public
Pensions Authority shall be the chief administrative officer of the board.
(b)Prior to April 1, 2021, the board of trustees shall authorize the executive
director to appoint the employees deemed necessary to transact the business
of the system. Effective April 1, 2021, the responsibility of appointing
employees and managing personnel needs shall be transferred to the Kentucky
Public Pensions Authority established by KRS 61.505.
(c)The board shall require the chief executive officer and may require the general
counsel to execute bonds for the faithful performance of his or her duties
notwithstanding the limitations of KRS Chapter 62.
(d)The board shall have a system of accounting established by the Kentucky
Public Pensions Authority.
(e)The board shall do all things, take all actions, and promulgate all
administrative regulations, not inconsistent with the provisions of KRS 16.505
to 16.652 and 61.510 to 61.705, necessary or proper in order to carry out the
provisions of KRS 16.505 to 16.652 and 61.510 to 61.705. Notwithstanding
any other evidence of legislative intent, it is hereby declared to be the
controlling legislative intent that the provisions of KRS 16.505 to 16.652 and
61.510 to 61.705 conform with federal statute or regulation and meet the
qualification requirements under 26 U.S.C. sec. 401(a), applicable federal
regulations, and other published guidance. Provisions of KRS 16.505 to
16.652 and 61.510 to 61.705 which conflict with federal statute or regulation
or qualification under 26 U.S.C. sec. 401(a), applicable federal regulations,
and other published guidance shall not be available. The board shall have the
authority to promulgate administrative regulations to conform with federal
statute and regulation and to meet the qualification requirements under 26
U.S.C. sec. 401(a), including an administrative regulation to comply with 26
U.S.C. sec. 401(a)(9).
(f)Notwithstanding any other provision of statute to the contrary, including but
not limited to any provision of KRS Chapter 12, the Governor shall have no
authority to change any provision of KRS 16.505 to 16.652 and 61.510 to
61.705 by executive order or action, including but not limited to reorganizing,
replacing, amending, or abolishing the membership of the Kentucky
Retirement Systems board of trustees.
(10)Notwithstanding any statute to the contrary, employees shall not be considered
legislative agents under KRS 6.611.
(11)The Attorney General, or an assistant designated by him or her, may attend each
meeting of the board and may receive the agenda, board minutes, and other
information distributed to trustees of the board upon request. The Attorney General
may act as legal adviser and attorney for the board, and the board may contract for
legal services, notwithstanding the limitations of KRS Chapter 12 or 13B.
(a)The Kentucky Public Pensions Authority shall publish an annual financial
report showing all receipts, disbursements, assets, and liabilities for the
systems. The annual report shall include a copy of an audit conducted in
accordance with generally accepted auditing standards. Except as provided by
paragraph
(b)of this subsection, the board may select the independent
certified public accountant hired by the Kentucky Public Pensions Authority
or the Auditor of Public Accounts to perform the audit. If the audit is
performed by an independent certified public accountant, the Auditor of
Public Accounts shall not be required to perform an audit pursuant to KRS
43.050(2)(a), but may perform an audit at his or her discretion. All
proceedings and records of the board shall be open for inspection by the
public. The Kentucky Public Pensions Authority shall make copies of the
audit required by this subsection available for examination by any member,
retiree, or beneficiary in the offices of the Kentucky Public Pensions
Authority and in other places as necessary to make the audit available to all
members, retirees, and beneficiaries. A copy of the annual audit shall be sent
to the Legislative Research Commission no later than ten
(10)days after
receipt by the board.
(b)At least once every five
(5)years, the Auditor of Public Accounts shall
perform the audit described by this subsection, and the system shall reimburse
the Auditor of Public Accounts for all costs of the audit. The Auditor of
Public Accounts shall determine which fiscal year during the five
(5)year
period the audit prescribed by this paragraph will be completed.
(13)All expenses incurred by or on behalf of the system and the board in the
administration of the system during a fiscal year shall be paid from the retirement
allowance account, including any administrative expenses for the Kentucky Public
Pensions Authority that are assigned to the Kentucky Retirement Systems by KRS
61.505. The board shall submit any administrative expenses that are specific to the
Kentucky Retirement Systems that are not otherwise covered by KRS
61.505(11)(a).
(14)Any person adversely affected by a decision of the board, except as provided under
subsection
(16)of this section or KRS 61.665, involving KRS 16.505 to 16.652 and
61.510 to 61.705, may appeal the decision of the board to the Franklin Circuit Court
within sixty
(60)days of the board action.
