KRS § 161.250 — KY Code / Title XIII / Chapter 161 / Section 161.250
161.250 Board of trustees to control retirement -- Membership -- Appeals -- Trustee education program -- Public disclosure of meeting notices and agendas and Annual Comprehensive Financial Report -- Administrative regulations for authorized benefit improvements
Status: in_force

161.250 Board of trustees to control retirement -- Membership -- Appeals --

Trustee education program -- Public disclosure of meeting notices and agendas

and Annual Comprehensive Financial Report -- Administrative regulations for

authorized benefit improvements.

(1) (a) The general administration and management of the retirement system, and the

responsibility for its proper operation and for making effective provisions of

KRS 161.155 and 161.220 to 161.714 are vested in a board of trustees to be

known as the "Board of Trustees of the Teachers' Retirement System of the

State of Kentucky."

(b) The board of trustees shall consist of the following:

1. The chief state school officer;

2. The State Treasurer;

3. Two (2) trustees, appointed by the Governor of the Commonwealth,

subject to Senate confirmation in accordance with KRS 11.160 for each

appointment or reappointment. These two (2) trustees shall have

investment experience. For purposes of this subparagraph, a trustee with

"investment experience" means an individual who does not have a

conflict of interest, as provided by KRS 161.460, and who has at least

ten (10) years of experience in one (1) of the following areas of

expertise:

a. A portfolio manager acting in a fiduciary capacity;

b. A professional securities analyst or investment consultant;

c. A current or retired employee or principal of a trust institution,

investment or finance organization, or endowment fund acting in

an investment-related capacity;

d. A chartered financial analyst in good standing as determined by

the CFA Institute; or

e. A university professor, teaching investment-related studies; and

4. Seven (7) other trustees elected as provided in KRS 161.260. Four (4) of

the elective trustees shall be members of the retirement system, to be

known as teacher trustees, two (2) shall be persons who are not

members of the teaching profession, to be known as the lay trustees, and

one (1) shall be an annuitant of the retirement system to be known as the

retired teacher trustee. One (1) teacher trustee shall be elected annually

for a four-year term. The retired teacher trustee shall be elected every

four (4) years. The chief state school officer and the State Treasurer are

considered ex officio members of the board of trustees and may

designate in writing a person to represent them at board meetings.

(c) 1. Elective trustees shall not serve more than three (3) consecutive four (4)

year terms. An elective trustee who has served three (3) consecutive

terms may be elected again after an absence of four (4) years from the

board of trustees.

2. The term limits established by subparagraph 1. of this paragraph shall

apply to elective 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

elective trustee has exceeded the term limits provided by subparagraph

1. of this paragraph.

(d) 1. Each appointed trustee shall serve a term of four (4) years. An appointed

trustee shall not serve more than three (3) consecutive four (4) year

terms. An appointed trustee who has served three (3) consecutive terms

may be appointed again after an absence of four (4) years from the

board of trustees.

2. Any vacancy that occurs in an appointed position shall be filled in the

same manner that provides for the selection of the trustee; however, any

vacancy shall be filled only for the duration of the unexpired term.

(2) A member, retired member, or designated beneficiary may appeal the retirement

system's decisions that materially affect the amount of service retirement allowance,

amount of service credit, eligibility for service retirement, or eligibility for

survivorship benefits to which that member, retired member, or designated

beneficiary claims to be entitled. All appeals must be in writing and filed with the

retirement system within thirty (30) days of the claimant's first notice of the

retirement system's decision. For purposes of this section, notice shall be complete

and effective upon the date of mailing of the retirement system's decision to the

claimant at the claimant's last known address. Failure by the claimant to file a

written appeal with the retirement system within the thirty (30) day period shall

result in the decision of the retirement system becoming permanent with the effect

of a final and unappealable order. The deadline to file a written appeal shall not be

subject to the jurisdiction of any court or appeal process, nor shall it otherwise be

tolled or waived. Appeals may include a request for an administrative hearing

which shall be conducted in accordance with the provisions of KRS Chapter 13B.

The board of trustees may establish an appeals committee whose members shall be

appointed by the chairperson and who shall have the authority to act upon the report

and recommendation of the hearing officer by issuing a final order on behalf of the

full board of trustees. A member, retired member, or designated beneficiary who

has filed a timely, written appeal of a decision of the retirement system may,

following the administrative hearing and issuance of the final order by the board of

trustees, appeal the final order of the board of trustees to the Franklin Circuit Court

in accordance with the provisions of KRS Chapter 13B.

(3) The board of trustees 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 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 system investments;

3. Laws, bylaws, and administrative regulations pertaining to the

retirement system and to fiduciaries; and

4. Actuarial and financial concepts pertaining to the retirement 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 retirement system shall

withhold payment of the per diem and travel expenses due to the board

member under KRS 161.290 until the trustee has completed the orientation

program;

(b) Annual required training for trustees on the administration, benefits,

financing, and investing of the retirement 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 KRS 161.290 until the board member has met the annual

training requirements; and

(c) The retirement system shall incorporate by reference in an administrative

regulation, pursuant to KRS 13A.2251, the trustee education program.

(4) 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 retirement system'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 retirement system'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 system by the

executive secretary;

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 return on

retirement 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

seventy-two (72) hours of adoption or ratification of the board;

(e) All bylaws, policies, or procedures adopted or ratified by the board of

trustees;

(f) The retirement system's summary plan description;

(g) The retirement system's law book;

(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 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 or 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, 2017;

(k) All contracts or offering documents for services, goods, or property purchased

or utilized by the system;

(l) 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 system's

website, the system 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; and

(m) All proxy vote reports as provided by KRS 161.430(8).

(5) Notwithstanding the requirements of subsection (4) of this section, the retirement

system shall not be required to furnish information that is protected under KRS

161.585, exempt under KRS 61.878, or that, if disclosed, would compromise the

retirement 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.

(6) For any benefit improvements the General Assembly has authorized the board of

trustees to establish under KRS 161.220 to 161.716 and that require formal

adoption by the board, the board shall establish the benefits by promulgation of

administrative regulations in accordance with KRS Chapter 13A.