Whether Section 18 of House Bill 1 of the 2004 Extraordinary Session of the Kentucky General Assembly establishes a moratorium on new entities entering the County Employees Retirement Systems.

OAG 05-001 January 5, 2005 Subject: Whether Section 18 of House Bill 1 of the 2004 Extraordinary Session of the Kentucky General Assembly establishes a moratorium on new entities entering the County Employees Retirement Systems. Requested by: J. Eric Wampler, General Counsel, Kentucky Retirement Systems Written by: Gerard Gerhard Syllabus: Section 18 of House Bill 1 of the 2004 Extraordinary Session of the Kentucky General Assembly, prohibits the Personnel Cabinet from entering into any “new contracts required under KRS 78.530 for coverage of employees in the state health plan” from the effective date of the legislation through December 31, 2005, which has the effect of establishing a moratorium, during such period, on agencies beginning participation in the County Employees Retirement System. Statutes construed: KRS 78.530. OAGs cited: None. Opinion of the Attorney General The Kentucky Retirement Systems and the Kentucky Personnel Cabinet have asked, in substance, whether Section 18 of House Bill 1, of the 2004 Extraordinary Session of the Kentucky General Assembly effectively imposes a moratorium on new entities becoming participants in the County Employees Retirement System from the effective date of the bill through December 31, 2005. As explained below, our view is that the language of Section 18 of the bill here involved does impose such a moratorium. Section 18 of House Bill 1 of the 204 Extraordinary Session of the Kentucky General Assembly, which became effective on October 19, 2004, provides: The Personnel Cabinet shall not enter into any new contracts required under KRS 78.530 for coverage of employees in the state health plan from the effective date of this Act through December 31, 2005. [Emphasis added.] KRS 78.530 contains two provisions that “require” contracts. These are KRS 78.530(1)(b), and KRS 78.530(7)(b). KRS 78.530(1)(b) states: Notwithstanding any statute to the contrary, after April 9, 2002, the systems shall deny the request for participation of any agency which does not have an irrevocable contract with the state Personnel Cabinet for health insurance coverage under KRS 18A.225 for its active employees, except that county governments entering the system between April 9, 2002, and July 1, 2003, under this section shall be excluded from this requirement. [Emphasis added.] KRS 78.530(7)(b) states: Notwithstanding any statute to the contrary, after April 9, 2002, the systems shall deny the request for participation of any agency which does not have an irrevocable contract with the state Personnel Cabinet for health insurance coverage under KRS 18A.225 for its active employees. [Emphasis added.] The phrase “request for participation,” as used in KRS 78.530, refers to a request for participation in the ”County Employees Retirement System,” given KRS 78.520(1), and the context in which the above quoted provisions appear. The plain language of Section 18 of House Bill 1 prohibits the Personnel Cabinet from entering into any new contracts required under KRS 78.530 during the period established by that legislation. It follows that an agency seeking to enter the County Employees Retirement System (the system subject to 78.530) between October 19, 2004, and December 31, 2005, (the period set forth in House Bill 1) would not have the irrevocable contract for health insurance coverage under KRS 18A.225, that is required by KRS 78.530. Accordingly, the application of such agency for participation in the County Employees Retirement System would have to be denied. KRS 78.530(1)(b), KRS 78.530(7)(b). In other words, Section 18 of House Bill 1 (2004 Extraordinary Session, Kentucky General Assembly) imposes a moratorium on new agencies entering the County Employees Retirement System during the period established by the legislation. GREGORY D. STUMBO ATTORNEY GENERAL Gerard R. Gerhard Assistant Attorney General #482 OAG 05-001 Page 3