Senator Susan Johns, Chairperson
Program Review and Investigations Committee
Legislative Research Commission
Frankfort, KY 406061
Dear Senator Johns:
You have requested an opinion from the Attorney General o an issue relating to the
Kentucky Open records Act and the third party administrators for the seven programs operating
under the umbrella of the Kentucky Association of Counties (KACo). Specifically, you ask
whether these third party administrators are "public agencies" within the meaning of KRS
61.870(1), the definitional section of the Open Records Act. You explain that each of the
programs is managed by a third party administrator which "provide[s] financial and other wide
ranging administrative services for the [programs]." All are Kentucky corporations, and have a
"contractual relationship" with the programs. To facilitate our analysis of this issue, you have
provided this Office with information concerning revenues received by the third party
administrators from state or local authority funds.
The Attorney General is charged with certain duties relative to the Open Records Law,
including, of course, reviewing denials of public records if asked to do so by the person seeking
inspection of those records. Here, we are presented with the threshold issue: Whether the third
party administrators of programs operating under the KACo umbrella are "public agencies" as
defined at KRS 61.870(1). That statute provides:
(1) "Public agency" means:
(a) Every state or local government officer;
(b) Every state or local government department, division, bureau board, commission, and authority;
(c) Every state or local legislative board, commission, committee, and officer;
(d) Every county and city governing body, council, school district board, special district board, and municipal corporation;
(e) Every state or local court or judicial agency;
(f) Every state or local government agency, including the policy-making board of an institution of education, created by or pursuant to state or local statute, executive order, ordinance, resolution, or other legislative act;
(g) Any body created by state or local authority in any branch of government;
(h) Any body which derives at least twenty-five percent (25%) of its funds expended by it in the Commonwealth of Kentucky from state or local authority funds;
(i) Any entity where the majority of its governing body is appointed by a public agency as defined in paragraph (a), (b), (c), (d), (e), (f), (g), (h), (j) or (k) of this subsection; by a member or employee of such a public agency; or by any combination thereof;
(j) Any board, commission, subcommittee, ad hoc committee, advisory committee, council, or agency, except for a committee of a hospital medical staff, established, created, and controlled by a public agency as defined in paragraph (a), (b), (c), (d), (e), (f), (g), (h), (i), or (k) of this subsection; and
(k) Any interagency body of two (2) or more public
agencies where each public agency is defined in
paragraph (a), (b), (c), (d), (e), (f), (g), (h), (i), or (j)
of this subsection[.]
This Office has consistently recognized that a private corporation does not come within
the purview of the Open Records Act if ti derives less than 25% of its funds from state or local
authority. OAG 81-377; OAG 82-216; OAG 84-237; OAG 88-61; 92-ORD-1114. Where
evidence is introduced that an agency receives at least 25% of its funds from state or local
authority, the Attorney General has deemed it a "public agency." OAG 88-72; OAG 89-46.
In 92-ORD-1232, we held that a number of programs administered by KACo, including
the Kentucky Association of Counties All Lines Fund (KALF), the Kentucky Association of
Counties Leasing Fund (COLT), the Kentucky Association of Counties Medical Program
(KAMP), and the Kentucky Association of Counties Advance Revenue Program (KARP), were
public agencies within the meaning of KRS 61.870(1)(k)(1) insofar as they are constituted as
interagency bodies of two or more political entities, agencies, or subdivisions of the state formed
under the Interlocal Cooperation Agreement Act, codified at KRS 65.210 et seq. In 92-ORD-1245, we held that KACo-KLC Workers Compensation Self Insurance Fund (KACo-KLC), an
interagency body of two or more public agencies formed pursuant to KRS 342.350(4), was a
public agency within the meaning of KRS 61.878(1)(k). In 93-ORD-96, we declared that KACo
itself is a public agency. Because it receives at least 25% of its funds from state or local
authority, KACo falls within the parameters of KRS 61.878(1)(h), and is therefore subject to the
Open Records Act. Most recently, we held that the KACo Reinsurance Trust Program (KRT) and
the KACo Unemployment Insurance Fund are public agencies for purposes of the Open Records
Act. OAG 93-65.
