KRS § 78.510 — KY Code / Title IX / Chapter 78 / Section 78.510
78.510 Definitions for KRS 78.510 to 78.852
Status: in_force

78.510 Definitions for KRS 78.510 to 78.852.

As used in KRS 78.510 to 78.852, unless the context otherwise requires:

(1) "System" means the County Employees Retirement System created by KRS 78.510

to 78.852;

(2) "Board" means the board of trustees of the system as provided in KRS 78.782;

(3) "County" means any county, or nonprofit organization created and governed by a

county, counties, or elected county officers, sheriff and his or her employees,

county clerk and his or her employees, circuit clerk and his or her deputies, former

circuit clerks or former circuit clerk deputies, or political subdivision or

instrumentality, including school boards, cities, charter county governments, urban-

county governments, consolidated local governments, or unified local governments

participating in the system by order appropriate to its governmental structure, as

provided in KRS 78.530, and if the board is willing to accept the agency,

organization, or corporation, the board being hereby granted the authority to

determine the eligibility of the agency to participate;

(4) "School board" means:

(a) Any board of education participating in the system by order appropriate to its

governmental structure, as provided in KRS 78.530, and if the board is willing

to accept the agency or corporation, the board being hereby granted the

authority to determine the eligibility of the agency to participate; or

(b) A public charter school as defined in KRS 160.1590 if the public charter

school satisfies the criteria set by the Internal Revenue Service to participate

in a governmental retirement plan;

(5) "Examiner" means the medical examiners as provided in KRS 61.665;

(6) "Employee" means every regular full-time appointed or elective officer or

employee of a participating county and the coroner of a participating county,

whether or not he or she qualifies as a regular full-time officer. The term shall not

include persons engaged as independent contractors, seasonal, emergency,

temporary, and part-time workers. In case of any doubt, the board shall determine if

a person is an employee within the meaning of KRS 78.510 to 78.852;

(7) "Employer" means a county, as defined in subsection (3) of this section, the elected

officials of a county, or any authority of the county having the power to appoint or

elect an employee to office or employment in the county;

(8) "Member" means any employee who is included in the membership of the system

or any former employee whose membership has not ceased under KRS 78.535;

(9) "Service" means the total of current service and prior service as defined in this

section;

(10) "Current service" means the number of years and months of employment as an

employee, on and after July 1, 1958, for which creditable compensation is paid and

employee contributions deducted, except as otherwise provided;

(11) "Prior service" means the number of years and completed months, expressed as a

fraction of a year, of employment as an employee, prior to July 1, 1958, for which

creditable compensation was paid. An employee shall be credited with one (1)

month of prior service only in those months he or she received compensation for at

least one hundred (100) hours of work. Twelve (12) months of current service in the

system shall be required to validate prior service;

(12) "Accumulated contributions" means the sum of all amounts deducted from the

compensation of a member and credited to his or her individual account in the

members' account, including employee contributions picked up after August 1,

1982, pursuant to KRS 78.610(4), together with interest credited, on the amounts,

and any other amounts the member shall have contributed thereto, including interest

credited thereon. "Accumulated contributions" shall not include employee

contributions that are deposited into accounts established pursuant to 26 U.S.C. sec.

401(h) within the fund established in KRS 78.520, as prescribed by KRS

78.5536(3)(b);

(13) "Creditable compensation":

(a) Except as limited by paragraph (c) of this subsection, means all salary, wages,

and fees, including payments for compensatory time, paid to the employee as

a result of services performed for the employer or for time during which the

member is on paid leave, which are includable on the member's federal form

W-2 wage and tax statement under the heading "wages, tips, other

compensation", including employee contributions picked up after August 1,

1982, pursuant to KRS 78.610(4). The creditable compensation of fee officers

who receive salary, fees, maintenance, or other perquisites as a result of their

official duties is the gross amount received decreased by the cost of salary

paid deputies and clerks and the cost of office supplies and other official

expenses;

(b) Includes:

1. Lump-sum bonuses, severance pay, or employer-provided payments for

purchase of service credit, which shall be averaged over the employee's

service with the system in which it is recorded if it is equal to or greater

than one thousand dollars ($1,000);

2. Cases where compensation includes maintenance and other perquisites,

but the board shall fix the value of that part of the compensation not paid

in money;

3. Lump-sum payments for creditable compensation paid as a result of an

order of a court of competent jurisdiction, the Personnel Board, or the

Kentucky Commission on Human Rights, or for any creditable

compensation paid in anticipation of settlement of an action before a

court of competent jurisdiction, the Personnel Board, or the Kentucky

Commission on Human Rights, including notices of violations of state

or federal wage and hour statutes or violations of state or federal

discrimination statutes, which shall be credited to the fiscal year during

which the wages were earned or should have been paid by the employer.

