Contributions - Benefit and contribution rates are established by state statute. Per KRS 61.565(3) contribution requirements of the active employees and the participating organizations are established and may be amended by the Kentucky Retirement System Board (KRS Board). For the fiscal year ended June 30, 2022, University nonhazardous and hazardous employees were required to contribute 5 percent of their annual covered salary for retirement benefits for the year ended June 30, 2022.
Nonhazardous and hazardous employees with a participation date after September 1, 2008, were required to contribute an additional 1 percent of their covered salary for retiree healthcare benefits.
Participating employers were required to contribute at an actuarially determined rate. Per KRS 61.565(3), normal contribution and past service contribution rates shall be determined by the Board on the basis of an annual valuation last proceeding the July 1 of a new biennium. The Board may amend contribution rates as of the first day of July of the second year of a biennium, if it is determined on the basis of a subsequent actuarial valuation that amended contribution rates are necessary to satisfy requirements determined in accordance with actuarial basis adopted by the KRS Board. Administrative costs of KERS are financed through employer contributions and investment earnings.
Pursuant to KRS 61.5991, the method of calculating the employer contribution changed from a percentage of pay to a two-part calculation effective July 1, 2021. The normal cost contributions are based on each employers' reported payroll multiplied by the normal cost percentage. House Bill 192, passed during the 2021 regular session of the legislature, set the KERS nonhazardous employer contribution rate for the year ended June 30, 2022, at 10.10% (7.90% to the pension fund and 2.20% to the insurance fund). The unfunded liability cost is an actuarially accrued liability contribution based upon the actuarial valuation for fiscal year 2019 and is prorated according to each employer's percentage of the plan's total actuarial accrued liability that is attributable to each employer's current and former employees. The University's share of the actuarially accrued liability contribution is 0.23208%, with 90% allocated to the pension fund and 10% allocated to the insurance fund. The University contributed $2,789,627 to the nonhazardous retirement plan; $376,345 for the normal cost contribution and $2,413,282 for the actuarially accrued liability contribution. Contributions of $68,421 were made by the University for the hazardous plan, for the year ended June 30, 2022, which was 100% of the required contributions for both retirement plans. $2,466,322 of the contribution was allocated to the nonhazardous KERS pension fund and $323,305 to the nonhazardous KERS insurance fund. All of the $68,421 contributed for the KERS Hazardous plan was allocated to pension benefits.
Pension liabilities, pension expense, and deferred outflows of resources and deferred inflows of resources related to pensions - At June 30, 2022, the University reported a liability of $32,282,399 for its proportionate share of the nonhazardous net pension liability and $454,343 for hazardous.
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