RENDERED: OCTOBER 31, 2019

T O BE PUBLISHED

2018-SC-000193-TG

UNIVERSITY OF KENTUCKY, K/K/K

UK HEALTHCARE; AND MARK F.

NEWMAN, IN HIS OFFICIAL CAPACITY AS

EXECUTIVE VICE PRESIDENT FOR

HEALTH AFFAIRS,

UNIVERSITY OF KENTUCKY APPELLANTS

ON TRANSFER FROM COURT OF APPEALS

CASE NO. 2018-CA-000584-MR

V. FAYETTE CIRCUIT COURT NO. 17-CI-00479

SARAH R. MOORE; COMMONWEALTH OF

KENTUCKY, DEPARTMENT OF REVENUE;

AND DANIEL P. BORK, COMMISSIONER,

KENTUCKY DEPARTMENT OF REVENUE APPELLEES

AND

2018-SC-000194-TG

COMMONWEALTH OF KENTUCKY,

DEPARTMENT OF REVENUE AND

DANIEL P. BORK, IN HIS OFFICIAL

CAPACITY AS COMMISSIONER OF THE

KENTUCKY DEPARTMENT OF REVENUE APPELLANTS

ON TRANSFER FROM COURT OF APPEALS

CASE NO. 2018-CA-000585-MR

V. FAYETTE CIRCUIT COURT NO. 17-CI-00479

SARAH R. MOORE APPELLEE

OPINION OF THE COURT BY JUSTICE HUGHES

AFFIRMING IN PART, REVERSING IN PART, AND REMANDINGKentucky Revised Statutes (KRS) Chapter 45 includes a statutory

process for the collection of debts owed the Commonwealth. Using this

statutory framework, the University of Kentucky referred Appellee Sarah

Moore ’ s delinquent UK Healthcare 1 accounts to the Commonwealth of

Kentucky, Department of Revenue (the Department) for collection. The

Department ’ s collection efforts included imposition of a 25% collection fee and

interest as well as garnishment of Moore ’ s paychecks, bank accounts, and tax

refunds. Moore petitioned the circuit court for a declaration that the University

is not an agency within the executive branch as required by KRS 45.237(l)(a)

and therefore not authorized to refer its accounts to the Department. After

rejecting the University ’ s claim that sovereign immunity barred Moore ’ s action,

the circuit court agreed with Moore ’ s position, declaring the University is not in

the executive branch of state government for purposes of KRS 45.237 et seq.

Both the University and the Department appealed, and the appeals were

transferred from the Court of Appeals to this Court. For reasons stated below,

we affirm the circuit court ’ s decision that sovereign immunity does not bar this

action against the University, but reverse the court ’ s holding that the

University is not within the executive branch. Having addressed these

threshold issues, we remand this case to the circuit court for further

proceedings.

1 UK HEALTHCARE is the registered service mark used by the University of

Kentucky to brand the provision of medical services through the University Medical

Center and University clinics.

2I. FACTUAL AND PROCEDURAL BACKGROUND

Appellee Sarah R. Moore sought medical care for herself or one of her

dependent children at a University of Kentucky health care facility five times

between May 2011 and December 2012. When Moore failed to pay the medical

bills, UK Healthcare did not file a civil action against Moore to collect the

accounts, but instead certified each account as an “ agency ” debt and then

referred it to the Department of Revenue for collection. The Department

operates the Enterprise Collections Office to collect other agency-referred debt

and the University claimed the qualifying “ agency ” status pursuant to KRS

45.237(l)(a). The Department ’ s efforts to collect Moore ’ s UK Healthcare debt

proceeded in the standard manner with imposition of a 25% collection fee and

interest on the debt and then enforcement through garnishment of Moore ’ s

state and/or federal tax refunds and her bank accounts and paychecks. The

Department ’ s collection process for agency-referred debt does not include

securing a judgment against the debtor for the amount owed and thus no

judgment was ever obtained against Moore.

Moore filed suit against Defendants/Appellants University of KentuckyUK Healthcare and UK ’ s Executive Vice President for Health Affairs, Michael

Karpf, 2 (collectively referred to as “ UK ” ), and the Department of Revenue and its

Commissioner, Daniel P. Bork (collectively referred to as “ the Department ” ).

Moore ’ s complaint alleged that neither the University nor UK Healthcare is an

2 The position is currently held by Mark Newman, Karpfs successor.

3agency within the executive branch as required by KRS 45.237(l)(a), and thus

the statutory collection process is not available to them. Moore sought a

judgment declaring that UK and UK Healthcare may not legally refer Moore ’ s

debt to the Enterprise Collections Office for collection and consequently the

Department of Revenue 3 and/or the Enterprise Collections Office may not

legally undertake efforts to collect debt owed to UK, 4 including efforts such as

garnishing Moore ’ s bank accounts, wages and tax refunds. The complaint also

alleged that UK breached the contractual implied covenant of good faith and

fair dealing, and that both UK and the Department violated the Takings and

Due Process Clauses of the Fifth Amendment to the United States Constitution,

and violated Section 2 of the Kentucky Constitution by exercising absolute and

arbitrary power over Moore ’ s liberty and property.

Moore subsequently amended her complaint, leaving only her request for

declaratory relief. Contemporaneously, UK and the Department each moved

the trial court to dismiss the claims against them pursuant to Kentucky Rule of

Civil Procedure (CR) 12.02. UK maintained that it is a state agency that shares

the Commonwealth of Kentucky ’ s sovereign immunity. 5 The Department

moved for dismissal on the grounds that the circuit court did not have subject3 This “ Department of Revenue ” reference was added in the amended complaint

discussed infra.

