KRS § 161.220 — KY Code / Title XIII / Chapter 161 / Section 161.220
161.220 Definitions for KRS 161.220 to 161.716 and 161.990
Status: in_force

161.220 Definitions for KRS 161.220 to 161.716 and 161.990.

As used in KRS 161.220 to 161.716 and 161.990:

(1) "Retirement system" means the arrangement provided for in KRS 161.220 to

161.716 and 161.990 for payment of allowances to members;

(2) "Retirement allowance" means the amount annually payable during the course of

his or her natural life to a member who has been retired by reason of service;

(3) "Disability allowance" means the amount annually payable to a member retired by

reason of disability;

(4) "Member" means the commissioner of education, deputy commissioners, associate

commissioners, and all division directors in the State Department of Education,

employees participating in the system pursuant to KRS 196.167(3)(b)1., and any

full-time teacher or professional occupying a position requiring certification or

graduation from a four (4) year college or university, as a condition of employment,

and who is employed by public boards, institutions, or agencies as follows:

(a) Local boards of education and public charter schools if the public charter

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

in a governmental retirement plan;

(b) Eastern Kentucky University, Kentucky State University, Morehead State

University, Murray State University, Western Kentucky University, and any

community colleges established under the control of these universities;

(c) State-operated secondary area vocational education or area technology

centers, Kentucky School for the Blind, and Kentucky School for the Deaf;

(d) Other public education agencies as created by the General Assembly and

those members of the administrative staff of the Teachers' Retirement System

of the State of Kentucky whom the board of trustees may designate by

administrative regulation;

(e) Regional cooperative organizations formed by local boards of education or

other public educational institutions listed in this subsection, for the purpose

of providing educational services to the participating organizations;

(f) All full-time members of the staffs of the Kentucky Association of School

Administrators, Kentucky Education Association, Kentucky Vocational

Association, Kentucky High School Athletic Association, Kentucky

Academic Association, and the Kentucky School Boards Association who

were members of the Kentucky Teachers' Retirement System or were

qualified for a position covered by the system at the time of employment by

the association in the event that the board of directors of the respective

association petitions to be included. The board of trustees of the Kentucky

Teachers' Retirement System may designate by resolution whether part-time

employees of the petitioning association are to be included. The state shall

make no contributions on account of these employees, either full-time or part-

time. The association shall make the employer's contributions, including any

contribution that is specified under KRS 161.550. The provisions of this

paragraph shall be applicable to persons in the employ of the associations on

or subsequent to July 1, 1972;

(g) Employees of the Council on Postsecondary Education who were employees

of the Department for Adult Education and Literacy and who were members

of the Kentucky Teachers' Retirement System at the time the department was

transferred to the council pursuant to Executive Order 2003-600;

(h) The Office of Career and Technical Education;

(i) The Office of Vocational Rehabilitation;

(j) The Kentucky Educational Collaborative for State Agency Children;

(k) The Governor's Scholars Program;

(l) Any person who is retired for service from the retirement system and is

reemployed by an employer identified in this subsection in a position that the

board of trustees deems to be a member, except that any person who becomes

a member on or after January 1, 2022, and subsequently draws a monthly

lifetime retirement allowance, shall upon reemployment after retirement not

earn a second retirement account;

(m) Employees of the former Cabinet for Workforce Development who are

transferred to the Kentucky Community and Technical College System and

who occupy positions covered by the Kentucky Teachers' Retirement System

shall remain in the Teachers' Retirement System. New employees occupying

these positions, as well as newly created positions qualifying for Teachers'

Retirement System coverage that would have previously been included in the

former Cabinet for Workforce Development, shall be members of the

Teachers' Retirement System;

