78.782 County Employees Retirement System board of trustees -- Appointed and
4,767 words·~22 min read·
/ky/78-782A research copy — for the controlling text, always check the official state or federal source. Not legal advice.
elected membership, vacancies, compensation, duties, and meetings -- Board
granted powers and privileges of corporation -- Chief executive officer and
general counsel -- Annual Comprehensive Financial Report -- Expenses --
Action for damages -- Appeals -- Transparency -- Limitations on use of funds.
(1)The County Employees Retirement System shall be administered by the board of
trustees composed of nine
(9)members, who shall be selected as follows:
(a)Three
(3)trustees, who shall be members or retired from the County
Employees Retirement System, elected by the members and retired members
of the County Employees Retirement System, of which:
1. Two
(2)shall have a majority of his or her service credit earned in the
County Employees Retirement System in a nonhazardous position; and
2. One
(1)shall have a majority of his or her service credit earned in the
County Employees Retirement System in a hazardous position;
(b)Six
(6)trustees appointed by the Governor, subject to Senate confirmation in
accordance with KRS 11.160 for each appointment or reappointment. Of the
six
(6)trustees appointed by the Governor:
1. One
(1)trustee with retirement experience shall be appointed from a list
of three
(3)applicants submitted by the Kentucky League of Cities;
2. One
(1)trustee with investment experience shall be appointed from a list
of three
(3)applicants submitted by the Kentucky League of Cities;
3. One
(1)trustee with retirement experience shall be appointed from a list
of three
(3)applicants submitted by the Kentucky Association of
Counties;
4. One
(1)trustee with investment experience shall be appointed from a list
of three
(3)applicants submitted by the Kentucky Association of
Counties;
5. One
(1)trustee with retirement experience shall be appointed from a list
of three
(3)applicants submitted by the Kentucky School Boards
Association; and
6. One
(1)trustee with investment experience shall be appointed from a list
of three
(3)applicants submitted by the Kentucky School Boards
Association.
Notwithstanding the provisions of KRS 12.070(3), the Governor shall appoint
each individual trustee described by subparagraphs 1. to 6. of this paragraph
solely from each corresponding individual list required to be submitted by the
Kentucky League of Cities, the Kentucky Association of Counties, or the
Kentucky School Boards Association as provided by subparagraphs 1. to 6. of
this paragraph, and the Governor shall not be able to reject the list of
applicants submitted, request that another list be provided, or use a list
different from the one
(1)individual list required to be submitted for each
specific appointment or reappointment;
(c)For purposes of paragraph
(b)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
(d)For purposes of paragraph
(b)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 78.790(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 the provisions of 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 78.790(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.
(3)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 or appointed trustee shall not serve
more than three
(3)consecutive four
(4)year terms. An elected or appointed trustee
who has served three
(3)consecutive terms may be elected or appointed again after
an absence of four
(4)years from the board.
(a)The trustees selected by the membership of the system 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
constitutionally eligible individuals.
(b)Individuals may be nominated by the system members by presenting to the
executive director, not less than four
(4)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 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 carry the name, address, and
position title of each individual nominated by the board and by petition.
Provision 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 County Employees Retirement System 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. Costs of an election shall be payable from the funds of
the system.
(h)For purposes of this subsection, an eligible voter shall be a person who was a
member of the 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 system 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 system 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; 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, the system shall notify members of the vacancy and
the opportunity to be considered for the vacant position. Any vacancy 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 at least thirty
(30)days prior to an appointed member's term of
office ending. The Governor's Office shall, with each appointment or
reappointment, request lists to be submitted and base selections on those lists
solely under the procedures and requirements provided by subsection (1)(b) of
this section.
(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 the County Employees Retirement System,
Kentucky Retirement Systems, 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 78.510 to
78.852. The executive director of the Kentucky Public Pensions Authority
shall be the chief administrative officer of the board.
(b)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.
(c)The board shall have a system of accounting established by the Kentucky
Public Pensions Authority.
(d)The board shall do all things, take all actions, and promulgate all
administrative regulations, not inconsistent with the provisions of KRS 78.510
to 78.852, necessary or proper in order to carry out the provisions of KRS
78.510 to 78.852. Notwithstanding any other evidence of legislative intent, it
is hereby declared to be the controlling legislative intent that the provisions of
KRS 78.510 to 78.852 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 78.510 to
78.852 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).
(e)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 78.510 to 78.852 by executive order
or action, including but not limited to reorganizing, replacing, amending, or
abolishing the membership of the County Employees Retirement System
board of trustees.
(10)The chief executive officer and general counsel of the board shall serve during its
will and pleasure. Notwithstanding any statute to the contrary, the chief executive
officer shall not be considered a legislative agent 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 County Employees Retirement
System 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
electronically to the Legislative Research Commission no later than ten
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 County Employees Retirement System
by KRS 61.505. The board shall submit any administrative expenses that are
specific to the County Employees Retirement System that are not otherwise covered
by KRS 61.505(11)(a).
(14)Except as provided under subsection
(16)of this section or KRS 61.665, any person
adversely affected by a decision of the board involving KRS 78.510 to 78.852 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
County Employees Retirement System.
(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 system 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 system or Authority 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
system.
(g)In discharging his or her administrative duties under this section, a trustee
shall strive to administer the 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 Kentucky Retirement Systems and may also establish a joint disability
appeals committee with the Kentucky Retirement Systems.
(17)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 system investments;
3. Laws, bylaws, and administrative regulations pertaining to the system
and to fiduciaries; and
4. Actuarial and financial concepts pertaining to the system.
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 system shall withhold
payment of the per diem and travel expenses due to the board member under
this section until the trustee has completed the orientation program;
(b)Annual required training for board members on the administration, benefits,
financing, and investing of the system. If a trustee fails to complete the annual
required training during the calendar or fiscal year, the retirement system shall
withhold payment of the per diem and travel expenses due to the board
member under this section until the board member has met the annual training
requirements; and
(c)The system shall incorporate by reference in an administrative regulation,
pursuant to KRS 13A.2251, the trustee education program.
(18)In order to improve public transparency regarding the administration of the system,
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 system 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
system's professional consultants, a total net of fees return on system
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 system 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 system's summary plan description;
(g)A document containing an unofficial copy of the statutes governing the
system;
(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, 2021. The system 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 system 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, 2021;
(k)A searchable database of the system's expenditures and a listing of each
individual employed by the system 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 system may provide the information
through a website established by the executive branch to inform the public
about public employee salaries and wages;
(l)All contracts or offering documents for services, goods, or property purchased
or utilized by the system for contracts or offering documents entered into on
or after July 1, 2021;
(m)Information regarding the system's 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 78.790(7).
(19)Notwithstanding the requirements of subsection
(18)of this section, the system
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 system's
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 system shall separate the excepted material by removal, segregation, or
redaction, and make the nonexcepted material available for examination.
(20)Notwithstanding any other provision of KRS 78.510 to 78.852 to the contrary, no
funds of the County Employees Retirement System, 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.