4 Moore also asserted that the debt of similarly-situated persons could not

legally be referred by UK to the Enterprise Collections Office and collection of amounts

allegedly owed could not be legally undertaken by the Enterprise Collections Office.

5 UK also argued that as a state agency, UK properly referred its delinquent

accounts to the Enterprise Collections Office and has no vicarious liability for any acts

or omissions of the Department.

4matter jurisdiction to decide the “ agency ” question since the Kentucky Board of

Tax Appeals (KBTA) holds exclusive jurisdiction to hear actions regarding the

Department ’ s revenue-collection activities and Moore has not exhausted her

administrative remedies with the KBTA. Finding that Moore ’ s amended

complaint only sought a declaration of rights against a government entity, the

circuit court concluded that sovereign immunity did not bar its jurisdiction to

declare those rights.

In her amended complaint, Moore requested a declaration that UK is not

an agency, defined in KRS 45.237(l)(a) as an “ organizational unit or

administrative body in the executive branch of state government ” ; that the

University may not lawfully refer the accounts of UK Healthcare to the

Department of Revenue under KRS 45.237 et. seq. for collection; and that the

Department of Revenue may not lawfully collect such accounts. By separate

motion, Moore presented the narrow question of whether UK is an agency

“ within the executive branch. ” 6 Collectively, UK and the Department opposed

6 Moore ’ s memorandum in support of her separate Motion of Plaintiff for

Declaratory Judgment That the University of Kentucky is Not an Agency “ In the

Executive Branch of State Government ” stated:

The crux of this case, and the focus of this motion, is whether

state law allows the University to refer its accounts to the Department to

be collected in this manner [e.g., without obtaining a court judgment;

garnishing wages, bank accounts, tax refunds; and adding a 25%

collection fee to the accounts]

. In short, the issue is whether the

University is an agency “ in the executive branch of state government, ” as

required by the governing statutes. If the University is not an agency “ in

the executive branch, ” then the University may not refer its accounts to

the Department, and the Department may not collect the University ’ s

accounts in the manner described above.

5the declaratory judgment action and motion arguing pertinently that UK is part

of the executive branch; 7 Fayette Circuit Court lacks subject-matter

jurisdiction because Moore has not exhausted the administrative remedies

available to her; and sovereign immunity bars the declaratory judgment action

because Moore does not allege an ongoing violation of law and because the

declaratory/injunctive relief exception to sovereign immunity cannot be used to

obtain money or forgive debt.

Following an initial order rejecting the sovereign immunity claim, the

trial court entered an order and judgment granting Moore ’ s motion for

declaratory judgment, confined to the executive branch issue, stating:

[H]aving expressed the reasons for its decision in open court [and

those reasons being] incorporated herein by reference,

. . . [jJudgment shall be entered pursuant to the Kentucky Declaratory

Judgment Act that the defendant, University of Kentucky, is not

“ in the executive branch of state government ” for purposes of KRS

45.237 etseq. and KRS 12.010.

The trial court designated its judgment as final and appealable.

After the trial court denied UK ’ s and the Department ’ s separate motions

to alter, amend or vacate the order and judgment and again designated its

order final and appealable, 8 each filed a notice of appeal and a motion to

7 UK stated that while it is independent of the Governor in many respects, it

remains a part of the executive branch.

8 UK ’ s grounds for the motion were: 1) sovereign immunity bars a declaratory

action when the requested declaratory judgment could result in a monetary judgment

in another case or forum; 2) the circuit court ’ s analysis was flawed and incomplete

when it ignored KRS 131.130(11) and resulted in an impermissible advisory opinion;

and 3) the University is not a fourth branch of government. The Department ’ s

grounds were: 1) the circuit court made a fundamental error of law when it reasoned

that UK is not part of the executive branch of Kentucky state government; 2) during its

oral ruling from the bench, the circuit court improperly cited and relied upon an

6transfer their appeal to this Court. This Court accepted transfer of the ensuing

appeals pursuant to CR 74.02.

II. ANALYSIS

The only two questions before the Court are whether the University of

Kentucky is within the executive branch for purposes of KRS 45.237 et seq.,

and, if so, whether sovereign immunity bars this declaratory judgment action

against the University and the Department. These questions of law are

reviewed de novo. Jacobsen v. Commonwealth, 376 S.W.3d 600, 606 (Ky.

2012).

Before addressing the questions presented, we note that numerous other

issues and arguments were presented to the trial court, and the parties ’ briefs

to this Court largely restate those arguments, but those issues are beyond the

scope of the circuit court ’ s order and judgment. When the circuit court decided

that the University is not part of the executive branch for purposes of KRS

45.237 et seq., it consequently decided, although not expressly stated, that the

entire bill collection process under KRS 45.237 et seq. was not properly

applicable to UK and the administrative remedies were not properly applicable

as well. Consequently, premised upon a finding that the University is an

agency within the executive branch, the Department ’ s argument that the

circuit court did not have subject-matter jurisdiction because Moore failed to

exhaust her administrative remedies before filing this action was not decided

unpublished Franklin Circuit Court decision; and 3) the Department has authority to

collect UK ’ s debts under KRS 131.130(11).

7by the circuit court and is not an issue presently before this Court. Neither are

any other issues raised in the briefs, such as Moore ’ s other arguments related

to the impropriety of employing KRS 45.237 et seq. to collect her UK

Healthcare accounts, and UK ’ s and the Department ’ s arguments that KRS

131.130(11) permits state universities to refer debts to the Department for

collection.

