Request By:
Mr. Mim Clark
General Manager
Kentucky Retirement Systems
226 West Second Street
Frankfort, Kentucky 40601
Opinion
Opinion By: Robert F. Stephens, Attorney General; By: Charles W. Runyan, Assistant Deputy Attorney General
The cash coming into the Kentucky Employes' Retirement System from the employer's contributions, the members' contributions and investment proceeds thereof is presently deposited in the Farmers Bank and Trust Company of Frankfort, Kentucky, which bank is the state depository holding the state's general fund account. See KRS 61.570. While the Kentucky Retirement Systems money is kept in the one big state general fund in the Farmers Bank, the Division of Accounts of the Department of Finance and the State Treasurer both have records reflecting the various departmental and state agency accounts, including the separate deposit account balances of the Kentucky Retirement Systems.
At present, the Citizens Fidelity Bank and Trust Company of Louisville is the current custodian of the securities of the Kentucky Retirement Systems. See KRS 61.650 concerning the investment powers of the Board of Trustees of the Kentucky Retirement Systems.
The Kentucky Retirement Systems is currently unable to maximize the investment procedure. The Board simply wants this money working for the system at the maximum. This could be possible, you say, if the deposit account is moved to the Citizens Fidelity Bank and Trust Company.
Your question:
"Under existing statutes, may the Kentucky Retirement Systems separate its account from the State account and move it to the Citizens Fidelity Bank and Trust Company, Louisville, Kentucky?"
First, such revenue going to the Kentucky Retirement Systems must be kept in the state treasury, since it involves money for which the state or its agency is responsible for receiving and disbursing from time to time to retirees or their beneficiaries. See KRS 41.070, 41.110 and § 230 of the Kentucky Constitution. These state treasury statutory and constitutional provisions envision money that should go into the state treasury for state expenditure for state purposes and under the state budget. The appellate court has declared that the purpose of these latter provisions of law was to prevent the expenditure of the state's money without the consent of the legislature.
Ferguson v. Oates, Ky., 314 S.W.2d 518 (1958) 521.
Public money of the state received into the treasury must be deposited on the day it is received in one (1) of the state depository banks. KRS 41.210. Banks shall be designated as depositories for state funds upon agreement of the State Treasurer and the Secretary of Finance. KRS 41.220.
It is our opinion that if the Secretary of Finance and the State Treasurer agree in writing to the moving of the deposit account of the Kentucky Retirement Systems from the state's general fund account at Farmers Bank and Trust Company, Frankfort, to the Citizens Fidelity Bank and Trust Company, such moving of the deposit account would be legal, although it would entail some new accounting procedure on the part of the Department of Finance and the State Treasury. We assume, of course, that the Citizens Fidelity Bank is already a designated state depository. Thus the transfer of the Kentucky Retirement Systems account would be permissible under the joint determination and agreement of the State Treasurer and Secretary of Finance under KRS 41.220(2) and 41.260. The two statutes are to be read together as a whole, under the doctrine of pari materia [same subject matter].
Dieruf v. Louisville & Jefferson County Bd. of Health, 304 Ky. 207, 200 S.W.2d 300 (1947).
If there is no written agreement with the Farmers Bank and Trust Company as a designated state depository bank specifying how long the depository shall act as such, the relation continues during the mutual will of the State Treasurer, the Secretary of the Department of Finance, and the Farmers Bank and Trust Company. In the event the Secretary of Finance and the State Treasurer decide to move the Kentucky Retirement Systems account to the other state depository, the Citizens Fidelity Bank, the State Treasurer and Secretary of Finance should give written notice of such intent to the Farmers Bank. In the event of such notice, the Farmers Bank then should turn over or tender the state deposit involving the Kentucky Retirement Systems deposit account.