Request By:
Mr. Fred B. Creasey
Executive Director
Kentucky Association of Counties
400 Kings Daughters Drive
Frankfort, Kentucky 40601
Opinion
Opinion By: David L. Armstrong, Attorney General; Nathan Goldman, Assistant Attorney General
In your letter you ask four questions. We will answer them in order.
"1. May counties in Kentucky acquire comprehensive liability and casualty insurance? "
KRS 65.150(1) states: "A county . . . may expend funds necessary to insure any of its employes and officials against any liability arising out of an act or omission committed in the scope and course of performing legal duties." In OAG 80-221 we opined that this statute accorded counties the authority to purchase insurance to cover acts or omissions or its employees or officials committed in the scope and course of their performing legal duties; in other words, comprehensive general liability insurance.
In
Commonwealth v. Fayette County, 239 Ky. 485, 39 S.W.2d 962 (1931), the court recognized a county's right to insure public property. This right is implicit in a county's obligation to construct, operate and maintain county buildings, etc., KRS 67.080(2)(b), and to carry out governmental functions necessary for the operation of the county, KRS 67.083. Therefore, we believe that a county may acquire comprehensive liability and casualty insurance.
"2. May counties and political subdivisions in Kentucky self-insure? "
There are no specific statutory provisions regarding self-insurance. A fiscal court has broad discretion in managing the fiscal affairs of the county.
A & W Equipment Co. v. Carroll, Ky., 377 S.W.2d 895 (1964). The fiscal court should take into consideration the public interest and exercise good business judgment. OAG 69-599. We believe that a fiscal court has the authority to determine if a self-insurance plan is in the best interests of the county and, if they determine that it is, to enter into it.
"3. May counties associate to self-insure under the provisions of KRS 65.210 to 65.300 (the Interlocal Cooperation Act) ?"
KRS 65.150(3) states: "Any parties eligible to expend funds for insurance pursuant to this section may associate for the purpose of insuring themselves." KRS 65.210 to 65.300 (the Interlocal Cooperation Act) allows two or more units of local government to join together to provide services and facilities. KRS 65.240(1) states, in part: "Any power or powers, privileges or authority exercised or capable of exercise by a public agency of this state may be exercised and enjoyed jointly with any other public agency of this state . . ." Since a county can self-insure, we believe that, pursuant to KRS 65.240(1) and 65.150(3), counties may associate to self-insure. See OAG 79-500.
"4. May KACo, as a bona fide association, on behalf of the counties issue revenue bonds under the Interlocal Cooperation Act to partially finance the self-insurance fund?"
KRS 65.270 provides for the issuance of bonds pursuant to an interlocal agreement. Clearly, pursuant to this statute, the parties to the agreement may issue bonds, assuming all other applicable provisions regarding payment, etc., are adhered to.
However, we do not believe that KACo may issue these bonds. KRS 65.270(2) specifies that a "public agency" may be the issuer. KRS 65.230 defines "public agency" as any political subdivision of this state, any agency of the state government or of the United States, any political subdivision of another state, a state-supported institution of higher education or a county or independent public school district. KACo would not qualify as a public agency pursuant to this statute.