Request By:
Mr. L. Griesinger
Morehead State University
Morehead, Kentucky 40351
Opinion
Opinion By: Robert F. Stephens, Attorney General; By: John F. Zink, Assistant Attorney General
Please allow this to serve as a reply to your letter of August 25, 1978, requesting an opinion from this office regarding the recent changes in certain sections of law governing the Kentucky Teachers' Retirement System (KTRS). Specifically, your first question, in effect, asked whether the recent statutory change is discriminatory to university members of KTRS. The change to which you refer was in the form of an amendment to KRS 161.540 whereby section (3) was added stating the following:
(3) Effective July 1, 1980, each member shall contribute to the retirement system nine and thirty-two hundreds percent of annual compensation except that university faculty members shall contribute seven and eighty-four hundreds percent of annual compensation. The contribution of members shall not exceed these applicable percentage on annual compensation. (Emphasis added).
As pointed out by the KTRS Newsletter of April, 1978, the increases in the rate of each member's contribution from the present 7.7% to the 1980 figure of 9.32% of annual compensation is to reflect the corresponding increase from 2.0% to 2.5% in the factor used to compute the benefit of each member. This increase from 2.0% to 2.5% does not apply to university members of KTRS who are also covered under the federal Social Security System.
In answering your question, it is necessary to note that KRS 161.220(4)(b) makes participation in KTRS by the employees of Morehead State University mandatory. Ordinarily, participation in the KTRS would preclude Social Security coverage. However, pursuant to KRS 61.435, employees of state colleges who are participating in the KTRS may also elect coverage under the federal Social Security System through a referendum held at each school. The employees at Morehead State University so voted to be covered under both systems.
Because of the election under KRS 61.435 made by the employees at Morehead State University to have this joint coverage, the employees are presently contributing to both the KTRS and the federal Social Security programs. Our research indicates the purpose of the exception from the 1.48% increase in member annual contribution, effective July 1, 1980, for university members of KTRS who participate in the federal Social Security program, was to limit any increased burden on those members because of their joint contribution to the two systems. As pointed out above, KRS 161.540(3), as now amended, so exempts these members from the 1.48% increase of July 1, 1980. The corresponding increase in the factor used to compute the members benefit (2.0% to 2.5%), which was mandated by the 1.48% contribution increase, is also not applied to university members of KTRS who are covered by federal Social Security. Therefore, it is the opinion of this office that university employees covered under both systems are not suffering any discrimination. Contrary to the statement in your letter, the provisions of KRS 161.540 does not prohibit you from participating in benefits extended to all other KTRS members.
While it is true that university members are exempted from the increase in the factor used to compute benefits, they are also exempted from the corresponding contribution increase. As such, you and other university members similarly situated are not being denied the coverage for which you are paying.
In your second question, you have asked whether the faculty employees may terminate their coverage under the federal Social Security System, and what recourse is open to them. As pointed out above, KRS 61.435 enables employees of state colleges, by referendum, to elect coverage under the Social Security System as well as under the KTRS. KRS 61.430 provides the authorization by which a state agency, in this case the state colleges, may enter into an agreement with the Secretary of Health, Education, and Welfare for the purpose of extending Social Security coverage over its employees. Under federal law, 42 U.S.C. § 418(g)(1), there is no means provided for the termination of a modification to the state agreement, but only for the termination of the entire agreement. Therefore, a state may terminate its agreement with the federal government thereby ending its participation in Social Security for all those state employees participating pursuant to the agreement.
However, the law does not enable an individual group of employees, such as the faculty at Morehead State University, to terminate their participation. It is the opinion of this office that the faculty of Morehead State University may not withdraw its participation in the Social Security System. This opinion is based, in part, on two prior opinions of this office on the same matter found in OAG 68-450 and OAG 75-268. In light of the opinion set out above, it is also the opinion of this office that there is no statutory authority which would permit faculty members to discontinue their participation in Social Security.
In conclusion, it is the opinion of this office that the 1978 amendments to KRS 161.540 are not discriminatory against the university members of KTRS who are covered under Social Security. In addition, the members at Morehead State University would not be able to terminate their coverage under the Social Security System.