Kansas Attorney General Opinion 2012-032

December 28, 2012
ATTORNEY GENERAL OPINION NO. 2012-32
Alan D. Conroy
Executive Director
Kansas Public Employees Retirement System
611 S. Kansas Avenue, Suite 100
Topeka, KS 66603-3869
RE: 	State 	Boards, 	Commissions 	and 	Authorities—Public 	Employees
Retirement Systems; Kansas Public Employees Retirement System—
Purchase of Participating Service Credit
State 	Boards, 	Commissions 	and 	Authorities—Public 	Employees
Retirement Systems; Compensation in Excess of Internal Revenue Code
Limitations—Compensation in Excess of Limitations Set Forth in Internal
Revenue Code; Requirements and Limitations
Synopsis: 	K.S.A. 74-4919a(1) authorizes an employee who is a member of the
Kansas Public Employees Retirement System (KPERS) to purchase the
first-year of service credit by applying for such purchase and paying the
amount determined by the employee's attained age and the actuarial
assumptions and tables currently in use by KPERS if such employee has
not retired and is employed by a participating employer. 	Cited herein:
K.S.A. 2011 Supp. 74-4902; 74-4909; K.S.A. 74-4911; K.S.A. 2011 Supp.
74-4917; K.S.A. 74-4919a; 74-4919c; K.S.A. 2011 Supp. 74-4919g; 74-
4919h; 74-4919j; 74-49,123; 26 U.S.C. § 415; 26 C.F.R. § 1.401-1.
* 	* 	*
Dear Mr. Conroy:
As Executive Director for the Board of Trustees of the Kansas Public Employees
Retirement System (Board), you ask for our opinion on whether, pursuant to K.S.A. 74-
4919a and K.S.A. 2011 Supp. 74-49,123, a member of the Kansas Public Employees

Mr. Alan D. Conroy
Page 2
Retirement System 	(KPERS), K.S.A. 74-4901 et seq., whose employment with a
participating employer 1 began in 2002 can purchase the employee's "year of service"
within one month after such employment ended in 2012 for reasons beyond the
employee's control. Based on the analysis below, the answer is no.
K.S.A. 74-4911(1) establishes the "year of service" that is at issue. 	Under K.S.A. 74-
4911(1), a person employed by a KPERS-participating employer becomes a member of
KPERS only after completing one year of service with the participating employer. 2
Information submitted with your letter indicates the Board has interpreted language in
K.S.A. 2011 Supp. 74-49,123 and K.S.A. 74-4919a as allowing former employees to
purchase their first year of participating service credit. Over the past 5 years, the Board
has applied its interpretation to more than 50 former employees who were members of
KPERS.
We begin by reviewing K.S.A. 2011 Supp. 74-49,123.
K.S.A. 2011 Supp. 74-49,123
In determining that a former employee may purchase the first-year service credit, 	the
Board relied upon the following language in K.S.A. 2011 Supp. 74-49,123:
(c) In addition to the federal internal revenue code provisions otherwise
noted in each retirement plan's law, and in order to satisfy the applicable
requirements under the federal internal revenue code, the retirement plans
shall be subject to the following provisions, notwithstanding any other
provisions of the retirement plan's law:
. . .
(6) Subject to the provisions of this subsection, benefits paid from, and
employee contributions made to the retirement plans shall not exceed the
maximum 	benefits 	and 	the 	maximum 	annual 	additions, 	respectively,
permissible under section 415 of the federal internal revenue code.
. . .
(C) Effective for permissive service credit contributions made in limitation
years beginning after December 31, 1997, if an active member makes one
or more contributions to purchase permissive service credit under a
retirement plan, then the requirements of this section shall be treated as
met only if [one of the two listed conditions are met].
1 K.S.A. 2011 Supp. 74-4902(24) ("an eligible employer who has agreed to make contributions to
[KPERS] on behalf of its employees").
2 The legislature amended K.S.A. 74-4911(1) in 2007 so that a person whose employment began on or
after July 1, 2009, with a KPERS participating employer became a member on the first day of such
employment. L. 2007, Ch. 164, § 14(1); now K.S.A. 2011 Supp. 74-4911(1).