This subparagraph shall also include lump-sum payments for reinstated

wages pursuant to KRS 61.569, which shall be credited to the period

during which the wages were earned or should have been paid by the

employer;

4. Amounts which are not includable in the member's gross income by

virtue of the member having taken a voluntary salary reduction provided

for under applicable provisions of the Internal Revenue Code; and

5. Elective amounts for qualified transportation fringes paid or made

available on or after January 1, 2001, for calendar years on or after

January 1, 2001, that are not includable in the gross income of the

employee by reason of 26 U.S.C. sec. 132(f)(4); and

(c) Excludes:

1. Living allowances, expense reimbursements, lump-sum payments for

accrued vacation leave, sick leave except as provided in KRS 78.616(5),

and other items determined by the board;

2. For employees who begin participating on or after September 1, 2008,

lump-sum payments for compensatory time;

3. Training incentive payments for city officers paid as set out in KRS

64.5277 to 64.5279;

4. For employees who begin participating on or after August 1, 2016,

nominal fees paid for services as a volunteer; and

5. Any salary or wages paid to an employee for services as a Kentucky

State Police school resource officer as defined by KRS 158.441;

(14) "Final compensation" means:

(a) For a member who begins participating before September 1, 2008, who is

employed in a nonhazardous position, the creditable compensation of the

member during the five (5) fiscal years he or she was paid at the highest

average monthly rate divided by the number of months of service credit

during that five (5) year period multiplied by twelve (12). The five (5) years

may be fractional and need not be consecutive. If the number of months of

service credit during the five (5) year period is less than forty-eight (48), one

(1) or more additional fiscal years shall be used;

(b) For a member who is employed in a nonhazardous position, whose effective

retirement date is between August 1, 2001, and January 1, 2009, and whose

total service credit is at least twenty-seven (27) years and whose age and years

of service total at least seventy-five (75), final compensation means the

creditable compensation of the member during the three (3) fiscal years the

member was paid at the highest average monthly rate divided by the number

of months of service credit during that three (3) year period multiplied by

twelve (12). The three (3) years may be fractional and need not be

consecutive. If the number of months of service credit during the three (3)

year period is less than twenty-four (24), one (1) or more additional fiscal

years shall be used;

(c) For a member who begins participating before September 1, 2008, who is

employed in a hazardous position, as provided in KRS 78.5520, the creditable

compensation of the member during the three (3) fiscal years he or she was

paid at the highest average monthly rate divided by the number of months of

service credit during that three (3) year period multiplied by twelve (12). The

three (3) years may be fractional and need not be consecutive. If the number

of months of service credit during the three (3) year period is less than twenty-

four (24), one (1) or more additional fiscal years, which may contain less than

twelve (12) months of service credit, shall be used;

(d) For a member who begins participating on or after September 1, 2008, but

prior to January 1, 2014, who is employed in a nonhazardous position, the

creditable compensation of the member during the five (5) complete fiscal

years immediately preceding retirement divided by five (5). Each fiscal year

used to determine final compensation must contain twelve (12) months of

service credit. If the member does not have five (5) complete fiscal years that

each contain twelve (12) months of service credit, then one (1) or more

additional fiscal years, which may contain less than twelve (12) months of

service credit, shall be added until the number of months in the final

compensation calculation is at least sixty (60) months; or

(e) For a member who begins participating on or after September 1, 2008, but

prior to January 1, 2014, who is employed in a hazardous position as provided

in KRS 78.5520, the creditable compensation of the member during the three

(3) complete fiscal years he or she was paid at the highest average monthly

rate divided by three (3). Each fiscal year used to determine final

compensation must contain twelve (12) months of service credit. If the

member does not have three (3) complete fiscal years that each contain twelve

(12) months of service credit, then one (1) or more additional fiscal years,

which may contain less than twelve (12) months of service credit, shall be

added until the number of months in the final compensation calculation is at

least thirty-six (36) months;

