Request By:
Mr. John D. Robey
Chairman, Board of Trustees
Kentucky Retirement Systems
151 Elkhorn Court
Frankfort, Kentucky 40601
Opinion
Opinion By: Frederic J. Cowan, Attorney General; Nathan Goldman, Assistant Attorney General
In your letter to the Attorney General you state that on March 31, 1988, the Board of Trustees of the Kentucky Retirement Systems voted to award a contract to Bobby McKee for service as general manager. Upon advice of counsel, the Board decided not to submit the contract to the Personal Service Contract Review Subcommittee (the subcommittee) .
On April 7, 1988, the Board, with two new members, met again and decided this time to submit the contract to the subcommittee.
You ask several questions pertaining to that decision. First, you ask whether the statutes governing the Board exempt this contract from review by the subcommittee.
KRS 61.645(9)(a) states that the Board shall:
"Appoint or contract for the services of a general manager, and fix his compensation without limitation by the provisions of KRS Chapter 18A and KRS 64.640. . . ."
The Board has apparently decided to contract for the service of a general manager rather than appoint one.
KRS 45.700 - 45.720 set out certain requirements for personal service contracts. Specifically, personal service contracts as defined by KRS 45.700(1)(d) are to be submitted to the subcommittee for review. Payament on the contract may not be made until review is completed. The subcommittee may recommend approval, disapproval or make certain objections to the contract. This recommendation is sent to the Secretary of the Finance and Administration Cabinet.
KRS 45.360(3) requires approval by the Finance and Administration Cabinet of all contracts by other state agencies. Thus, the first step generally for state contracts, prior to submission to the subcommittee, is approval by the Finance and Administration Cabinet.
In your situation, however, KRS 619645(2)(d) states
In your situation, however, KRS 61.645(2)(d) states that the Board may "contract for investimetn counseling, actuarial, auditing and other professional services as its statutory purpose may require without limitations of KRS 45.360." (emphasis added). We take this to mean that these contracts do not require Finance and Administration Cabinet approval.
You contend that the contract for the services of the contract for the services of the general manager pursuant to KRS 61.452(9)(a) is within KRS 61.645(2)(d)'s contracts for "other professional services" and, therefore, exempt from Finance and Administration Cabinet approval. This, then, impinges on the subcommittee's review since it is tied, by statute, to the Finance and Administration Cabinet.
Because of a dearth of case law interpreting these statutes, we must turn to the general principles of statutory construction.
One such principle is ejusdem generis. The rule of ejusdem generis is that where general words follow or precede a designation of particular subjects in a statute, the meaning of the general words ordinarily will be presumed to be restricted by the particular designation and to include only things or persons of the same kind, class or nature as those specifically enumerated.
Steinfeld v. Jefferson County Fiscal Court, 312 Ky. 614, 229 S.W.2d 319 (1950). Based on this principle, the term "other professional services" in KRS 61.645(2)(d) would appear to be limited to extra-agency support services.
If you add this principle to one that holds that a specific statute controls over a general one,
Land v. Newsome, Ky., 614 S.W.2d 948 (1981), it would appear to us that the contract for a general manager is not one which would come within the purview of KRS 61.645(2)(d) and would, therefore, not be exempt from review by the Finance and Administration Cabinet pursuant to KRS 45.360.
If that is the case, then the contract for a general manager would also be subject to review by the subcommittee.
Your next question is whether there is a difference between a regular full-time employment contract and an independent contract for the purposes of the personal service review statutes.
KRS 45.700(1)(d) defines "personal service contract" as:
an agreement whereby an individual, firm, partnership or corporation is to perform certain duties, professional or otherwise, for a specified period of time for a price agreed upon, which are exempted from competitive bidding pursuant to KRS 45.360.
KRS 45.360(1)(f) exempts from competitive bidding contracts for professional, technical, scientific, or artistic services. The contract for a general manager would appear to be such an exempt contract.
The contract described by KRS 45.700 is, we believe, what you refer to as an independent contract. It is a contract for services from an individual who does not become a state employee.
On the other hand, the term "employment contract" , as we believe you are using it, is not strictly speaking a formal, written contract as such. Rather, it is descriptive of the relationship between an employer and an employee. 53 Am.Jur. 2d, Master and Servant, § 14. The Board may create such a relationship between it and a general manager pursuant to its statutory power to appoint a general manager. KRS 61.645(9)(a). statutory power to appoint a general manager. KRS 61.645(9)(a). Presumably, that is what has been done in the past. This power of appointment does not create a personal service contract. Neither does it allow the Board to circumvent the state personnel system, except insofar as the compensation of the general manager is concerned. KRS 18A.005(1) refers to the "appointing authority" in terms of the employer/employee relationship. State personnel regulations also use the term "appoint" in referring to the employment of individuals in state service. See, e.g., 101 KAR 2:070. Consequently, it is our opinion that the term "appoint" in KRS 61.645(9)(a) refers to the employement of an individual as general manager. Compare, KRS 161.340(1)[the Teachers Retirement System may "appoint an executive secretary"]. This appointment may be accomplished by a resolution of the board. This resolution may set the compensation of the general manager, since such is specifically permitted by statute. However, all other terms and conditions of employment must be consistent with the state personnel law.
Your third question relates to the legal enforceabilitiy of the contract vis-a-vis the date it becomes effective. Since we have opined that it is subject to review by the subcommittee, payment under the contract may not be made until the review process by the subcommittee has been completed or unless the Secretary of the Finance and Administration Cabinet certifies that emergency payment should be made. KRS 45.710(4).
We have answered your next question, concerning the Finance and Administration Cabinet's involvement, previously.
Your next question asks whether the 30-day cancellation clause required of all personal service contracts pursuant to KRS 45.710(1) can be qualified as "for cause."
KRS 45.710(1) states, in part: "Each service contract shall have a cancellation clause not to exceed thirty (30) days' notice to the contractee. " The statute uses the term "contractee" to refer to the party providing the service. Thus, the state would be the contractor. OAG 78-640. In that Opinion we stated that the beneficiary of this provision was the Commonwealth. Consequently, we can find no authority for the contractor to modify the statutory language by inserting a "for cause" provision.
Your final question asks whether a contract for a general manager can include benefits provided to state personnel.
We would have to answer in the negative. As we cited earlier, the definition of a personal service contract in KRS 45.700(1)(d) states that such a contract is "for a price agreed upon". There is no provision for additional moneys to be paid to the contractor other than the price agreed upon for the service rendered.
This Opinion has been restricted to the questions presented and should not be construed to offer an opinion on any specific provisions in the contract.