I. The University of Kentucky Is within the Executive Branch of State

Government

In 2004, the General Assembly enacted a new section of KRS Chapter 45

relating to collection of debts owed the Commonwealth. 2004 Ky. Acts, eh.

192. As noted, Moore ’ s complaint challenged the Department ’ s debt collection

process for debt certified by UK Healthcare, which included garnishing her

paychecks, bank accounts, and tax refunds without the amount Moore owed to

UK Healthcare ever being reduced to judgment. Moore challenges UK ’ s and

the Department ’ s collection process pursuant to KRS Chapter 45 by first

seeking a declaration that UK Healthcare is not an agency “ in the executive

branch of state government ” within the ambit of KRS 45.238(1), a declaration

that would render UK HealthCare ’ s delinquent account referral to the

Department and the ensuing collection process legally improper. In short, if

UK is not in the executive branch, Moore prevails in this case.

KRS 45.238(1) states: “ Debts that are certified by an agency or by a local

government as provided in KRS 45.237 shall be referred to the [Department of

Revenue] for collection. The [Department of Revenue] shall be vested with all

8the powers necessary to collect any referred debts. ” 9 For purposes of KRS

45.238(1), “ agency ” means “ an organizational unit or administrative body in

the executive branch of state government as defined in KRS 12.010. ” KRS

45.237(l)(a). KRS 12.010(1) defines “ organizational unit ” as “ any unit of

organization in the executive branch of the state government that is not an

administrative body, including but not limited to any agency, program cabinet,

department, bureau, division, section or office. ” 10 In turn, KRS 12.010(8)

9 KRS 45.238(1) was last amended in 2013 with incorporation of the text “ or by

a local government. ”

10 Definitions are provided within KRS 12.010 for every organizational entity

identified except “ agency ” and “ bureau. ”

KRS 12.010 provides:

In [KRS Chapter 12, Executive Branch Administrative Organization], and

throughout the Kentucky Revised Statutes where applicable and

appropriate unless the context requires otherwise:

(1) “ Organizational unit ” means any unit of organization in the executive

branch of the state government that is not an administrative body,

including but not limited to any agency, program cabinet, department,

bureau, division, section or office;

(2) “ Department ” means that basic unit of administrative organization of

state government, by whatever name called, designated by statute or by

statutorily authorized executive action as a “ department, ” such

organization to be headed by a commissioner;

(3) “ Division ” means a major subdivision of a department established by

statute or by statutorily authorized administrative action, such to be

headed by a director;

(4) “ Branch ” means a small grouping of logical workforce personnel, such

to be headed by a manager;

(5) “ Section ” means a smaller grouping within a branch, such to be

headed by a supervisor;

(6) “ Unit ” means the smallest grouping of coordinated employees, such to

be headed by a leader;

(7) “ Office ” means a staff support or administrative function and shall be

a major subdivision of a program cabinet only, such to be headed by an

executive director;

(8) “ Administrative body ” means any multi-member body in the executive

branch of the state government, including but not limited to any board,

9defines an “ administrative body ” as “ any multi-member body in the executive

branch of the state government, including but not limited to any board,

council, commission, committee, authority or corporation, but does not include

‘ branch, ’ ‘ section, ’ “ unit ’ or ‘ office. ’ ” 11

KRS 12.010(1) and KRS 12.010(8) place limits on the definitions of

“ organizational unit ” and “ administrative body ” by informing the reader not

only what each is, but also by stating what it is not, and by providing examples

of entities which would qualify. “ University ” or “ institution ” 12 is not a listed

council, commission, committee, authority or corporation, but does not

include “ branch, ” “ section, ” “ unit ” or “ office ” ;

(9) “ Program cabinet ” means a group of departments, or departments and

administrative bodies, designated by statute or statutorily authorized

executive action as a “ program cabinet. ”

11 KRS 12.010(9) ’ s definition of “ program cabinet, ” along with KRS 12.015,

explains administrative bodies are included in an existing program cabinet or

department.

KRS 12.015 states:

Unless specifically provided otherwise, each administrative body

established by statute or statutorily authorized executive action shall be

included for administrative purposes in an existing department or

program cabinet. When an administrative body is established and the

law establishing it does not specify the department or program cabinet

within which the body is to be included, the Governor shall assign the

body to an existing department or program cabinet in accordance with

this chapter.

12 See KRS 164.001(12): “ ‘ Institution ’ means a university, college, community

college, health technology center, vocational-technical school, technical institute,

technical college, technology center, or the Kentucky Community and Technical

College System. ” See also KRS 11.080: “ As used in KRS 11.090 to 11.110, ‘ agency ’

includes any department, program cabinet, institution, board, commission, office or

agency of the state. ”

10example under either the “ organizational unit ” or “ administrative body ”

definitions. 13

Moore focused her motion for declaratory judgment on the premise that

the University is not in the executive branch of state government, making the

determination of whether the University is an “ organizational unit, ” an

“ administrative body, ” or neither, a non-issue before the circuit court,

assuming she prevailed. Similarly, the circuit court only declared that

University of Kentucky is not in the executive branch for purposes of KRS

45.237 et seq. and KRS 12.010. The circuit court relied in part on the General

Assembly ’ s action in 1952 when it removed the University of Kentucky from the

Department of Education and also this Court ’ s recent decision in

Commonwealth ex rel. Beshear v. Commonwealth ex rel. Bevin, 498 S.W.3d 355

(Ky. 2016) (Beshear}. UK and the Department argue that the circuit court

erred when it held that University of Kentucky is not within the scope of KRS

45.237 and KRS 45.238. Because UK ’ s and the Department ’ s arguments

overlap to some extent, we will address them collectively.