Any funds which the third party administrators receive from these programs must be
treated as "state or local authority funds." In 93-ORD-96, we dealt with this precise issue. It is
instructive to quote at length:
KRS 61.870(1)(h) defines a public agency as "[a]ny body which
derives at least twenty-five percent (25%) of its funds . . . from
state or local authority funds[.]" The term "state or local authority"
is not defined in the statute, nor has it been construed by this
Office, but it is commonly understood to mean "a government
agency that administers a project," New World Dictionary, 94 (2d
ed. 1978), or "a public agency or corporation with administrative
powers in a specified field," Webster's II New Riverside University
Dictionary, 139 (2d ed. 1988). See also, The American Heritage
Dictionary, 142 (2d ed. 1985). KRS 446.0880(4) provides that
"[a]ll words and phrases shall be construed according to the
common and approved usage of language . . . ." Consistent with
this rule of law, we believe that the term "authority" must be
construed to mean "public agency." Since KACo-KLC, KALF,
COLT, KARP, . . . KAMP [, KRT, KACo Unemployment
Insurance Fund, and KACo] have been deemed "public agencies"
for purposes of the Open Records Act, we believe that funds
derived from these sources must be calculated into the 25%
threshold established in KRS 61.870(1)(h).
93-ORD-96, p. 6.
Turning to the specific issue which you raise, we examine each of the five third party
administrators to determine if they are "public agencies." The Committee's research discloses
that Governmental Services, Inc., generated $611,058 in gross revenue in 1992. One hundred
percent of this revenue was derived from KACo-KLC Workers Compensation Self-Insurance
Fund, for which it provides administrative services. It is therefore a "public agency" within the
scope of KRS 61.870(1)(h). Similarly, KACo Administrative Services, Inc., which generated
$500,000 in gross revenues in 1992, received 100 of its funds from the Kentucky Association of
Counties Leasing Trust, which it administers. It, too, must be characterized as a "public agency"
as defined in KRS 61.878(1)(h). Kentucky Risk Insurance Services, Inc. (KRISI) generated
$521,026 in 1991,(2) receiving 100 of this revenue from the Kentucky Association of Counties All
Lines Fund, Kentucky Association of Counties Medical Program, Kentucky Association of
Counties Advance Revenue Program, Kentucky Association of Counties Leasing Trust, and
Kentucky Association of Counties Unemployment Insurance fund collectively. KRISI is
therefore a "public agency" for purposes of the Open Records Act.
Based on the scant information with which the Committee was provided, it does not
appear that Selective Management Services, Inc., or Multi-Benefits System, of Kentucky, Inc.,
which administer KACo All Lines Fund and KACo Medical Program, respectively, are "public
agencies" under the 25% funding rule. Mr. Richard Williams, Selective Management's owner,
indicated that it receives only 15% of its funds from KALF, and provided access to financial
records to substantiate this claim. Mr. Dale Wood, owner of Multi-Benefits System, declined
access to the corporation's gross revenue figures, but advised that funds received from KAMP
represent less than 15% of its gross income. Assuming that they do not fall within the parameters
of any of the other definitional sections of the parameters of any of the other definitional sections
of the Act, we must conclude that these third party administrators are not "public agencies," and
are not subject to the Open Records Act.(3)
To summarize, it is our opinion that Governmental Services, Inc., KACo Administrative
Services, Inc., and Kentucky Risk Insurance Services, Inc., are "public agencies" insofar as each
of them satisfies the 25% public funding threshold established in KRS 61.870(1)(h). Selective
Management Services, Inc., and Multi-Benefits Systems, Inc., on the other hand, cannot be
characterized as "public agencies" since neither derives 25% or more of its funds from state or
local authority funds.. This assumes the accuracy of the financial figures provided to this Office
by your Committee.
Sincerely yours,
CHRIS GORMAN
ATTORNEY GENERAL
Amye B. Majors
Assistant Attorney General
(502) 564-7600
ABM:jgh/1354
cc: Joe Fiala
Mike Greenwell
1. KRS 61.870(1)(k) defines a public agency as "[a]ny interagency body of two (2) or more public agencies where each public agency is defined in [preceding paragraphs (a) through (j) of this definitional subsection.]"
2. The Committee was unable to obtain information from Kentucky Risk Insurance Services, Inc., relative to its 1992 gross revenue. We are left with no alternative but to assume that the revenue for both years was roughly equivalent, and was received from the same sources.
3. It is, in our view, unfortunate that a private entity charged with administering a public agency, and public agency funds, would choose to ignore the mandates of the Open Records Act, at least with respect to records relating to the public agency, regardless of whether the entity can be characterized as a public agency. This opens the door to widespread abuse, permitting the public agency to "secret away" its records in the shelter of a private corporation.