Mr. Alan D. Conroy
Page 3
. . .
(iii) For purposes of this paragraph, the term "permissive service credit"
means service credit:
(a) Specifically recognized by a retirement plan's law for purposes of
calculating a member's benefit under that retirement plan;
(b) which such member has not received under a retirement plan; and
(c) which such member may receive under a retirement plan's law only by
making a voluntary additional contribution, in an amount determined under
the retirement plan's law and procedures established by the board, which
does not exceed the amount necessary to fund the benefit attributable to
such service credit.
You state in your letter that, because K.S.A. 2011 Supp. 74-49,123 lacks a definition for
"active member," the Board adopted a policy interpreting "active member." 	That
interpretation includes former employees only if their employment was terminated due
to unforeseen circumstances, 3 their first-year service credit was purchased within 45
days of their employment being terminated, and they had not withdrawn the KPERS
contributions 	or 	commenced 	a 	benefit. 	You 	indicate 	that 	the 	rationale 	for 	this
interpretation of "active member" is the former employee has earned the service credit,
the 	former 	employee 	pays 	both 	the 	employer's 	and 	employee's 	contributions 	to
purchase the service credit, and the service credit is calculated by quarters so that a
member who works one day into a quarter will receive credit for the entire quarter.
These reasons are useful to calculate the former employee's retirement benefit, but
none is useful to extend the former employee's ending employment date with the
participating employer.
The information you provided also states the Board adopted its interpretation to be
consistent with federal law, specifically 26 U.S.C. § 415(n). 	That provision relates to
special rules for the purchase of permissive service credit in a qualified retirement plan.
Under federal regulation, a qualified retirement plan "may cover former employees as
well as present employees and employees who are temporarily on leave." 4 Thus, a
provision authorizing former employees to purchase service credits is discretionary, not
mandatory.
The critical point here is the Board did not promulgate its interpretation of K.S.A. 2011
Supp. 74-49,123(c)(6)(C) in a regulation 5 although it has the authority to do so. 6 As a
result, the Board's interpretation of "active member" does not have the force of law. 7
3 The unforeseen circumstances are the employer submitted the necessary documents late; the
employee was terminated or laid-off from employment without notice or suffered a serious health
condition; the employee's financial institution sent the payment late or an incorrect amount; or (4) the
employee and employer are engaged in a settlement agreement for wrongful termination.
4 26 C.F.R. § 1.401-1(b)(4). Emphasis added.
5 See Agency 80 of Kansas Administrative Regulations.
6 K.S.A. 2011 Supp. 74-4909(2).
7 Bruns v. Kansas State Bd. of Technical Professions, 255 Kan. 728, Syl. 2 (1994) (a state agency's
internal policy that "is adopted to govern the agency's enforcement or administration of legislation is a rule

Mr. Alan D. Conroy
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Nevertheless, we concur that K.S.A. 2011 Supp. 74-49,123(c)(6)(C) is necessary to the
analysis, but not because it refers to an "active member." 	The question of whether a
former employee may purchase the first-year service credit is answered in the definition
of "permissive service credit."8 In other words, a former employee can purchase
"permissive service credit" only if the laws governing KPERS "specifically recognize" the
purchase of the first-year service credit "for purposes of calculating a member's benefit
under that retirement plan," the member has not received the benefit under the plan,
and the amount for such purchase is determined by the retirement plan. 9 Thus, we next
review K.S.A. 74-4919a.
K.S.A. 74-4919a
The Board relied upon the following language in K.S.A. 74-4919a(1):
An employee of a participating employer who becomes a member as
provided in K.S.A. 74-4911 and amendments thereto, after completion of
one year of continuous employment as therein provided may purchase
participating 	service 	credit 	for 	such 	year 	of 	employment 	by 	making
application therefor. 	Such application and payment may be made at any
time 	after 	the 	employee 	becomes 	a 	member 	and 	continues 	to 	be
employed by a participating employer.
You state that the Board has interpreted the above language the same as it has
interpreted the term "active member" in K.S.A. 2011 Supp. 74-49,123(c)(6)(C). 	Thus,
the Board interprets K.S.A. 74-4919a(1) to include former employees if they meet the
conditions discussed in the above analysis of K.S.A. 2011 Supp. 74-49,123(c)(6)(C).
Like its interpretation of "active member," the Board did not adopt its interpretation of
K.S.A. 74-4919a(1) in a regulation; 10 thus, it has no force of law. 11 Even if it had
adopted such a regulation, it appears the interpretation conflicts with the clear language
of K.S.A. 74-4919a(1). 12 The second sentence requires the employee to be a member
of KPERS and "to be employed by a participating employer" when the application and
payment is submitted. 	The requirement of current employment is consistent with the
definition of an "employee," 13 which is the focus of these two sentences in K.S.A. 74-
4919a(1). 	Because the above language is clear and unambiguous, it does not need
or regulation as a matter of law under [K.S.A. 2011 Supp. 77-415(c)(4) of the Kansas Rules and
Regulations Filing Act] and to be effective must be filed and published as a rule or regulation").
8 The definition of "permissive service credit" in K.S.A. 2011 Supp. 74-49,123(c)(6)(C)(iii)(a)-(c) is nearly
identical to the definition of the same phrase in federal law. See 26 U.S.C. § 415(n)(3)(A).
9 K.S.A. 2011 Supp. 74-49,123(c)(6)(C)(iii)(a).
10 Supra, note 4.
11 Supra, note 5.
12 255 Kan. at 735 (a regulation cannot contravene or nullify a controlling statutory enactment).
13 K.S.A. 2011 Supp. 74-4902(14) (the person's employment with a participating employer is not seasonal
or temporary and requires at least 1,000 hours of work per year).