In support of their position that the University is part of the executive

branch, Appellants rely on multiple statutes and several cases. They cite KRS

49.070(1) (stating in part “ state institutions of higher education under KRS

Chapter 164 are agencies of the state ” ); Withers v. University of Kentucky, 939 * 11

13 Compare KRS 49.070(1): “ For purposes of KRS 49.060 [which waives the

Commonwealth ’ s sovereign immunity defense for negligence claims arising from its

agent acting within the scope of his employment], state institutions of higher

education under KRS Chapter 164 are agencies of the state. ”

11S.W.2d 340, 343 (Ky. 1997), explaining that the University of Kentucky

“ operates under the direction and control of central state government; ” 14 and

KRS 164.225 (expressly stating that the University of Kentucky is “ an

independent agency and instrumentality of the Commonwealth ” ). They also

cite Beshear, 498 S.W.3d at 380, for its reiteration that “ universities are state

agencies ” and explanation that state universities are part of the executive

branch, even though universities are somewhat different than program

cabinets and boards directly under the Governor ’ s control. Noting that the

Kentucky Constitution requires the University of Kentucky to be within one of

the three

— and only three

— branches of government, Appellants insist it can

logically only be within the executive branch. As noted supra, Moore relies on

the General Assembly ’ s removal of the University from the Department of

Education in 1952 as well as other statutes and portions of Beshear, 498

14 As noted supra, KRS 49.070(1) states: “ For purposes of KRS 49.060 [which

waives the Commonwealth ’ s sovereign immunity defense for negligence claims arising

from its agent acting within the scope of his employment], state institutions of higher

education under KRS Chapter 164 are agencies of the state. ” At the time Withers, 939

S.W.2d 340, was decided, KRS 49.070(1) was numbered KRS 44.073(1) and KRS

49.060 was numbered KRS 44.072. Withers stated:

The language of KRS 44.073(1) establishes the University of

Kentucky as an agency of the state and KRS 446.010(31) defines “ state

funds ” or “ public funds ” in such a manner as to include sums paid to the

University of Kentucky Medical Center for health care sciences.

Numerous other statutes contained in KRS 164 establish

unmistakably that the University of Kentucky operates under the

direction and control of central state government and that it is funded

from the State Treasury.

Id. at 343.

12S.W.3d 355, to support her argument. After review, we conclude Appellants ’

position regarding UK ’ s status within the executive branch is persuasive.

We begin with the Kentucky Constitution which established the three

branches of government

— legislative, executive, and judicial

— with each

branch (or department as the Constitution refers to them) being separate and

having its own powers. Section 27. No person(s) of one department “ shall

exercise any power properly belonging to either of the others, except in the

instances

. . . expressly directed or permitted [by the Constitution]. ” Section

28. As this Court has held, there is no autonomous “ fourth branch of

government ” under these constitutional provisions. LRC v. Brown, 664 S.W.2d

907, 917 (Ky. 1984) (Constitution recognizes only three branches and

Legislative Research Commission resides in legislative branch, not outside it).

Moore asserts that the term “ executive branch ” is not used in the

Kentucky Constitution and as used in KRS 45.237, and other statutes

including the Executive Branch Code of Ethics, it has a statutory meaning that

does not raise constitutional issues. She maintains that when one examines

the term ’ s statutory usage, it relates to the operational authority that the

Governor or other elected official may exert over the agency or entity in

question and that actual executive control by the Governor is the touchstone

for an agency being deemed to be in the executive branch for purposes of KRS

45.237 et seq. However, a cardinal rule of statutory construction is “ [a]ll words

and phrases [in the statute] shall be construed according to the common and

approved usage of language, but technical words and phrases, and such others

13as may have acquired a peculiar and appropriate meaning in the law, shall be

construed according to such meaning. ” KRS 446.080(4). We do not find

“ executive branch ” to be a technical word or phrase and therefore, construe it

according to its common usage.

Moreover, we agree with Appellants that the University is principally a

creature of the legislature, and must fall within one of the three recognized

branches. LRC, 664 S.W.2d at 917. Moore ’ s premise that the University may

exist in some type of limbo or intermediate classification across the three

branches finds no support in Kentucky law. Recognizing that the University

must be categorized in one of the three branches, we consider Moore ’ s

argument that the General Assembly specifically removed public universities

from the executive branch in 1952 when they were removed from the

Department of Education.

Prior to its 1952 amendment, KRS 156.010(3) pertinently provided

that the University of Kentucky and state teachers colleges, 15 with their

governing boards, “ are included in the Department of Education and

constitute a division thereof, but each shall continue to exercise all the

functions conferred upon it by law. ” 16 In 1952, the General Assembly

15 Eastern Kentucky State Teachers College, Western Kentucky State Teachers

College, Morehead State Teachers College, and Murray State Teachers College were the

other named colleges.

16 In contrast to the administrative independence conferred upon University of

Kentucky and state colleges, KRS 156.010(2) provided that the “ Department of

Education shall exercise all administrative functions of the state in relation to the

management and control of the public common schools, of vocational education and

14removed the University of Kentucky and the state teachers colleges from

the Department of Education, amending KRS 156.010(3) to reflect the

removal and enacting KRS 164.285, which states:

KRS 156.010 and 64.640 and any other statute, to the extent that

they provide that the University of Kentucky, Eastern Kentucky

State University, Western Kentucky State University, Murray State

University, and Morehead State University shall be included in the

Department of Education and constitute a division thereof, are hereby repealed.