(a)A trustee shall discharge his or her duties as a trustee, including his or her
duties as a member of a committee:
1. In good faith;
2. On an informed basis; and
3. In a manner he or she honestly believes to be in the best interest of the
Kentucky Retirement Systems.
(b)A trustee discharges his or her duties on an informed basis if, when he or she
makes an inquiry into the business and affairs of the Kentucky Retirement
Systems or into a particular action to be taken or decision to be made, he or
she exercises the care an ordinary prudent person in a like position would
exercise under similar circumstances.
(c)In discharging his or her duties, a trustee may rely on information, opinions,
reports, or statements, including financial statements and other financial data,
if prepared or presented by:
1. One
(1)or more officers or employees of the Kentucky Retirement
Systems whom the trustee honestly believes to be reliable and
competent in the matters presented;
2. Legal counsel, public accountants, actuaries, or other persons as to
matters the trustee honestly believes are within the person's professional
or expert competence; or
3. A committee of the board of trustees of which he or she is not a member
if the trustee honestly believes the committee merits confidence.
(d)A trustee shall not be considered as acting in good faith if he or she has
knowledge concerning the matter in question that makes reliance otherwise
permitted by paragraph
(c)of this subsection unwarranted.
(e)Any action taken as a trustee, or any failure to take any action as a trustee,
shall not be the basis for monetary damages or injunctive relief unless:
1. The trustee has breached or failed to perform the duties of the trustee's
office in compliance with this section; and
2. In the case of an action for monetary damages, the breach or failure to
perform constitutes willful misconduct or wanton or reckless disregard
for human rights, safety, or property.
(f)A person bringing an action for monetary damages under this section shall
have the burden of proving by clear and convincing evidence the provisions of
paragraph (e)1. and 2. of this subsection, and the burden of proving that the
breach or failure to perform was the legal cause of damages suffered by the
Kentucky Retirement Systems.
(g)Nothing in this section shall eliminate or limit the liability of any trustee for
any act or omission occurring prior to July 15, 1988.
(h)In discharging his or her administrative duties under this section, a trustee
shall strive to administer the retirement system in an efficient and cost-
effective manner for the taxpayers of the Commonwealth of Kentucky and
shall take all actions available under the law to contain costs for the trusts,
including costs for participating employers, members, and retirees.
(16)When an order by the system substantially impairs the benefits or rights of a
member, retired member, or recipient, except action which relates to entitlement to
disability benefits, or when an employer disagrees with an order of the system as
provided by KRS 61.598, the affected member, retired member, recipient, or
employer may request a hearing to be held in accordance with KRS Chapter 13B.
The board may establish an appeals committee whose members shall be appointed
by the chair and who shall have authority to act upon the recommendations and
reports of the hearing officer on behalf of the board. The member, retired member,
recipient, or employer aggrieved by a final order of the board following the hearing
may appeal the decision to the Franklin Circuit Court, in accordance with KRS
Chapter 13B. The board may establish a joint administrative appeals committee
with the County Employees Retirement System and may also establish a joint
disability appeals committee with the County Employees Retirement System.
(17)The board shall give the Kentucky Education Support Personnel Association
twenty-four
(24)hours notice of the board meetings, to the extent possible.
(18)The board shall establish a formal trustee education program for all trustees of the
board. The program shall include but not be limited to the following:
(a)A required orientation program for all new trustees elected or appointed to the
board. The orientation program shall include training on:
1. Benefits and benefits administration;
2. Investment concepts, policies, and current composition and
administration of retirement systems investments;
3. Laws, bylaws, and administrative regulations pertaining to the
retirement systems and to fiduciaries; and
4. Actuarial and financial concepts pertaining to the retirement systems.
If a trustee fails to complete the orientation program within one
(1)year from
the beginning of his or her first term on the board, the retirement systems shall
withhold payment of the per diem and travel expenses due to the board
member under this section and KRS 16.640 until the trustee has completed the
orientation program;
(b)Annual required training for board members on the administration, benefits,
financing, and investing of the retirement systems. If a trustee fails to
complete the annual required training during the calendar or fiscal year, the
retirement systems shall withhold payment of the per diem and travel
expenses due to the board member under this section and KRS 16.640 until
the board member has met the annual training requirements; and
(c)The retirement systems shall incorporate by reference in an administrative
regulation, pursuant to KRS 13A.2251, the trustee education program.
