Could a new agency enter Kentucky's County Employees Retirement System during the 2004–05 health-contract freeze?

Plain-English summary

The Kentucky Retirement Systems and Personnel Cabinet asked whether Section 18 of House Bill 1 from the 2004 extraordinary session temporarily prevented new agencies from joining the County Employees Retirement System. The Attorney General concluded that it did. The bill prohibited the Personnel Cabinet from entering into new state-health-plan contracts required under KRS 78.530 from October 19, 2004, through December 31, 2005. The retirement statute required an agency seeking entry to have an irrevocable health-coverage contract. During that period, a new applicant could not obtain the required contract, so its application would have to be denied.

The opinion addressed new agency participation during that historical period. It did not say that existing participating agencies were removed from the retirement system.

Currency note

This opinion was issued in 2005. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Common questions

Q: Could a new agency join the County Employees Retirement System during the 2004–05 freeze? A: The AG said no. The health-coverage contract required for a new applicant was temporarily barred by Section 18 of House Bill 1.

Q: Why did a health-insurance contract rule affect retirement membership?
A: KRS 78.530 required an agency seeking participation to have an irrevocable Personnel Cabinet health-coverage contract for its active employees. The temporary ban prevented new contracts of that kind.

Q: What period did the opinion cover?
A: It identified October 19, 2004, through December 31, 2005, as the period set by the 2004 legislation.

Q: Did the opinion remove existing agencies from the system?
A: No. It analyzed requests from agencies seeking to begin participation, not continued membership of existing participants.

Background and statutory framework

Section 18 said the Personnel Cabinet “shall not enter into any new contracts required under KRS 78.530” for employees' state health coverage during the stated period. The opinion then read KRS 78.530(1)(b) and (7)(b), which required an irrevocable contract under KRS 18A.225 before an agency could participate. It concluded that applications for new participation during the freeze had to be denied.

Citations and references

Statutes: KRS 78.530(1)(b); KRS 78.530(7)(b); KRS 18A.225.

Legislation: Section 18 of House Bill 1, 2004 Extraordinary Session.

Source

• Landing page: https://kdla.access.preservica.com/uncategorized/IO_172ee2ec-50e8-4a2f-9ee3-68ebae75e610/
• Original PDF: https://kdla.access.preservica.com/download/file/IO_172ee2ec-50e8-4a2f-9ee3-68ebae75e610

Original opinion text

OAG 05-001
January 5, 2005
Subject:

Whether Section 18 of House Bill 1 of the 2004
Extraordinary Session of the Kentucky General Assembly establishes a moratorium on new entities entering the County Employees Retirement Systems.

Requested by:

J. Eric Wampler, General Counsel,
Kentucky Retirement Systems

Written by:

Gerard Gerhard

Syllabus:

Section 18 of House Bill 1 of the 2004 Extraordinary
Session of the Kentucky General Assembly, prohibits the Personnel Cabinet from entering into any “new contracts required under KRS 78.530 for coverage of employees in the state health plan” from the effective date of the legislation through December 31, 2005, which has the effect of establishing a moratorium, during such period, on agencies beginning participation in the County Employees Retirement System.

Statutes construed:
OAGs cited:

KRS 78.530.

None.

Opinion of the Attorney General

OAG 05-001
Page 2

The Kentucky Retirement Systems and the Kentucky Personnel
Cabinet have asked, in substance, whether Section 18 of House Bill 1,
of the 2004 Extraordinary Session of the Kentucky General Assembly
effectively imposes a moratorium on new entities becoming participants in the County Employees Retirement System from the effective date of the bill through December 31, 2005. As explained below, our view is that the language of Section 18 of the bill here involved does impose such a moratorium. Section 18 of House Bill 1 of the 204 Extraordinary Session of the Kentucky General Assembly, which became effective on October 19, 2004, provides: The Personnel Cabinet shall not enter into any new contracts required under KRS 78.530 for coverage of employees in the state health plan from the effective date of this Act through December 31, 2005.
[Emphasis added.]
KRS 78.530 contains two provisions that “require” contracts.
These are KRS 78.530(1)(b), and KRS 78.530(7)(b). KRS 78.530(1)(b)
states:
Notwithstanding any statute to the contrary, after April 9,
2002, the
systems shall deny the request for participation of
any agency which does not have an irrevocable contract with the state Personnel Cabinet for health insurance coverage under KRS 18A.225 for its active employees, except that county governments entering the system between April 9, 2002, and July 1, 2003, under this section shall be excluded from this requirement.
[Emphasis added.]

OAG 05-001
Page 3

KRS 78.530(7)(b) states:
Notwithstanding any statute to the contrary, after April 9,
2002, the
systems shall deny the request for participation of
any agency which does not have an irrevocable contract with the state Personnel Cabinet for health insurance coverage under KRS 18A.225 for its active employees.
[Emphasis added.]
The phrase “request for participation,” as used in KRS 78.530,
refers to a request for participation in the ”County Employees Retirement System,” given KRS 78.520(1), and the context in which the above quoted provisions appear. The plain language of Section 18 of House Bill 1 prohibits the Personnel Cabinet from entering into any new contracts required under KRS 78.530 during the period established by that legislation. It follows that an agency seeking to enter the County Employees Retirement System (the system subject to 78.530) between October 19, 2004, and December 31, 2005, (the period set forth in House Bill 1) would not have the irrevocable contract for health insurance coverage under KRS 18A.225, that is required by KRS 78.530. Accordingly, the application of such agency for participation in the County Employees Retirement System would have to be denied. KRS 78.530(1)(b), KRS 78.530(7)(b). In other words, Section 18 of House Bill 1 (2004 Extraordinary Session, Kentucky General Assembly) imposes a moratorium on new agencies entering the County Employees Retirement System during the period established by the legislation. GREGORY D. STUMBO ATTORNEY GENERAL

OAG 05-001
Page 4

Gerard R. Gerhard
Assistant Attorney General
#482