Request By:
Mr. Brent Caldwell
Caldwell County Attorney
P.O. Box 203
Princeton, Kentucky 42445
Opinion
Opinion By: Frederic J. Cowan, Attorney General; Nathan Goldman, Assistant Attorney General
In your letter to the Attorney General you ask for our opinion on two questions, which we consolidate as one. You wish to know whether the county clerk may purchase health insurance for herself and her employees out of the fees generated by her office without the approval of the fiscal court and charge health insurance premiums as an office expense against these fees. You state that we have written several past opinions on this question which appear to be in conflict. You cite OAG 76-85, 84-203 and 84-324. We believe that your reference to OAG 76-85 should have been OAG 76-69.
In OAG 76-69 we opined that a county clerk could fund hospital insurance premiums for regularly employed deputies out of the fees of his office and without formal pre-expenditure approval of the fiscal court. Such expenditures are subject to the maximum level of expenses set for the office pursuant to KRS 64.530.
In OAG 84-203 we opined that "[t]he initiation of the matter of establishing . . . fringe benefits as applied to these deputies of the constitutional officers must, if it is done at all, be by the constitutional officer, since he is their employer in the strict sense." We went on to say that if the fiscal court has established a fringe benefit program for its employees, the constitutional officer could request that his deputies be made a part of the program, provided that it could be funded out of his fees, the county treasury or both. We stated that the fiscal court is not required to establish such programs nor is the constitutional officer required to request participation. We did not, however, address the question involved in your situation -- may the constitutional officer establish and fund a fringe benefit program out of his fees when the fiscal court has not established one of its own.
In OAG 84-324 we addressed that question. We opined that the fiscal court would still have to approve the county clerk's establishment of a health insurance benefits program for deputy county clerks even if the fiscal court had no such program of its own. We also opined that there was no statutory authority to allow the health insurance benefits program to cover the officer himself. KRS 79.080(2) extended only to county employees. We stated that a change in the statute to include the county officer would not present a constitutional problem.
Before we deal with the question of a conflict between the opinions, we would note that, as concerns the inclusion of the county clerks themselves in these programs, KRS 79.080(2) was amended following OAG 84-324 to include elected officers. See OAG 85-13.
KRS 64.530(3) states:
"In the case of officers compensated from fees or partly from fees and partly by salary, the fiscal court shall fix the maximum compensation that officer except the officers named in KRS 64.535 may receive from both sources. The fiscal court may also fix the maximum amount that the officer may expend each year for expenses of his office. The fiscal court shall fix annually the maximum amount, including fringe benefits, which the officer may expend for deputies and assistants, and allow the officer to determine the number to be hired and the individual compensation of each deputy and assistant."
The statute was changed to its present form in 1988. Acts 1988, chp 249, § 7. Prior to that time, the statute read as follows:
"In the case of officers compensated from fees, or partly from fees and partly by salary, the fiscal court shall fix the maximum compensation that any officer except "the officers named in KRS 64.535 may receive from both sources. The fiscal court may also fix the number of deputies and assistants, and the compensation thereof, and the maximum amount that the officer may expend each year for expenses of his office."
These two forms of the statute do not appear to be substantially different as concerns expenses. The only substantive difference appears to relate to the fiscal court fixing the number of deputies.
In Funk v. Milliken, Ky., 317 S.W.2d 499 (1958), the Court had before it the same statutory provision relating to expenses. KRS 64.530 gave the fiscal court the authority to fix "the maximum amount that the officer may expend each year for expenses of his office." The Court held:
"This does not mean a lump sum, blanket allowance, because KRS 64.710 prohibits such allowances except where expressly provided for by statute. See Smith v. Campbell, Ky., 286 S.W.2d 532. We think it means that the fiscal court may fix, in advance, the categories of reasonable official expenses that will be allowed and the maximum amount that will be allowed for each category. In such case, the officer still will be required to submit a detailed account of the expenses, with adequate supporting data, in order to obtain credit. It would be desirable for all fiscal courts to exercise the authority given by KRS 64.530, and limit the expenses in advance, or even require that each individual expenditure be approved in advance. However, it is our opinion that the statute does not require this to be done, and where it has not been done the officer yet may receive credit for proper expenses. But in order to receive credit he must not only show the amount and purpose of each expenditure, and that it is reasonable, but must establish that the expenditure is in an allowable category.
"In determining whether an expense is in an allowable category, whether the determination is made in advance or when the officer "makes his settlement at the end of each year, the fiscal court will be governed by the consideration of whether the expense is official rather than personal in nature. Any abuse of authority will of course be subject to judicial review."
Id. at 507.
The Court in Funk also held that expenses which are "reasonable in amount, beneficial to the public, and not predominantly personal to the officer in the sense that by common understanding and practice they are considered to be personal expenses" may be allowed by the fiscal court. Id. at 506.
In our opinion, health insurance premiums are a legitimate office expense and fit within the parameters of the Funk definition, assuming the amount to be reasonable.
However, it is also our opinion that KRS 64.530 requires fiscal court approval of these expenditures. The fiscal court may evidence its approval prior to the actual expenditure by fixing, in advance, allowable expense categories and the maximum amount which can be spent. This is true even with the 1988 amendment to KRS 64.530 which specifically requires the fiscal court to set a maximum amount for fringe benefits.
If the fiscal court has complied with KRS 64.530 in this manner, no further approval is necessary. To that extent OAG 76-69 and 84-324 are not in conflict. Any perceived conflict should be interpreted in light of this opinion, which hopefully clarifies those prior opinions.
You have informed us orally that the Caldwell fiscal court has not, in the past, complied with KRS 64.530. You ask whether their failure to comply affects their ability to now approve or deny past expenditures.
This is a question which does not lend itself to an easy answer since there is no prior case law on it. Obviously, an ultimate answer can only be given by a court of law. However, we would be of the opinion that, as a matter of equity, the fiscal court's failure to comply with KRS 64.530 is, in a sense, a waiver of the court's ability to approve or deny the expenditure. An action to deny the past years' expenditures could amount to an ex post facto action. We would recommend that no action be taken by the fiscal court on past expenditures and that the fiscal court comply with KRS 64.530 in the future.