Moore equates the University ’ s removal from the Department of Education with

removal from the entire organizational structure of the executive branch.

Moore additionally views KRS 164.225 and KRS 164.160 as support for

her position, given the Governor ’ s lack of organizational control over the

University. KRS 164.225, entitled “ Board ’ s exclusive jurisdiction over

appointments, qualifications, compensation, promotions, and retirement

programs, ” also enacted in 1952, identified the University of Kentucky as “ an

independent agency and instrumentality of the Commonwealth. ”

KRS 164.225 states in its entirety:

Anything in any statutes of the Commonwealth to the contrary

notwithstanding, the power over and control of appointments,

qualifications, salaries, and compensation payable out of the State

Treasury or otherwise, promotions and official relations of all

employees of the University of Kentucky, as provided in KRS

164.220, and, subject to any restrictions imposed by general law,

the retirement ages and benefits of such employees shall be under

the exclusive jurisdiction of the board of trustees of the University

of Kentucky, which shall be an independent agency and

rehabilitation, of the state institutions of higher education for Negroes, and of the

Kentucky School for the Blind. ”

15instrumentality of the Commonwealth. No relative of a board of

trustee member shall be employed by the university. 17

(Emphasis added.)

KRS 164.160 further provides that the board of trustees, vested with the

government of the University in KRS 164.131,

shall be a body corporate, under the name of board of trustees of

the University of Kentucky, with the usual corporate powers, and

shall possess all the immunities, rights, privileges and franchises

usually attaching to the governing bodies of educational

institutions. It may receive, hold and administer, on behalf of the

university, subject to the conditions attached, all revenues

accruing from endowments, appropriations, allotments, grants or bequests, and all types of property.

In Beshear, 498 S.W.3d at 380, we specifically stated that, “ Universities

are

. . . not part of the executive branch in the same sense as the program

cabinets and boards directly under the Governor ’ s control. ” Moore construes

Beshea r's holding that the Governor ’ s authority over program cabinets differs

fundamentally from his authority over the relatively independent boards of the

state universities as further evidence that UK is not part of the executive

branch.

Beginning with the language of KRS 164.225 and KRS 164.285, we

reiterate that in interpreting a statute, “ we must look first to the plain language

of [the] statute and, if the language is clear, our inquiry ends. ” Univ. of

Louisville v. Rothstein, 532 S.W.3d 644, 648 (Ky. 2017) (citation omitted). A

17 The last quoted sentence of KRS 164.225 regarding relatives of

trustees was added in 1992.

16plain reading of these unambiguous statutes does not suggest that by removing

the University from the Department of Education and stating the University is

“ an independent agency and instrumentality of the Commonwealth, ” the

General Assembly completely removed the University from the executive branch

of government. As discussed supra, the executive branch includes many

organizational units, administrative boards, agencies, and other entities leaving

a wide range of possibilities for categorizing the University outside the

Department of Education but still within the executive branch.

Turning next to our 2016 decision in Beshear, that case addresses the

Governor ’ s authority to reduce state universities ’ budgetary allotments or

otherwise direct them not to spend previously appropriated funds. 498 S.W.3d

355, 380-81. In Beshear we recognized that although the state universities are

part of the executive branch hierarchy, they maintain statutorily recognized

independence in many respects. Although the issue in Beshear was not

whether the state universities are part of the executive branch, Beshear ' s

review of the characteristics of universities as compared to other executive

branch entities is useful to an understanding of the executive branch

organization scheme. We do not read Beshear, as Moore urges, to state that

University of Kentucky is independent of the executive branch.

The Beshear Court responded to the question of whether the state

universities are under the Governor ’ s budgetary control as follows:

Although the Universities are state agencies and are attached to

the executive branch for budgetary purposes, they are not part of

17the executive branch in the same sense as the program cabinets

and boards directly under the Governor's control.

Unlike those cabinets and boards, the Universities ’ boards

are separate “ bod[ies] corporate, with the usual corporate powers. ”

KRS 164.350; see also KRS 164.460 (same for the University of

Kentucky); KRS 164.830(1) (same for the University of Louisville)

. They are expressly excluded from being part of the Department of

Education. KRS 164.285. In some ways, they are akin to

municipal or public corporations, having a separate existence from

the main body of government, although retaining many of the

government's characteristics, such as immunity from suit.

The Universities ’ boards have close to plenary power over the

operation of their respective institutions. For example, they have

exclusive control over appointments, qualifications, and salaries of

faculty and employees. KRS 164.365(1); KRS 164.220 (UK); KRS

164.830 (U of L).

There are, of course, some limits on how the boards operate.

For example, certain expenditures must be approved by the

Finance and Administration Cabinet or the Council on Postsecondary Education. See KRS 164A.575 (requiring cabinet

approval for real property purchases); KRS 164.020(1 l)(a) (giving

council power to approve certain capital construction projects).

But that does not otherwise bring the financial decision-making

— the choice whether to spend funds

— back within the purview of the

Governor.