(n) Effective January 1, 1998, employees of state community colleges who are

transferred to the Kentucky Community and Technical College System shall

continue to participate in federal old age, survivors, disability, and hospital

insurance, and a retirement plan other than the Kentucky Teachers' Retirement

System offered by Kentucky Community and Technical College System. New

employees occupying positions in the Kentucky Community and Technical

College System as referenced in KRS 164.5807(5) that would not have

previously been included in the former Cabinet for Workforce Development,

shall participate in federal old age, survivors, disability, and hospital

insurance and have a choice at the time of employment of participating in a

retirement plan provided by the Kentucky Community and Technical College

System, including participation in the Kentucky Teachers' Retirement System,

on the same basis as faculty of the state universities as provided in KRS

161.540 and 161.620;

(o) Employees of the Office of General Counsel, the Office of Budget and

Administrative Services, and the Office of Quality and Human Resources

within the Office of the Secretary of the former Cabinet for Workforce

Development and the commissioners of the former Department for Adult

Education and Literacy and the former Department for Technical Education

who were contributing to the Kentucky Teachers' Retirement System as of

July 15, 2000;

(p) Employees of the Kentucky Department of Education only who are graduates

of a four (4) year college or university, notwithstanding a substitution clause

within a job classification, and who are serving in a professional job

classification as defined by the department;

(q) The Governor's School for Entrepreneurs Program;

(r) Employees of the Office of Adult Education within the Department of

Workforce Development in the Education and Labor Cabinet who were

employees of the Council on Postsecondary Education, Kentucky Adult

Education Program and who were members of the Kentucky Teachers'

Retirement System at the time the Program was transferred to the cabinet

pursuant to Executive Orders 2019-0026 and 2019-0027;

(s) Employees of the Education Professional Standards Board who were

members of the Kentucky Teachers' Retirement System at the time the

employees were transferred to the Kentucky Department of Education

pursuant to Executive Order 2020-590; and

(t) WeLeadCS, the virtual computer science career academy established in KRS

158.809;

(5) "Present teacher" means any teacher who was a teacher on or before July 1, 1940,

and became a member of the retirement system created by 1938 (1st Extra. Sess.)

Ky. Acts ch. 1, on the date of the inauguration of the system or within one (1) year

after that date, and any teacher who was a member of a local teacher retirement

system in the public elementary or secondary schools of the state on or before July

1, 1940, and continued to be a member of the system until he or she, with the

membership of the local retirement system, became a member of the state Teachers'

Retirement System or who becomes a member under the provisions of KRS

161.470(4);

(6) "New teacher" means any member not a present teacher;

(7) "Prior service" means the number of years during which the member was a teacher

in Kentucky prior to July 1, 1941, except that not more than thirty (30) years' prior

service shall be allowed or credited to any teacher;

(8) "Subsequent service" means the number of years during which the teacher is a

member of the Teachers' Retirement System after July 1, 1941;

(9) "Final average salary" means the average of the five (5) highest annual salaries

which the member has received for service in a covered position and on which the

member has made contributions, or on which the public board, institution, or

agency has picked-up member contributions pursuant to KRS 161.540(2), or the

average of the five (5) years of highest salaries as defined in KRS 61.680(2)(a),

which shall include picked-up member contributions. Additionally, the board of

trustees may approve a final average salary based upon the average of the three (3)

highest salaries for individuals who become members prior to January 1, 2022, who

are at least fifty-five (55) years of age and have a minimum of twenty-seven (27)

years of Kentucky service credit. However, if any of the five (5) or three (3) highest

annual salaries used to calculate the final average salary was paid within the three

(3) years immediately prior to the date of the member's retirement for individuals

who become members prior to January 1, 2022, or within the five (5) years

immediately prior to the date of the member's retirement for individuals who

become members on or after January 1, 2022, the amount of salary to be included

for each of those three (3) years or five (5) years, as applicable, for the purpose of

calculating the final average salary shall be limited to the lesser of:

(a) The member's actual salary; or

(b) The member's annual salary that was used for retirement purposes during each

of the prior three (3) years or five (5) years, as applicable, plus a percentage

increase equal to the percentage increase received by all other members

employed by the public board, institution, or agency, or for members of

school districts, the highest percentage increase received by members on any

one (1) rank and step of the salary schedule of the school district. The increase

shall be computed on the salary that was used for retirement purposes. The

board of trustees may promulgate an administrative regulation in accordance

with KRS Chapter 13A to establish a methodology for measuring the

limitation so that the combined increases in salary for each of the last three (3)

full years of salary prior to retirement shall not exceed the total permissible

percentage increase received by other members of the employer for the same

three (3) year period.

