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Docket: 2019-SC-0476-TG
Opinion Date: June 17, 2021
Judge: John D. Minton, Jr.
Areas of Law: Government & Administrative Law, Labor & Employment Law
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In this administrative appeal brought by the Kentucky Retirement Systems from the decision of the circuit court in two consolidated cases concerning application of Ky. Rev. Stat. 61.598 the Supreme Court held that the Retirement Systems improperly applied the statute to pay spikes to a certain extent. Section 61-598, commonly known as the pension spiking statute, identifies artificial increases in creditable compensation to public pension-member employees occurring in the last five years preceding retirement, effectively increasing the employee's retirement benefits. In both cases, the alleged spikes were partly due to a change in the Jefferson County Sheriff's office (JCSO) accounting method and partly due to the employees' accrual of overtime hours. The Retirement Systems assessed JCSO for payment increased actuarial costs attributable to the alleged pension spikes. The circuit court reversed. The Supreme Court affirmed in part and reversed in part, holding (1) an isolated transition in JCSO's new accounting method did not amount to an increase in compensation; (2) the Retirement Systems properly assessed the increased actuarial costs to the extent it was caused by regular overtime work and was not the result of a bona fide promotion or career advancement; and (3) the circuit court erred in reversing the Retirement System's original assignment of the burden of proving a bona fide promotion.
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