The Governor also has some say with respect to the

Universities ’ boards. For example, he gets to appoint most of the

members of the boards. See KRS 164. 131(l)(e) (UK); KRS

164.821(1) (U of L); KRS 164.321(l)(a) (other universities). [ 18 ] And

he may remove members for cause. See KRS 63.080(2); KRS

164. 131(l)(d) (UK); KRS 164.82 l(l)(b) (U ofL); KRS 164.321(10)

(other universities); KRS 164.325 (specifically applying 63.080(2) to

boards of regents). [ 19 ]

18 These three statutes have since been amended by 2017 Ky. Acts ch. 101

(Senate Bill 107) to add, pertinently, the qualification that “ The members appointed by

the Governor shall be subject to confirmation by the Senate. ”

19 After a dispute arose as to the Governor ’ s authority under KRS 12.028 to

abolish and reorganize the board of a state university, the General Assembly passed

18These provisions, however, do not undermine the university

boards ’ fundamental independence. A large portion of this

independence is financial self-control. The authority over the

expenditure of funds appropriated to the Universities has been

statutorily lodged with independent boards that head these

institutions. Those boards may decline to spend funds

appropriated to them, in which case the funds will lapse. But by

giving that authority to the boards, the General Assembly has

necessarily deprived the Governor of it. We thus conclude that the

Governor cannot order the boards of the Universities not to spend

funds appropriated to them.

The Governor ’ s authority with respect to the boards differs

fundamentally from his authority with respect to those state

entities and employees that answer to him, such as the program

cabinets and secretaries who head those cabinets. In this sense,

the Universities are much more like private entities. And their

authority over spending their money is largely independent of the

executive branch.

498 S.W.3d at 380-81 (footnotes omitted).

Although Moore stresses the Governor ’ s lack of actual operational control

over the University, the fact that the University maintains a level of statutorily

granted autonomy, which may not be enjoyed by other executive branch

entities, does not exclude it from the executive branch. Indeed, Beshear does

not hold otherwise.

In the case at bar, the circuit court simply declared that the University is

not “ in the executive branch of state government ” for purposes of KRS 45.237

et seq. and went no further with its analysis. The circuit court erred in this

Senate Bill 107 in 2017. See Bevin v. Beshear, 526 S.W.3d 89 (Ky. 2017). KRS

63.080; 164.131; 164.821; and 164.321 were amended to reflect Senate Bill 107 ’ s

provision of a specific statutory path for a governor to disband and reconstitute a

university

’ s governing board and the process for the removal of individual members of

a university ’ s governing board. See id. at 90. We find nothing in the amendments

that would change our analysis in Beshear, 498 S.W.3d at 380-81.

19conclusion. KRS 164.225 plainly provides that the University is “ an

independent agency and instrumentality of the Commonwealth, ” and this

Court has held that it is attached to the executive branch. Beshear, 498

S.W.3d at 380.

Finally, even if a particular entity is within the executive branch, the

General Assembly may condition application of other statutes to it based on the

position the entity occupies within the executive branch. In short, the

University of Kentucky may be included 20 or excluded from the definition of

“ agency ” in regard to particular statutes, i.e., being an agency for purposes of

one statute but not necessarily others. 21 As to the statutes at hand, KRS

45.237 et seq., we only declare that the University is in the executive branch of

state government. On remand, the circuit court must determine whether UK is

an executive branch entity entitled to refer debts to the Department of Revenue

for collection pursuant to KRS 45.238.

II. Sovereign Immunity Does Not Bar This Declaratory Judgment Action

We turn next to whether sovereign immunity bars Moore ’ s declaratory

judgment action, an argument rejected by the circuit court ten months before it

decided the executive branch issue. As we observed in Beshear v. Hay don

Bridge Co., 416 S.W.3d 280, 286 (Ky. 2013) (Haydon Bridge IQ, “ sovereign

20 See, e.g., KRS 49.070(1): “ For purposes of KRS 49.060 [which waives the

Commonwealth ’ s sovereign immunity defense for negligence claims arising from its

agent acting within the scope of his employment], state institutions of higher

education under KRS Chapter 164 are agencies of the state. ”

21 In other chapters of KRS beyond KRS 45.237 et seq., agency is defined

differently. See KRS 11.080 referenced supra in n. 12.

20immunity is a common law doctrine, a ‘ bedrock component ’ of American

government, which prohibits claims ‘ against the government treasury absent

the consent of the sovereign. ” ’ (Citations omitted.) The circuit court correctly

discerned that it does not bar this declaratory judgment action.

The Declaratory Judgment Act is contained in KRS Chapter 418.

Pertinently, KRS 418.040 states:

In any action in a court of record of this Commonwealth having

general jurisdiction wherein it is made to appear that an actual

controversy exists, the plaintiff may ask for a declaration of rights,

either alone or with other relief; and the court may make a binding

declaration of rights, whether or not consequential relief is or could

be asked.

KRS 418.045 provides examples of when a declaratory judgment may be

requested and specifically recognizes that a declaratory judgment may be

granted when a person ’ s rights are affected by a statute or other government

regulation.

After the court has issued a declaration of rights by judgment, order or

decree, further relief based upon that declaration may be granted whenever

necessary or proper. KRS 418.055. That relief may be requested in the same

proceeding wherein the declaration issued or it may be sought by petition in an

independent action. Id. Under the Declaratory Judgment Act, specifically KRS

418.055, declaratory relief may be available even though an injunction may

not. See, e.g., Beshear v. Haydon Bridge Co., Inc., 304 S.W.3d 682 (Ky. 2010)

(Haydon Bridge I); Haydon Bridge II, 416 S.W.3d 280.

21Recognizing that UK has sovereign immunity for certain claims under

Withers, 939 S.W.2d at 342-43, and its progeny, the circuit court relied

primarily on Commonwealth v. Kentucky Retirement Systems, 396 S.W.3d 833

(Ky. 2013), in concluding that it had authority to declare the rights of the

parties in this case, particularly whether UK Healthcare is within the executive

branch for purposes of KRS 45.237 et seq., an issue of law. In Retirement

Systems, this Court held that sovereign immunity did not bar a plaintiff from

seeking a declaration of rights under the Declaratory Judgment Act against the

Commonwealth. Id. at 835. The plaintiffs in that case were a group of county

employees seeking a declaration that a particular statute affecting their

retirement benefits was unconstitutional. Id. at 833.