(15) "Final rate of pay" means the actual rate upon which earnings of an employee were

calculated during the twelve (12) month period immediately preceding the

member's effective retirement date, and shall include employee contributions

picked up after August 1, 1982, pursuant to KRS 78.610(4). The rate shall be

certified to the system by the employer and the following equivalents shall be used

to convert the rate to an annual rate: two thousand eighty (2,080) hours for eight (8)

hour workdays, one thousand nine hundred fifty (1,950) hours for seven and one-

half (7.5) hour workdays, two hundred sixty (260) days, fifty-two (52) weeks,

twelve (12) months, one (1) year;

(16) "Retirement allowance" means the retirement payments to which a member is

entitled;

(17) "Actuarial equivalent" means a benefit of equal value when computed upon the

basis of the actuarial tables adopted by the board. In cases of disability retirement,

the options authorized by KRS 61.635 shall be computed by adding ten (10) years

to the age of the member, unless the member has chosen the Social Security

adjustment option as provided for in KRS 61.635(8), in which case the member's

actual age shall be used. For members who begin participating in the system prior

to January 1, 2014, no disability retirement option shall be less than the same option

computed under early retirement;

(18) "Normal retirement date", unless otherwise provided in KRS 78.510 to 78.852,

means:

(a) For a member with service in a nonhazardous position, the sixty-fifth birthday

of a member;

(b) For a member with service in a hazardous position who begins participating

before September 1, 2008, the first day of the month following a member's

fifty-fifth birthday; or

(c) For a member with service in a hazardous position who begins participating

on or after September 1, 2008, the first day of the month following a

member's sixtieth birthday;

(19) "Fiscal year" of the system means the twelve (12) months from July 1 through the

following June 30, which shall also be the plan year. The "fiscal year" shall be the

limitation year used to determine contribution and benefits limits as set out in 26

U.S.C. sec. 415;

(20) "Agency reporting official" means the person designated by the participating

employer who shall be responsible for forwarding all employer and employee

contributions and a record of the contributions to the system and for performing

other administrative duties pursuant to KRS 78.510 to 78.852;

(21) "Regular full-time positions," as used in subsection (6) of this section, shall mean

all positions that average one hundred (100) or more hours per month, determined

by using the number of hours actually worked in a calendar or fiscal year, or eighty

(80) or more hours per month in the case of noncertified employees of school

boards, determined by using the number of hours actually worked in a calendar or

school year, unless otherwise specified, except:

(a) Seasonal positions, which although temporary in duration, are positions which

coincide in duration with a particular season or seasons of the year and that

may recur regularly from year to year, in which case the period of time shall

not exceed nine (9) months, except for employees of school boards, in which

case the period of time shall not exceed six (6) months;

(b) Emergency positions which are positions utilized by the employer during:

1. An emergency as determined by the employer for a period not

exceeding thirty (30) working days and are nonrenewable; or

2. A state of emergency declared by the President of the United States or

the Governor of the Commonwealth of Kentucky that are created or

filled specifically for addressing the employer's needs during and as a

result of the declared emergency;

(c) Temporary positions that are positions of employment with a participating

agency for a period of time not to exceed twelve (12) months and not

renewable;

(d) Probationary positions which are positions of employment with a participating

employer that do not exceed twelve (12) months and that are used uniformly

by the participating agency on new employees who would otherwise be

eligible for participation in the system. Probationary positions shall not be

renewable by the participating employer for the same employee, unless the

employee has not been employed with the participating employer for a period

of at least twelve (12) months; or

(e) Part-time positions that are positions that may be permanent in duration, but

that require less than a calendar or fiscal year average of one hundred (100)

hours of work per month, determined by using the number of months actually

worked within a calendar or fiscal year, in the performance of duty, except in

case of noncertified employees of school boards, the school term average shall

be eighty (80) hours of work per month, determined by using the number of

months actually worked in a calendar or school year, in the performance of

duty;

