Kentucky HB 220: AN ACT relating to step therapy protocols.

Bill Text

CHAPTER 189
Legislative Research Commission PDF Version

1
CHAPTER 189
( HB 220 )
AN ACT relating to pension spiking in the systems administered by the Kentucky Public Pensions Authority.
Be it enacted by the General Assembly of the Commonwealth of Kentucky:
Section 1. KRS 61.598 is amended to read as follows:
(1) As used in[For purposes of] this section, "bona fide promotion or career advancement":
(a) Means:
1. A professional advancement in substantially the same line of work held by the employee in the
four (4) years immediately prior to the final five (5) fiscal years preceding retirement or a change
in employment position based on the training, skills, education, or expertise of the employee that
imposes a significant change in job duties and responsibilities to clearly justify the increased
compensation to the member; or
2. a. An increase in creditable compensation for all employees in a specified class due to an
increase in rate of pay authorized or funded by the legislative or administrative body of
the employer or due to an increase in rate of pay mandated in a collective bargaining
agreement approved by the legislative body of the employer.
b. Subdivision a. of this subparagraph shall be retroactive to apply to any member whose
effective retirement date occurred on or after July 1, 2021; and
(b) Does not include any circumstance where an elected official participating in the Kentucky Employees
Retirement System or the County Employees Retirement System takes a position of employment with a
different employer participating in any of the state-administered retirement systems.
(2) (a) For employees retiring from the Kentucky Employees Retirement System, the County Employees
Retirement System, or the State Police Retirement System on or after January 1, 2018, the systems
shall, for each of the retiring employee's last five (5) fiscal years of employment, identify any fiscal year
in which the creditable compensation increased at a rate of ten percent (10%) or more annually over the
immediately preceding fiscal year's creditable compensation. The employee's creditable compensation
in the fiscal year immediately prior to the employee's last five (5) fiscal years of employment shall be
utilized to compare the initial fiscal year in the five (5) fiscal year period.
(b) Except as limited or excluded by subsections (3) and (4) of this section, any amount of increase in
creditable compensation for a fiscal year identified under paragraph (a) of this subsection that exceeds
ten percent (10%) more than the employee's creditable compensation from the immediately preceding
fiscal year shall not be included in the creditable compensation used to calculate the retiring employee's
monthly retirement allowance. If the creditable compensation for a specific fiscal year identified under
paragraph (a) of this subsection as exceeding the ten percent (10%) increase limitation is not used to
calculate the retiring employee's monthly retirement allowance, then no reduction in creditable
compensation shall occur for that fiscal year.
(c) If the creditable compensation of the retiring employee is reduced as provided by paragraph (b) of this
subsection, the retirement systems:
1. Shall refund the employee contributions and interest attributable to the reduction in creditable
compensation; and
2. Shall not refund the employer contributions paid but shall utilize those funds to pay down the
unfunded liability of the pension fund in which the retiring employee participated.
(3) (a) In order to ensure the prospective application of the limitations on increases in creditable compensation
contained in subsection (2) of this section, only the creditable compensation earned by the retiring
employee on or after July 1, 2017, shall be subject to reduction under subsection (2) of this section.
Creditable compensation earned by the retiring employee prior to July 1, 2017, shall not be subject to
reduction under subsection (2) of this section.

ACTS OF THE GENERAL ASSEMBLY 2
(b) If the reductions in creditable compensation during a retiring member's entire last five (5) years of
employment results in a reduction in his or her monthly retirement allowance of less than twenty-five
dollars ($25) per month or an actuarially equivalent value under the various payment options, then no
reduction in creditable compensation or retirement allowances shall occur under subsection (2) of this
section.
(4) Subsection (2) of this section shall not apply to:
(a) A bona fide promotion or career advancement as defined by subsection (1) of this section;
(b) A lump-sum payment for compensatory time paid to an employee upon termination of employment;
(c) A lump-sum payment made pursuant to an alternate sick leave program under KRS 78.616(5) that is
paid to an employee upon termination of employment;
(d) Increases in creditable compensation in a fiscal year over the immediately preceding fiscal year, where
in the immediately preceding fiscal year the employer