Advisory Opinion 1994-21A

June 17, 1994

Ms. Theresa L. Holmes 
Corporate Counsel 
Lexington Fayette Urban County Government 
200 East Main Street
Lexington, Kentucky 40507

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  • 3(32)

Dear Ms. Holmes:

This is in response to a request for an advisory opinion submitted by you and by Ms. Laurie Bottoms of The Carnegie Center for Literacy and Learning, Lexington, Kentucky, regarding the applicability of Title I of the Employee Retirement Income Security Act of 1974 (ERISA). Specifically, you and Ms. Bottoms ask whether inclusion of employees of The Carnegie Center for Literacy and Learning (also known as the Carnegie Literacy Center, herein referred to as the Center) in the County Employees Retirement Systems (CERS) would affect the status of CERS as a governmental plan within the meaning of section 3(32) of Title I of ERISA.

You advise that CERS is a retirement system administered by the Kentucky Retirement Systems (the Kentucky Systems) to provide retirement benefits to employees of counties and school boards in the State of Kentucky. The Center has applied to the Kentucky Systems for permission to participate in CERS in order to provide retirement benefits to the Center's employees. The Kentucky Systems have notified the Center that, in order not to jeopardize the governmental plan status of CERS, the Center must obtain an opinion from the Department of Labor that the Center may establish and maintain a governmental plan within the meaning of section 3(32) of ERISA.

You further advise that the Center was created under Ordinance No. 85-90 of the Lexington-Fayette Urban County Government (the Urban County). The Center is controlled by a Board of Directors of 12 individuals, of whom the Urban County appoints three quarters and the Lexington Public Library Board (the Public Library) appoints one quarter.1 Under an agreement between the Public Library and the Urban County, the Public Library has agreed to provide $900,000 for the renovation of the building to be used by the Center. If the Center operates from the renovated building for less than 10 years, the Urban County has agreed to repay the Public Library 10 percent of the amount contributed for each year less than 10 years. The Public Library is funded, at least in part, by tax money appropriated by the Urban County. The Public Library has also agreed that 24 percent of the Urban County's annual appropriation would be used to operate the Center.

The term "governmental plan" is defined in section 3(32) to include:

. . . a plan established or maintained for its employees by the Government of the United States, by the government of any State or political subdivision thereof, or by any agency or instrumentality of any of the foregoing. . . .

Based on the information you have provided, it is the view of the Department of Labor (the Department) that the Center is an agency or instrumentality of the Urban County, a political subdivision of the State of Kentucky. The Center was created by the Urban County; its Board of Directors consists of individuals who are either directly or indirectly appointed by the Urban County; and it is supported, at least in part, by tax money. Accordingly, if the Center is permitted to participate in CERS, it is the Department's position that such action would not in itself cause CERS to fail to qualify as a "governmental plan," as defined in section 3(32).2

This letter constitutes an advisory opinion under ERISA Procedure 76-1.  Accordingly, it is issued subject to the provisions of that procedure, including section 10 thereof relating to the effect of advisory opinions.


Robert J. Doyle
Director of Regulations and Interpretations


1 Under Kentucky Revised Statutes §173.340(2), the members of a public library board are appointed by the mayor of the city maintaining the library. Article 7, §7.19 of the Charter of the Lexington-Fayette Urban County Government, dated June 20, 1972, provides that vacancies on the Public Library will be filled by the mayor, subject to confirmation by the council.

2 We note that the Department has not previously rendered an opinion regarding the status of CERS as a governmental plan within the meaning of section 3(32) of Title I of ERISA. Nothing in this letter should be interpreted as rendering an opinion of the status of CERS under that title. The information you submitted concerned only the status of the Center as a governmental entity described in section 3(32) of Title I of ERISA and not any other entity that participates in CERS to provide pension benefits to its employees.