Both UK and the Department maintain that a declaratory judgment

against them in the context of this case is barred by sovereign immunity. * 22

“ Sovereign immunity is founded on the notion that the resources of the state,

its income and property, cannot be compelled as recompense for state action

that harms a plaintiff through the ordinary suit-at-law process. ” Retirement

Systems, 396 S.W.3d at 836; accord Haydon Bridge II, 416 S.W.3d at 286-87.

Immunity from suits seeking monetary damages exists for the state and its

agencies except where it has been explicitly waived by the legislature. See

Furtula, 438 S.W.3d at 305; Withers, 939 S.W.2d at 346 (quoting Edelman v.

22 UK can only have governmental immunity. Furtula v. Univ. of Kentucky, 438

S.W.3d 303, 306 n. 1 (Ky. 2014). Because no issue is presented as to the specific type

of immunity UK enjoys, and caselaw frequently uses the term “ sovereign immunity ”

when discussing the immunity of state agencies, id. (citations omitted), we maintain

UK ’ s sovereign immunity terminology.

22Jordan, 415 U.S. 651, 673 (1974)). UK and the Department posit that, if

successful, Moore will be using the requested declaratory judgment to recover

money, in the form of a refund, from UK and the State Treasury, and as a

consequence, sovereign immunity bars her claim.

In Haydon Bridge II, 416 S.W.3d at 293-94, 23 this Court recognized the

declaratory and injunctive 24 relief exceptions to sovereign immunity. UK,

however, insists that this Court has not defined the precise parameters of the

declaratory and injunctive relief exceptions and suggests that we follow the

federal courts by imposing limitations on the Ex Parte Young, 209 U.S. 123

(1908), doctrine allowing prospective injunctive relief. As we stated in Haydon

Bridge II,

[p ] ursuant to the Young exception, a federal court may grant

prospective injunctive relief against a state officer to compel

compliance with federal law, whether constitutional or statutory.

However, the exception is not applicable to an action directly

against the state or state agency, only against a state officer, and it

cannot be used to compel a state officer to comply with state law.

416 S.W.3d at 289 (citations omitted).

23 The Haydon Bridge plaintiffs sought both declaratory and injunctive relief in

their original, first amended, and second amended petitions, 416 S.W.3d at 284-85,

and again characterized the relief sought in the third amended complaint as

declaratory and injunctive, id. at 286. A review of Haydon Bridge I and Haydon Bridge

II reveals that the plaintiffs ’ request for declaratory relief was the primary issue in

Haydon Bridge I, and their request for injunctive relief sought in the third amended

complaint filed after Haydon Bridge / was decided, was the primary issue in Haydon

Bridge II. Haydon Bridge II held that the prospective injunctive relief was proper, but

the retrospective injunctive relief, return of transferred funds, was not.

24 To the extent UK suggests that Moore is currently pursuing injunctive relief,

we do not agree. Moore only seeks a declaration of rights. The Department ’ s brief

indicates it voluntarily suspended collection activities after Moore filed the instant

action.

23UK cites Verizon Maryland, Inc. v. Public Service Commission of Maryland,

535 U.S. 635, 645 (2002), Green v. Mansour, 474 U.S. 64, 73 (1985), and

Seminole Tribe of Florida v. Florida, 517 U.S. 44, 74 (1996), respectively, to

persuade this Court that “ the declaratory and injunctive relief exception ” 1)

should be limited to situations when someone “ alleges an ongoing violation of

. . . law and seeks relief properly characterized as prospective ” ; 2) does not

apply when the plaintiff may use a declaratory judgment to obtain a monetary

judgment against the state treasury in another proceeding; and 3) does not

apply if there is another administrative or judicial process for obtaining similar

relief. Citing Green, the Department also contends that Moore cannot obtain a

declaratory

judgment in this action and use the judgment in a separate suit for

monetary damages against the Department and UK, the rule being that a

declaratory judgment action that will be used to establish liability for monetary

relief against the state is barred by sovereign immunity.

Although UK and the Department view this case as an opportunity for

this Court to obtain guidance from federal law, especially as to foreclosure of

both declaratory and injunctive relief when a declaration may be used to obtain

monetary relief from the state treasury, the Commonwealth ’ s declaratory

judgment statutes, referenced in pertinent part supra, are unambiguous that

declaratory relief is not predicated on whether associated future consequential

relief may be requested. Furthermore, the Commonwealth ’ s existing

jurisprudence contains the guidance necessary to address whether sovereign

immunity bars Moore ’ s claim for a declaratory judgment, the only claim within

24her amended complaint ruled on by the circuit court. As to the availability of

injunctive relief, “ [ujnless and until some demand is made, there is no

justiciable issue before the Court for determination. The Court will not render

advisory opinions or consider matters which may or may not occur in the

future. ” Nordike v. Nordike, 231 S.W.3d 733, 739 (Ky. 2007) (citations,

quotation marks, and modifications omitted). We turn to the question of

whether sovereign immunity bars the circuit court from issuing a declaratory

judgment in this action.