(22) "Alternate participation plan" means a method of participation in the system as

provided for by KRS 78.530(3);

(23) "Retired member" means any former member receiving a retirement allowance or

any former member who has on file at the retirement office the necessary

documents for retirement benefits and is no longer contributing to the system;

(24) "Current rate of pay" means the member's actual hourly, daily, weekly, biweekly,

monthly, or yearly rate of pay converted to an annual rate as defined in final rate of

pay. The rate shall be certified by the employer;

(25) "Beneficiary" means the person, persons, estate, trust, or trustee designated by the

member in accordance with KRS 61.542 or 61.705 to receive any available benefits

in the event of the member's death. As used in KRS 78.5536, beneficiary shall not

mean an estate, trust, or trustee;

(26) "Recipient" means the retired member, the person or persons designated as

beneficiary by the member and drawing a retirement allowance as a result of the

member's death, or a dependent child drawing a retirement allowance. An alternate

payee of a qualified domestic relations order shall not be considered a recipient,

except for purposes of KRS 61.623;

(27) "Person" means a natural person;

(28) "School term or year" means the twelve (12) months from July 1 through the

following June 30;

(29) "Retirement office" means the Kentucky Public Pensions Authority office building

in Frankfort, unless otherwise designated by the Kentucky Public Pensions

Authority;

(30) "Vested" for purposes of determining eligibility for purchasing service credit under

KRS 61.552 means the employee has at least forty-eight (48) months of service if

age sixty-five (65) or older or at least sixty (60) months of service if under the age

of sixty-five (65). For purposes of this subsection, "service" means service in the

systems administered by the Kentucky Retirement Systems and County Employees

Retirement System;

(31) "Participating" means an employee is currently earning service credit in the system

as provided in KRS 78.615;

(32) "Month" means a calendar month;

(33) "Membership date" means the date upon which the member began participating in

the system as provided in KRS 78.615;

(34) "Participant" means a member, as defined by subsection (8) of this section, or a

retired member, as defined by subsection (23) of this section;

(35) "Qualified domestic relations order" means any judgment, decree, or order,

including approval of a property settlement agreement, that:

(a) Is issued by a court or administrative agency; and

(b) Relates to the provision of child support, alimony payments, or marital

property rights to an alternate payee;

(36) "Alternate payee" means a spouse, former spouse, child, or other dependent of a

participant, who is designated to be paid retirement benefits in a qualified domestic

relations order;

(37) "Accumulated employer credit" means the employer pay credit deposited to the

member's account and interest credited on such amounts as provided by KRS

78.5512 and 78.5516;

(38) "Accumulated account balance" means:

(a) For members who began participating in the system prior to January 1, 2014,

the member's accumulated contributions; or

(b) For members who began participating in the system on or after January 1,

2014, in the hybrid cash balance plan as provided by KRS 78.5512 and

78.5516, the combined sum of the member's accumulated contributions and

the member's accumulated employer credit;

(39) "Volunteer" means an individual who:

(a) Freely and without pressure or coercion performs hours of service for an

employer participating in one (1) of the systems administered by Kentucky

Retirement Systems or the County Employees Retirement System without

receipt of compensation for services rendered, except for reimbursement of

actual expenses, payment of a nominal fee to offset the costs of performing

the voluntary services, or both; and

(b) If a retired member, does not become an employee, leased employee, or

independent contractor of the employer for which he or she is performing

volunteer services for a period of at least twelve (12) months following the

retired member's most recent retirement date;

(40) "Nominal fee" means compensation earned for services as a volunteer that does not

exceed five hundred dollars ($500) per month with each participating employer.

