Could Kentucky county clerks and sheriffs use excess fees to buy health insurance only for their own staff?

Plain-English summary

The Kentucky Magistrates/Commissioners Association asked about House Bill 527, which would let certain county clerks and sheriffs use excess office fees to purchase health insurance for themselves and their employees when county government had not provided it. The AG concluded that the bill drew an arbitrary distinction between those offices' employees and other county employees. It therefore considered the bill unconstitutional under Kentucky's constitutional protections against arbitrary classification.

The opinion explained that county government could provide employee health insurance under existing law, while fiscal courts had roles in setting compensation, fringe benefits, and office expenses. The defect it identified in HB 527 was selective coverage financed from public money simply because a clerk's or sheriff's office had excess fees.

Currency note

This opinion was issued in 1992. 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.

Historical summary

County clerks and sheriffs

HB 527 would have allowed an office with excess fees to buy at least twelve months of health coverage for all its employees, including the elected officer if desired, when county government had not supplied coverage. The AG concluded that this favorable treatment of two kinds of offices lacked a rational basis and could not stand under the constitutional rule it applied.

Fiscal courts and other county employees

The opinion distinguished county-wide health insurance authority from the special arrangement in HB 527. It recalled earlier AG opinions saying that when a fiscal court provided employee benefits, it had to treat similarly situated county employees alike, subject to the legal limits the earlier opinions identified for elected officers and deputies.

Common questions

Did the AG say HB 527 could fund insurance from excess fees?

It said the bill appeared to allow sheriffs and clerks to retain excess public fees for that purpose, but concluded the resulting preferential treatment was unconstitutional.

Why did the AG object to covering only those offices?

The opinion found no reasonable difference tied to the bill's purpose between employees in offices with excess fees and other county employees. It called the division arbitrary and irrational.

Did the opinion reject county employee health insurance generally?

No. It cited KRS 79.080 as authority for counties to procure insurance for employees and elected officers. Its constitutional objection targeted the selective scheme in HB 527.

Background and statutory framework

The opinion read KRS 64.530 as allocating compensation and fringe-benefit roles between fiscal courts and fee-supported county officers. KRS 79.080 authorized counties to procure health insurance. Against that structure, HB 527 would have given a special path to sheriffs' and clerks' offices with excess fees. The AG applied the classification principle quoted from Schoo v. Rose and concluded that the bill violated sections 1, 2, and 3 of Kentucky's constitution. This is the AG's 1992 constitutional assessment, not a court ruling.

Citations and references

• HB 527: 1992 bill the AG found unconstitutional.
• KRS 64.530 and KRS 64.530(3): compensation, fringe benefits, and office expense provisions.
• KRS 79.080: county health insurance authority discussed in the opinion.
• Schoo v. Rose, Ky., 270 S.W.2d 940, 941 (1954): classification rule quoted by the AG.

Source

• Landing page: https://www.ag.ky.gov/Resources/Opinions/Opinions/OAG92-108.htm

Original opinion text

OAG 92-108

June 26, 1992

Richard Tanner

Executive Director

Kentucky Magistrates/Commissioners Association

400 Kings Daughters Drive

Frankfort, Kentucky 40601

Dear Mr. Tanner:

You have presented three questions to the Attorney General regarding House Bill 527, enacted by the 1992 General Assembly, which purports to allow certain county clerks and sheriffs to purchase health insurance for their employees without an appropriation from the fiscal court. Without restating your questions we can in summary say that your questions direct our attention to the constitutional validity of the bill. For the reasons expressed in this opinion, we believe that HB 527 creates an arbitrary classification and is unconstitutional under sections 1, 2, and 3 of the state constitution.

I. Compensation of county officers and employees

In order to understand what HB 527 does, one must first understand the rudimentary aspects of Kentucky's system of compensating county officers and employees. Section 106 of the state constitution provides that sheriffs, county clerks, and jailers in counties having a population exceeding 75,000 are paid from the state treasury, with the caveat that the total of their salaries, the salaries of their deputies, and their necessary office expenses may not exceed 75% of the fees that they collect.

Following the classification made in the constitution, the General Assembly has provided in KRS 64.530 a set of rules for the compensation of all county officers and employees in counties with populations below 75,000. Subsection 1 states that the fiscal court “shall fix the compensation of every county officer and employee” except the sheriff, county judge/executive, county clerk, county attorney, and jailer. Subsection 2 states that “deputies or assistants of county officers shall be deemed to be county employees” for the purposes of the statute. Subsection 3 deals with officers who are compensated from fees they collect. It states that the fiscal court shall fix their compensation and may also

fix the maximum amount that the officer may expend each year for expenses of his office. The fiscal court shall fix annually the maximum amount, including fringe benefits, which the officer may expend for deputies and assistants, and allow the officer to determine the number to be hired and the individual compensation of each deputy and assistant.