For individuals who became members of the retirement system prior to July 1,

2021, this limitation shall not apply if the member receives an increase in salary in a

percentage exceeding that received by the other members, and this increase was

accompanied by a corresponding change in position or in length of employment.

The board of trustees may promulgate an administrative regulation in accordance

with KRS Chapter 13A to provide definitions for a corresponding change in

position or in length of employment. This limitation shall also not apply to the

payment to a member for accrued annual leave if the individual becomes a member

before July 1, 2008, or accrued sick leave which is authorized by statute and which

shall, for individuals subject to KRS 161.155(10) who became nonuniversity

members of the system prior to January 1, 2022, be included as part of a retiring

member's annual compensation for the member's last year of active service;

(10) "Annual compensation" means the total salary received by a member as

compensation for all services performed in employment covered by the retirement

system during a fiscal year. Annual compensation shall not include payment for any

benefit or salary adjustments made by the public board, institution, or agency to the

member or on behalf of the member which is not available as a benefit or salary

adjustment to other members employed by that public board, institution, or agency.

Annual compensation shall not include the salary supplement received by a member

under KRS 157.197(2)(c), 158.6455, or 158.782 on or after July 1, 1996. Under no

circumstances shall annual compensation include compensation that is earned by a

member while on assignment to an organization or agency that is not a public

board, institution, or agency listed in subsection (4) of this section. In the event that

federal law requires that a member continue membership in the retirement system

even though the member is on assignment to an organization or agency that is not a

public board, institution, or agency listed in subsection (4) of this section, the

member's annual compensation for retirement purposes shall be deemed to be the

annual compensation, as limited by subsection (9) of this section, last earned by the

member while still employed solely by and providing services directly to a public

board, institution, or agency listed in subsection (4) of this section. The board of

trustees shall determine if any benefit or salary adjustment qualifies as annual

compensation. For an individual who becomes a member on or after July 1, 2008,

annual compensation shall not include lump-sum payments upon termination of

employment for accumulated annual or compensatory leave;

(11) "Age of member" means the age attained on the first day of the month immediately

following the birthdate of the member. This definition is limited to retirement

eligibility and does not apply to tenure of members;

(12) "Employ," and derivatives thereof, means relationships under which an individual

provides services to an employer as an employee, as an independent contractor, as

an employee of a third party, or under any other arrangement as long as the services

provided to the employer are provided in a position that would otherwise be

covered by the Kentucky Teachers' Retirement System and as long as the services

are being provided to a public board, institution, or agency listed in subsection (4)

of this section;

(13) "Regular interest" means:

(a) For an individual who becomes a member prior to July 1, 2008, interest at

three percent (3%) per annum;

(b) For an individual who becomes a member on or after July 1, 2008, but prior to

January 1, 2022, interest at two and one-half percent (2.5%) per annum for

purposes of crediting interest to the teacher savings account or any other

contributions made by the employee that are refundable to the employee upon

termination of employment; and

(c) For an individual who becomes a member on or after January 1, 2022, the

rolling five (5) year yield on a thirty (30) year United States Treasury bond as

of the end of May prior to the most recently completed fiscal year, except

that:

1. Once the member has at least sixty (60) months of service in the system

it shall mean interest at two and one-half percent (2.5%) per annum for

purposes of crediting interest to employee contributions in the

foundational benefit component or any other contributions made by the

employee to the foundational benefit component that are refundable to

the employee upon termination of employment; and

2. The board shall have the authority to adjust the regular interest rate for

individuals who become members on or after January 1, 2022, in

accordance with KRS 161.633 and 161.634;