Compensation earned for services as a volunteer from more than one (1)

participating employer during a month shall not be aggregated to determine whether

the compensation exceeds the five hundred dollars ($500) per month maximum

provided by this subsection;

(41) "Nonhazardous position" means a position that does not meet the requirements of

KRS 78.5520 or has not been approved by the board as a hazardous position;

(42) "Hazardous position" means a position that meets the requirements of KRS 78.5520

and has been approved by the board as hazardous;

(43) "Level-percentage-of-payroll amortization method" means a method of determining

the annual amortization payment on the unfunded actuarial accrued liability as

expressed as a percentage of payroll over a set period of years. Under this method,

the percentage of payroll shall be projected to remain constant for all years

remaining in the set period and the unfunded actuarially accrued liability shall be

projected to be fully amortized at the conclusion of the set period;

(44) "Increment" means twelve (12) months of service credit which are purchased. The

twelve (12) months need not be consecutive. The final increment may be less than

twelve (12) months;

(45) "Last day of paid employment" means the last date employer and employee

contributions are required to be reported in accordance with KRS 16.543, 61.543, or

78.615 to the retirement office in order for the employee to receive current service

credit for the month. Last day of paid employment does not mean a date the

employee receives payment for accrued leave, whether by lump sum or otherwise,

if that date occurs twenty-four (24) or more months after previous contributions;

(46) "Objective medical evidence" means reports of examinations or treatments; medical

signs which are anatomical, physiological, or psychological abnormalities that can

be observed; psychiatric signs which are medically demonstrable phenomena

indicating specific abnormalities of behavior, affect, thought, memory, orientation,

or contact with reality; or laboratory findings which are anatomical, physiological,

or psychological phenomena that can be shown by medically acceptable laboratory

diagnostic techniques, including but not limited to chemical tests,

electrocardiograms, electroencephalograms, X-rays, and psychological tests;

(47) "Hazardous disability" as used in KRS 78.510 to 78.852 means a disability which

results in an employee's total incapacity to continue as an employee in a hazardous

position, but the employee is not necessarily deemed to be totally and permanently

disabled to engage in other occupations for remuneration or profit;

(48) "Act in line of duty" means, for employees in hazardous positions under KRS

78.5520:

(a) A single act occurring which was required in the performance of the principal

duties of the hazardous position as defined by the job description; or

(b) A single act of violence committed against the employee that is found to be

related to his or her job duties, whether or not it occurs at his or her job site;

(49) "Dependent child" means a child in the womb and a natural or legally adopted child

of the member who has neither attained age eighteen (18) nor married or who is an

unmarried full-time student who has not attained age twenty-two (22). Solely in the

case of a member who dies as a direct result of an act in line of duty as defined in

this section, dies as a result of a duty-related injury as defined in KRS 61.621,

becomes totally and permanently disabled as a direct result of an act in the line of

duty as defined in this section, or becomes disabled as a result of a duty-related

injury as defined in KRS 61.621 and is eligible for the benefits provided by KRS

61.621(5)(a), "dependent child" also means a naturally or legally adopted disabled

child of the member, regardless of the child's age, if the child has been determined

to be eligible for federal Social Security disability benefits or is being claimed as a

qualifying child for tax purposes due to the child's total and permanent disability;

(50) "Normal retirement age" means the age at which the member meets the

requirements for his or her normal retirement date as provided by subsection (18) of

this section;

(51) "Disability retirement date" means the first day of the month following the last day

of paid employment;

(52) "Monthly average pay" means:

(a) In the case of a member who dies as a direct result of an act in line of duty as

defined in KRS 16.505 or who dies as a result of a duty-related injury as

defined in KRS 61.621, the higher of the member's monthly final rate of pay

or the average monthly creditable compensation earned by the deceased

member during his or her last twelve (12) months of employment; or

(b) In the case where a member becomes totally and permanently disabled as a

direct result of an act in line of duty as defined in KRS 16.505 or becomes

disabled as a result of a duty-related injury as defined in KRS 61.621 and is

eligible for the benefits provided by KRS 61.621(5)(a), the higher of the

member's monthly final rate of pay or the average monthly creditable

compensation earned by the disabled member during his or her last twelve

(12) months of employment prior to the date the act in line of duty or duty-

related injury occurred;

(53) "Authority" means the Kentucky Public Pensions Authority as provided by KRS

61.505;

(54) "Executive director" means the executive director of the Kentucky Public Pensions

Authority; and

(55) "Gainful employment" means work in any capacity that is or may be performed

with regularity and is or may be usually done for pay, whether pay is received or

not received, including seasonal, volunteer, part-time, and on-call work.