Thus there exists some tension between sections 1 and 2, which say that the fiscal court sets the compensation of all deputies and assistants, and section 3, which says that the elected officers fix the compensation of their deputies and assistants.

II. Health insurance for county employees

For purposes of county-wide health insurance, the General Assembly has drawn no distinction among employees, assistants, deputies, and elected officers. In KRS 79.080 the legislature has authorized counties to procure health insurance for “employees and elected officers.” We have said that this statute includes deputies of elected officers. OAG 85-13.

On a few occasions we have considered whether an elected county officer may procure health insurance for her employees under either the “fringe benefits” or “office expenses” provisions of KRS 64.530(3). In OAG 84-203 and OAG 84-324 we said that health insurance was a fringe benefit that the fiscal court could provide to all county employees, but that the statutes as they then existed prevented the fiscal court from procuring health insurance for elected officers and their deputies unless the officer made a specific request for the coverage. We also said that if a fiscal court undertakes to provide health insurance for county employees, it must provide the insurance to all employees except those officers and deputies for whom it could not legally make that expenditure.

In OAG 89-51 we said that health insurance for a county clerk and her employees was a legitimate office expense, but that the clerk could not incur the expense without the approval of the fiscal court.

III. What HB 527 does

House Bill 527 attempts to fund certain health insurance premiums out of the public funds that county clerks and sheriffs collect as fees. Subsection 1 defines “excess fees” as the amount of fees and commissions collected by an officer that exceeds “the total salaries and expenses that are required by law to be paid by an office.” Subsection 2 targets those fees in the following way:

Notwithstanding the provisions of KRS 64.530(3), a sheriff or county clerk whose office earns excess fees during any fiscal year, and whose employees are not being provided with health insurance or health maintenance organization coverage by county government or by an agency of county government on the day the fiscal year closes, may purchase health insurance or health maintenance organization coverage, effective within one (1) month after the close of the fiscal year, that will cover all employees of the office, including the sheriff or county clerk if he desires, for at least twelve (12) months.

Subsection 3 says that the “coverage shall be reasonable in relation to the amount of money available from the excess fees.” Thus, although the statute does not say it explicitly, the statute apparently allows the clerk or sheriff to retain excess fees and spend the money on health insurance for the officer and his employees.

Since the statute would only operate in counties that do not provide health insurance to county employees, the precise and intended effect of the bill is to use public funds to provide health insurance to two groups of county employees while denying that privilege to all other county employees. Such discrimination, as we shall now explain, is prohibited by our constitution.

IV. The constitutional standard

House Bill 527 attempts to do that which we said in OAG 84-203 the fiscal court could not do: that is, offer favorable treatment to a group of county employees. The following extended quotation from OAG 84-203 describes the constitutional standard supporting our conclusion:

First, the fiscal court is not mandated to establish such personnel and benefits programs for its own personnel. But if it does establish such programs for its employees, it would have to uniformly cover all fiscal court employees alike. . . .

. . .

For purposes of personnel policies and fringe benefits, all county employees directly under the fiscal court must be considered in the same class. Discrimination cannot be made against persons in the same class. See 2, 3, and 59, Kentucky Constitution; and Markendorf v. Friedman, 280 Ky. 484, 133 S.W.2d 516 (1939) 519. Also see the Fourteenth Amendment to the Federal Constitution. That amendment, inter alia, prohibits the denial of equal protection to any person. Exact equality is no prerequisite of equal protection of the laws under that amendment. Rather, the Fourteenth Amendment only forbids classifications involving invidious discrimination, which is defined as a classification which is arbitrary, irrational, and not reasonably related to a legitimate purpose. . . .

That standard was expressed in Schoo v. Rose, Ky., 270 S.W.2d 940, 941 (1954), in this way:

The Legislature can not take what may be termed a natural class of persons, split that class in two and then arbitrarily designate the dissevered factions of the original unit as two classes and thereupon enact different rules for the government of each. It is equally well established that the classification must be based upon some reasonable and substantial difference in kind, situation or circumstance which bears a proper relation to the purpose of the Statute. . . .

We perceive no rational basis that can justify the favorable treatment that HB 527 would give to clerks, sheriffs, and their employees. The bill does nothing more than to reward employees who are fortunate enough to work for an official who has some excess public money in her hands at the close of the fiscal year. The sort of discrimination that the bill perpetuates is invidious, arbitrary, and irrational. By granting special benefits to two groups of county employees the legislature has created the precise sort of unnatural classification that the court condemned in Schoo v. Rose.

We therefore conclude that House Bill 527 is unconstitutional.

Sincerely,

Chris Gorman

Attorney General

Ross T. Carter

Assistant Attorney General