KRS § 78.635 — KY Code / Title IX / Chapter 78 / Section 78.635
78.635 Employer's annual contribution to system -- Computation -- Limitation on annual increase of employer contribution rate -- Notification of rate change
Status: in_force

78.635 Employer's annual contribution to system -- Computation -- Limitation

on annual increase of employer contribution rate -- Notification of rate

change.

(1) (a) Except as provided by subsection (4) of this section, each employer

participating in the County Employees Retirement System as provided for

in KRS 78.510 to 78.852 shall contribute annually to the system an

amount determined by the actuarial valuation completed in accordance

with KRS 78.784 and as specified by this section. Employer contributions

for the system shall be equal to the sum of the "normal cost contribution"

and the "actuarially accrued liability contribution."

(b) For purposes of this section, the normal cost contribution shall be

computed as a percentage of pay and shall be an annual amount that is

sufficient when combined with employee contributions to fund benefits

earned during the year in the system. The amount shall be:

1. Paid as a percentage of creditable compensation reported for each

employee participating in the system and accruing benefits; and

2. The same percentage of pay for all employees who are participating

in the system, except that separate percentage rates shall be

developed in each system for those employers whose employees

are participating in hazardous duty retirement coverage as provided

by KRS 78.5520.

(c) For purposes of this section, the actuarially accrued liability contribution

shall be:

1. Computed by amortizing the total unfunded actuarially accrued

liability of the system over a closed period of thirty (30) years

beginning with the 2019 actuarial valuation using the level

percentage of payroll amortization method, except that any increase

or decrease in the unfunded actuarially accrued liability occurring

after the completion of the 2019 actuarial valuation shall be

amortized over a closed period of twenty (20) years beginning with

the actuarial valuation in which the increase or decrease in the

unfunded actuarially accrued liability is recognized. An increase or

decrease in the unfunded actuarially accrued liability may result

from, but not be limited to, legislative changes to benefits, changes

in actuarial methods or assumptions, or actuarial gains or losses;

2. Paid as a percentage of payroll on the creditable compensation

reported for each employee participating in the system and accruing

benefits; and

3. The same percentage of pay for all employees who are participating

in the system, except that separate percentage rates shall be

developed in each system for those employers whose employees

are participating in hazardous duty retirement coverage as provided

by KRS 78.5520.

(d) The employer contributions computed under this section shall be

determined using:

1. The entry age normal cost funding method;

2. An asset smoothing method that smooths investment gains and

losses over a five (5) year period; and

3. Other funding methods and assumptions established by the board in

accordance with KRS 78.784.

(2) Normal contribution and the actuarially accrued liability contribution rates shall

be determined by the board on the basis of the annual actuarial valuation last

preceding the July 1 of a new fiscal year.

(3) Employer contribution rates as provided by this section shall include an

employer contribution rate to fund pension benefits and an employer

contribution rate to fund retiree health benefits.

(4) The employer contribution rate established by the board for the County

Employees Retirement System that is payable on or after July 1, 2018, and

until June 30, 2028, for the pension and retiree health insurance funds,

including the normal cost contribution and the actuarially accrued liability

contribution for each fund, shall not increase by more than a factor of one and

twelve one hundredths (1.12) over the prior fiscal year's employer contribution

rate as determined by the system's consulting actuary.

(5) The system shall advise each employer prior to the beginning of each fiscal

year of any change in the employer contribution rate. Based on the employer

contribution rate, each employer shall include in the budget sufficient funds to

pay the employer contributions as determined by the board under this section.