Request By:
Mr. Owen W. Potts, Sr.
Mayor, City of Jeffersontown
10416 Watterson Trail
Jeffersontown, Kentucky 40299
Opinion
Opinion By: Steven L. Beshear, Attorney General; By: Thomas R. Emerson, Assistant Attorney General
This is in reply to your letter presenting the following question and fact situation:
"Can a city acting alone under the provisions of Kentucky Revised Statute 79.080, provide retirement benefits for city employees and officers, including police, by establishing and contributing to the Individual Retirement Account, which meets the requirements of Section 219 of the Federal Internal Revenue Code."
KRS 79.080 (2) provides as follows:
"Cities of all classes, counties and urbancounty governments and the agencies of cities, counties and urban-county governments are authorized to establish and operate plans for the payment of retirement, disability, health maintenance organization coverage, or hospitalization benefits to their employes, and health maintenance organization coverage or hospitalization benefits to the immediate families of their employes. Such a plan may require employes to pay a percentage of their salaries into a fund from which coverage or benefits are paid or the city, county, urban-county government or agency may pay out of its own funds the entire cost of the coverage or benefits. A plan may include a combination of contributions by employes and by the city, county, urban-county government or agency into a fund from which coverage or benefits are paid, or it may take any form desired by the city, county, urban-county government or agency. Each city, county, urbancounty government or agency may make rules and regulations and do all other things necessary in the establishment and operation of such a plan." Emphasis supplied by the undersigned.
KRS 79.080 (2) does not mention or include municipal officers and this office has consistently concluded that such officers are excluded from the coverage authorized by the statute. The statute is limited to municipal employes and a municipal officer could only participate in a retirement plan under KRS 79.080 (2) if he paid all the required amounts due from his own personal funds. See OAG 79-20, OAG 75-470, OAG 73-283 and OAG 70-720, copies enclosed. In Policemen's and Firemen's Retirement Fund v. Shields, Ky., 521 S.W.2d 82 (1975), the Court said, "The rights of persons participating in a pension plan are governed entirely by the terms of the pension plan and the statutes under which it is operated."
Jeffersontown is a city of the fourth class [KRS 81.010 (4)] and if the city is going to enact a retirement plan for its police officers it will have to do so pursuant to the statutory provisions applicable to those persons. Police officers cannot be included under the terms of KRS 79.080 (2) because other statutory provisions control as to their pension plans.
A fourth class city may operate a pension plan for its police officers pursuant to KRS 95.767 to 95.785 or, as an alternative, it may, pursuant to the authority set forth in KRS 95.761, utilize the pension plan provided for in KRS 95.520 to 95.620 or the general civil service and pension plan authorized by KRS 90.300 to 90.420. Thus, a city of the fourth class may not operate a pension plan for its police officers under KRS 79.080 (2) but, rather, it must utilize the provisions of KRS 95.767 to 95.785 or KRS 95.520 to 95.620 or KRS 90.300 to 90.420. See OAG 72-762, copy enclosed.
While municipal officers and police officers cannot be included in a retirement plan adopted pursuant to KRS 79.080 (2), city employes could be included under a retirement plan enacted pursuant to that statute. In OAG 73-283, at page two, we said that there appears to be no restrictions on the city as to its operation of a pension plan enacted pursuant to KRS 79.080 (2). The statute authorizes the retirement plan to "take any form desired by the city" and the city is permitted to make rules and regulations and to do all other things necessary in the establishment and operation of the retirement plan.
Section 219 of the Federal Internal Revenue Code appears in 26 USCA § 219 and deals with "Retirement savings." 26 USCA § 408 deals with "Individual retirement accounts." Assuming that your proposed retirement plan meets Federal requirements such a plan could probably be adopted pursuant to KRS 79.080 (2) so long as it is limited to city employes and does not include municipal officers and police officers.