(19)In order to improve public transparency regarding the administration of the systems,
the board of trustees shall adopt a best practices model by posting the following
information to the Kentucky Public Pensions Authority's website and shall make
available to the public:
(a)Meeting notices and agendas for all meetings of the board. Notices and
agendas shall be posted to the Kentucky Public Pensions Authority's website
at least seventy-two
(72)hours in advance of the board or committee
meetings, except in the case of special or emergency meetings as provided by
KRS 61.823;
(b)The Annual Comprehensive Financial Report with the information as follows:
1. A general overview and update on the retirement systems by the
executive director;
2. A listing of the board of trustees;
3. A listing of key staff;
4. An organizational chart;
5. Financial information, including a statement of plan net assets, a
statement of changes in plan net assets, an actuarial value of assets, a
schedule of investments, a statement of funded status and funding
progress, and other supporting data;
6. Investment information, including a general overview, a list of the
retirement system's professional consultants, a total net of fees return on
retirement systems investments over a historical period, an investment
summary, contracted investment management expenses, transaction
commissions, and a schedule of investments;
7. The annual actuarial valuation report on the pension benefit and the
medical insurance benefit; and
8. A general statistical section, including information on contributions,
benefit payouts, and retirement systems' demographic data;
(c)All external audits;
(d)All board minutes or other materials that require adoption or ratification by
the board of trustees. The items listed in this paragraph shall be posted within
three
(3)business days of adoption or ratification of the board;
(e)All bylaws, policies, or procedures adopted or ratified by the board of
trustees;
(f)The retirement systems' summary plan description;
(g)A document containing an unofficial copy of the statutes governing the
systems administered by Kentucky Retirement Systems;
(h)A listing of the members of the board of trustees and membership on each
committee established by the board, including any investment committees;
(i)All investment holdings in aggregate, fees, and commissions for each fund
administered by the board, which shall be updated on a quarterly basis for
fiscal years beginning on or after July 1, 2017. The systems shall request from
all managers, partnerships, and any other available sources all information
regarding fees and commissions and shall, based on the requested information
received:
1. Disclose the dollar value of fees and commissions paid to each
individual manager or partnership;
2. Disclose the dollar value of any profit sharing, carried interest, or any
other partnership incentive arrangements, partnership agreements, or
any other partnership expenses received by or paid to each manager or
partnership; and
3. As applicable, report each fee or commission by manager or partnership
consistent with standards established by the Institutional Limited
Partners Association (ILPA).
In addition to the requirements of this paragraph, the systems shall also
disclose the name and address of all individual underlying managers or
partners in any fund of funds in which system assets are invested;
(j)An update of net of fees investment returns, asset allocations, and the
performance of the funds against benchmarks adopted by the board for each
fund, for each asset class administered by the board, and for each manager.
The update shall be posted on a quarterly basis for fiscal years beginning on
or after July 1, 2017;
(k)A searchable database of the systems' expenditures and a listing of each
individual employed by the systems along with the employee's salary or
wages. In lieu of posting the information required by this paragraph to the
Kentucky Public Pensions Authority's website, the systems may provide the
information through a website established by the executive branch to inform
the public about executive branch agency expenditures and public employee
salaries and wages;
(l)All contracts or offering documents for services, goods, or property purchased
or utilized by the systems;
(m)Information regarding the systems' financial and actuarial condition that is
easily understood by the members, retired members, and the public; and
(n)All proxy vote reports as provided by KRS 61.650(7).
(20)Notwithstanding the requirements of subsection
(19)of this section, the retirement
systems shall not be required to furnish information that is protected under KRS
61.661, exempt under KRS 61.878, or that, if disclosed, would compromise the
retirement systems' ability to competitively invest in real estate or other asset
classes, except that no provision of this section or KRS 61.878 shall exclude
disclosure and review of all contracts, including investment contracts, by the board,
the Auditor of Public Accounts, and the Government Contract Review Committee
established pursuant to KRS 45A.705 or the disclosure of investment fees and
commissions as provided by this section. If any public record contains material
which is not excepted under this section, the systems shall separate the excepted
material by removal, segregation, or redaction, and make the nonexcepted material
available for examination.
(21)Notwithstanding any other provision of KRS 16.505 to 16.652 and 61.510 to 61.705
to the contrary, no funds of the systems administered by Kentucky Retirement
Systems, including fees and commissions paid to an investment manager, private
fund, or company issuing securities, who manages systems assets, shall be used to
pay fees and commissions to placement agents. For purposes of this subsection,
"placement agent" means a third-party individual, who is not an employee, or firm,
wholly or partially owned by the entity being hired, who solicits investments on
behalf of an investment manager, private fund, or company issuing securities.