(14) "Accumulated contributions" means the contributions of a member to the teachers'

savings fund, including picked-up member contributions as described in KRS

161.540(2), plus accrued regular interest;

(15) "Annuitant" means a person who receives a retirement allowance or a disability

allowance;

(16) "Local retirement system" means any teacher retirement or annuity system created

in any public school district in Kentucky in accordance with the laws of Kentucky;

(17) "Fiscal year" means the twelve (12) month period from July 1 to June 30. The

retirement plan year is concurrent with this fiscal year. A contract for a member

employed by a local board of education may not exceed two hundred sixty-one

(261) days in the fiscal year;

(18) "Public schools" means the schools and other institutions mentioned in subsection

(4) of this section;

(19) "Dependent" as used in KRS 161.520 and 161.525 means a person who was

receiving, at the time of death of the member, at least one-half (1/2) of the support

from the member for maintenance, including board, lodging, medical care, and

related costs;

(20) "Active contributing member" means a member currently making contributions to

the Teachers' Retirement System, who made contributions in the immediate

preceding fiscal year, for whom picked-up member contributions are currently

being made, or for whom these contributions were made in the immediate

preceding fiscal year;

(21) "Full-time" means employment in a position that requires services on a continuing

basis equal to at least seven-tenths (7/10) of normal full-time service on a fiscal

year basis;

(22) "Full actuarial cost," when used to determine the payment or payments that a

member must pay for service credit means the actuarial value of all costs associated

with the enhancement of a member's benefits or eligibility for benefit

enhancements, including health insurance supplement payments made by the

retirement system. The board may promulgate administrative regulations in

accordance with KRS Chapter 13A to provide the methodology for the assessment

of and procedures for the payment and collection of the full actuarial cost of the

purchased service. The actuary for the retirement system shall determine the full

actuarial value costs and actuarial cost factor tables as provided in KRS 161.400;

(23) "Last annual compensation" means the annual compensation, as defined by

subsection (10) of this section and as limited by subsection (9) of this section,

earned by the member during the most recent period of contributing service, either

consecutive or nonconsecutive, that is sufficient to provide the member with one (1)

full year of service credit in the Kentucky Teachers' Retirement System, and which

compensation is used in calculating the member's initial retirement allowance,

excluding bonuses, retirement incentives, payments for accumulated sick leave,

annual, personal, and compensatory leave, and any other lump-sum payment. For

an individual who becomes a member on or after July 1, 2008, payments for annual

or compensatory leave shall not be included in determining the member's last

annual compensation;

(24) "Participant" means a member, as defined by subsection (4) of this section, or an

annuitant, as defined by subsection (15) of this section;

(25) "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;

(26) "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;

(27) "University member" means an individual who becomes a member through

employment with an employer specified in subsection (4)(b) and (n) of this section;

(28) "Nonuniversity member" means an individual who becomes a member through

employment with an employer specified under subsection (4) of this section, except

for those members employed by an employer specified in subsection (4)(b) and (n)

of this section;

(29) "Accumulated employer contribution" means the employer contribution deposited

to a member's account through the supplemental benefit component and regular

interest credited on such amounts as provided by KRS 161.635 for nonuniversity

members and KRS 161.636 for university members;

(30) "Accumulated account balance" means:

(a) For members who began participating in the system prior to January 1, 2022,

the member's accumulated contributions; or

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

2022, the combined sum of the member's accumulated contributions and the

member's accumulated employer contributions;

(31) "Foundational benefit component" means the benefits provided by KRS 161.220 to

161.716 to individuals who become members on or after January 1, 2022, except

for the supplemental benefit component and retiree health benefits set forth in KRS

161.675; and

(32) "Supplemental benefit component" means:

(a) The benefit established pursuant to KRS 161.635 for individuals who become

nonuniversity members on or after January 1, 2022; or

(b) The benefit established pursuant to KRS 161.636 for individuals who become

university members on or after January 1, 2022.