Mr. Alan D. Conroy
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interpretation. 14 When employment terminates, so has the authority to purchase the
first-year service credit. However, our analysis does not end here.
The third sentence in K.S.A. 74-4919a(1) uses the word "member," not "employee." We
question whether the third sentence modifies the first two sentences or has independent
meaning. It states:
Any member of the system who has not retired may purchase, subject to
the provisions of K.S.A. 74-49,123 and amendments thereto, such service
credit by paying the then present value of the retirement benefits based on
such service by means of a single lump-sum payment in the amount
determined by the actuary using the member's attained age and the
actuarial 	assumptions 	and 	tables 	currently 	in 	use 	by 	this 	retirement
system.
A "member" is defined as:
an eligible employee who is in the system and is making the required
employee contributions; any former employee who has made the required
contributions to the system and has not received a refund if such member
is within five years of termination of employment with a participating
employer; 	or 	any 	former 	employee 	who 	has 	made 	the 	required
contributions to the system, has not yet received a refund and has been
granted a vested benefit.15
Effective July 1, 2009, KPERS members who had completed five years of credited
service at the date of termination were automatically vested in KPERS if the member
did 	not 	withdraw 	the 	accumulated 	contributions 	prior 	to 	the 	commencement 	of
retirement benefit payments.16 Under the factual scenario you submitted, even though
no longer employed by a participating employer, the former employee was a "member"
as he was within 5 years of his termination date, had not received a refund of
contributions, and had vested in KPERS.
To determine whether the third sentence in K.S.A. 74-4919a modifies the preceding two
sentences or is a separate provision that expands eligibility to purchase the first-year
service credit to former employees who are "members," we follow the rules of statutory
construction used by the courts. 	The fundamental rule is to give effect to the intent of
the legislature as expressed in the statute's language. 	If the language of a statute is
plain and unambiguous, courts must apply that language rather than determine what the
law should or should not be, speculate as to legislative intent, add something not readily
found in the statute, or resort to canons of statutory construction. 17 However, where a
14 Martin v. Kansas Dept. of Revenue, 285 Kan. 625, 629 (2008) (when the language in a statute is clear
and unambiguous, there is no need for interpretation).
15 K.S.A. 2011 Supp. 74-4902(21) (emphasis added).
16 K.S.A. 2011 Supp. 74-4917(2).
17 Higgins v. Abilene Machine, Inc., 288 Kan. 359, 361-62 (2009).

