Opinion ID: 2461858
Heading Depth: 1
Heading Rank: 12

Heading: trust and agency fund transfers

Text: Under a traditional statutory scheme, the General Assembly has created what are called trust and agency funds. Basically, when any affected agency, board, commission, or other entity of state government receives fees, rental, sales, bond proceeds, gifts, or other income, those monies are specifically appropriated by the General Assembly to those units of government. Budget, Part II, Trust and Agency Funds; KRS 45.253. In the present budget bill, and based on the same premise of the financial condition of the state, the General Assembly provided for the suspension of enumerated statutes to provide for the transfer of certain agency and special funds to the general fund. Budget Memorandum, at i. [9] Not only does the budget document provide for the transfers, but they are also authorized by statute. KRS 48.315. [10] In each of the challenged transfers of funds, the enabling act created a reduction in the funds available to the affected agency. The trial court upheld the validity of these transfers, declaring that the General Assembly has the authority under Section 15 of the Kentucky Constitution and under KRS 48.315 to suspend, for the duration of the biennium, sections of the Kentucky Revised Statute that pertain to trust and agency funds. We agree in part. We repeat ourselves when we say that the General Assembly has, constitutionally speaking, the power in a budget bill to repeal or amend the manner in which public funds are used. Ky. Const. Sec. 51, the title section, has not been violated by the matters clearly relating to appropriations. What we decide is simply that the transfers of funds which are merely temporary, determinable suspensions of the operation of the statutes relating to appropriations of public funds are within the legislative authority as set out in SB 294 and Ky. Const. Sec. 51, the amendment section. However, the transfers of funds which relate to appropriations of private contributions cannot be termed suspensions or modifications of the operation of the statutes. Because the General Assembly has no authority to transfer private funds to the general fund, the transfer of money from agencies in which public funds and private employee contributions are commingled, and cannot be differentiated, is unconstitutional. Diversions from the Kentucky Employees Retirement System, County Employees Retirement System, State Police Retirement System, and Teachers' Retirement System fall within this category, as do Workers' Compensation and Workers' Claims Special Fund. The employee contributions and the insurance company assessments constitute private, mandatory donations. [11] To the extent that private funds were transferred, we reverse.