In Retirement Systems, members of the County Employee Retirement

System, administered by the Kentucky Retirement Systems, filed an action

seeking a declaration that KRS 61.637(1), a statute regarding a retired

employee ’ s right to receive retirement benefits upon reemployment by the

public employer, is unconstitutional. 25 396 S.W.3d at 835. The

Commonwealth moved for dismissal on the basis of sovereign immunity,

asserting its immunity is not waived in declaratory judgment actions, but the

trial court denied that motion. Id. at 836. On interlocutory appeal, 26 this

Court agreed with the trial court that a declaratory judgment action is not a

claim for damages, but rather a request that the plaintiffs rights under the law

be declared. Id. at 838.

25 The original complaint also sought injunctive relief but that request was later

“ dropped. ” 396 S.W.3d at 836.

26 Pursuant to Breathitt County Board of Education v. Prater, 292 S.W.3d 883

(Ky. 2009), the Commonwealth was entitled to an immediate appeal of the denial of its

sovereign immunity claim.

25“ [A declaratory judgment action] is qualitatively different from [an action]

requiring the state to pay out the people ’ s resources as damages for state

injury to a plaintiff. ” Id. at 839. “ There is no harm to state resources from a

declaratory judgment. When the state is a real party in interest, the state is

merely taking a position on what a plaintiffs rights are in the underlying

controversy. ” Id. at 838. “ When statutory

. . . rights are adjudicated, the state

is inevitably affected in some manner. There simply can be no sovereign

immunity when [a court is asked to declare someone ’ s rights under a statute].

The state is not above its own

. . . laws. ” Id. at 840.

Retirement Systems makes clear that the state is not sovereignly immune

from a declaratory

judgment action. Consequently, the circuit court acted

within its jurisdiction when it entered declaratory judgment regarding UK ’ s

status vis-a-vis the executive branch of state government. As to UK ’ s and the

Department ’ s unripe argument that sovereign immunity bars monetary

injunctive relief flowing from a declaratory judgment, “ it is also true that in

subsequent

. . . actions to enforce declared rights, the immunity issue could be

relevant if the revenue or property of the state would be affected. ” Id.; see

Haydon Bridge II, 416 S.W.3d 280. At this juncture, UK ’ s status as an agency

for purposes of KRS 45.237 et seq. and other issues that would necessarily be

addressed preliminary to any monetary relief remain undecided.

III. CONCLUSION

For the foregoing reasons, we affirm the circuit court ’ s decision that

sovereign immunity does not bar this declaratory action against the University

26of Kentucky, but reverse the circuit court ’ s decision that the University of

Kentucky is not within “ the executive branch of state government ” for purposes

of KRS 45.237 et seq. Accordingly, we remand this case for further

proceedings consistent with this Opinion.

All sitting. All concur.

27COUNSEL FOR UNIVERSITY OF KENTUCKY,

A/K/A UK HEALTHCARE; AND MARK F.

NEWMAN, IN HIS OFFICIAL

CAPACITY AS EXECUTIVE VICE

PRESIDENT FOR HEALTH AFFAIRS,

UNIVERSITY OF KENTUCKY:

Kevin G. Henry

Bryan Howard Beauman

Joshua Michael Salsburey

Sturgill, Turner, Barker & Moloney PLLC

William Thro

Office of Legal Counsel

University of Kentucky

COUNSEL FOR COMMONWEALTH OF

KENTUCKY, DEPARTMENT OF REVENUE;

AND DANIEL P. BORK, IN HIS OFFICIAL

CAPACITY AS COMMISSIONER OF THE

KENTUCKY DEPARTMENT OF REVENUE:

Mark Stephen Pitt

Stephen Chad Meredith

Matthew Kuhn

Office of the Governor

Frank L. Dempsey

Frankfort, Kentucky

Raymond Campbell Connell

Department of Revenue

COUNSEL FOR SARAH R. MOORE:

William L. Davis

Lexington, Kentucky

E. Douglas Richards

E. Douglas Richards, PSC

28COUNSEL FOR COMMONWEALTH

OF KENTUCKY, DEPARTMENT OF

REVENUE; AND DANIEL P. BORK,

COMMISSIONER, KENTUCKY

DEPARTMENT OF REVENUE:

Mark Stephen Pitt

Stephen Chad Meredith

Matthew Kuhn

Office of the Governor

Frank L. Dempsey

Frankfort, Kentucky

Raymond Campbell Connell

Department of Revenue

COUNSEL FOR AMICUS CURIAE:

MOREHEAD STATE UNIVERSITY:

Freddi J. Vescio Fitzpatrick

General Counsel

KENTUCKY EQUAL JUSTICE CENTER:

Benjamin Carter

Ben Carter Law, PLLC

KENTUCKY JUSTICE ASSOCIATION:

Kevin Crosby Burke

Jamie Kristin Neal

Burke Neal PLLC

KENTUCKY COMMUNITY AND TECHNICAL

COLLEGE SYSTEM (KCTCS); WESTERN KENTUCKY

UNIVERSITY; EASTERN KENTUCKY UNIVERSITY;

MOREHEAD STATE UNIVERSITY; MURRAY STATE

UNIVERSITY; AND NORTHERN KENTUCKY

UNIVERSITY:

Brent Robert Baughman

Melissa Norman Bork

Kyle William Miller

Bingham Greenebaum Doll, LLP

29APPALRED LEGAL AID:

Evan Barret Smith

Appalred Legal Aid

LEGAL AID OF THE BLUEGRASS:

Joshua Bryan Crabtree

Karen Hoskins Ginn

Legal Aid of the Bluegrass

KENTUCKY LEGAL AID:

Amanda Anderson Young

Kentucky Legal Aid

LEGAL AID SOCIETY OF LOUISVILLE:

Neva-Marie Polley Scott

Legal-Aid Society of Louisville

30