Mr. Alan D. Conroy
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plain reading of the statute results in an ambiguity or a lack of clarity, statutory
construction is necessary. 	In such instances, we examine other evidence of legislative
intent such as legislative history and canons of statutory construction. 18 Courts also
determine legislative intent for a statutory provision from a general consideration of the
entire act; in doing so, different provisions are reconciled to make them harmonious if
possible. 19
K.S.A. 	74-4919a 	was 	enacted 	in 	1971. 20 That 	original 	provision 	had 	only 	two
sentences. 	The first sentence provided that an employee who was a KPERS member
could purchase the first-year service credit if the employee applied for such purchase
and 	paid 	to 	KPERS 	"a 	lump 	sum 	amount 	equivalent 	to 	four 	percent 	(4%) 	of
compensation paid to such member for personal services during said year by said
participating employer." 21 The second sentence required the application and payment
to "be made at any time after the employee becomes a member and continues to be
employed by a participating employer."22 Thus, the initial version of K.S.A. 74-4919a
required 	employment 	with 	a 	participating 	employer 	at 	the 	time 	of 	purchase 	and
established the amount that the employee paid for the purchase.
The amendments pertinent to our discussion occurred in 1995. 	None of the legislative
history indicates that the legislature intended to expand K.S.A. 74-4919a(1) so that
former employees who were KPERS members could purchase the first-year of service
credit. 23 The legislative history instead shows that the Board requested that payments
for service credit purchases be changed from the method based on a percentage of the
employee's 	compensation 	to 	a 	method 	using 	actuary 	tables. 24 As 	a 	result, 	the
legislature amended K.S.A. 74-4919a(1) by deleting the language in the first sentence
regarding the computation of the purchase amount and adding the third sentence
regarding the computation of the purchase amount based upon the present value of the
retirement benefits, the member's current age, and actuary tables. 25 The legislature
also amended other KPERS statutes requiring the Board to use the actuarial method to
determine the amount for purchasing prior service credits.26
Based upon the legislative history, the third sentence does not expand eligibility to
purchase the first-year service credit to former employees who are "members." Rather,
it addresses compliance with K.S.A. 2011 Supp. 74-49,123(c)(6)(c)(iii). 	As noted
18 Id. at 362.
19 Redd v. Kansas Truck Center, 291 Kan. 176, 195 (2010).
20 L. 1971, Ch. 253, § 1.
21 Id.
22 Id. (emphasis added).
23 Minutes, House Committee on Appropriations, March 9, 1995; Minutes, Senate Committee on Ways
and Means, March 24, 1995; and Minutes, Senate Committee on Ways and Means, March 30, 1995.
24 Minutes, House Committee on Appropriations, March 9, 1995, Attachment 6-2; Minutes, Senate
Committee on Ways and Means, March 24, 1995, Attachment 6-2; and Minutes, Senate Committee on
Ways and Means, March 30, 1995, Attachments 5-2 and 7.
25 L. 1995, Ch. 267, § 11.
26 See L. 1995, Ch. 267, §11(1) and (3) (now K.S.A. 74-4919a[1] and [3]); § 12 (now K.S.A. 74-4919c); §
14(2) (now K.S.A. 2011 Supp. 74-4919g[2]); § 15(1) (now K.S.A. 2011 Supp. 74-4919h[1]); and § 16(1)
(now K.S.A. 2011 Supp. 74-4919j[1]).

Mr. Alan D. Conroy
Page 7
above, K.S.A. 2011 Supp. 74-49,123(c)(6)(C)(iii) has three requirements to qualify as a
"permissive service credit." 	First, the retirement plan must specifically recognize such
purchase for calculating the member's benefit; second, the member has not received
such benefit under the retirement plan; and third, the retirement plan's law requires the
member to make "a voluntary additional contribution, in an amount determined under
the retirement plan's law." 	The first two sentences in K.S.A. 74-4919a(1) address the
first and second requirements for a permissive service credit. 	The third sentence in
K.S.A. 74-4919a(1) addresses the third requirement for a permissive service credit—the
method to compute the voluntary additional contribution made by the employee.
Conclusion
Based upon the above analysis, the legislative intent is that the first, second, and third
sentences of K.S.A. 74-4919a(1) are read together. 	The third sentence of K.S.A. 74-
4919a(1) does not provide an independent right for a KPERS member to purchase that
member's first-year service credit if such member is not employed by a participating
employer at the time of purchase. 	An employee who is a KPERS member may
purchase the first-year of service credit by applying for such purchase and paying the
amount determined by the employee's attained age and the actuarial assumptions and
tables currently in use by KPERS if such employee has not retired and is employed by a
participating employer.
Sincerely,
Derek Schmidt
Kansas Attorney General
Janet L. Arndt
Assistant Attorney General
DS:AA:JLA:sb