KY Court Upholds Lexington Police Pension Ruling

February 4, 2008 (PLANSPONSOR.com) - A Kentucky state appellate court has upheld a lower court ruling that the Lexington Urban County government underfunded its police and firefighter pension fund.

The Lexington Herald-Leader reported that, unless the Court of Appeals ruling gets overturned, local government officials may have to come up with $30 million to $35 million in back pension payments.  The panel agreed with a December 2006 decision by Fayette Circuit Judge Gary Payne.

The court sided with five police officers who sued the Urban County Government over the underfunding allegations , according to the opinion written by Judge Janet L. Stumbo. Lexington Police Officer Tommy Puckett, a former pension board member and the lead plaintiff in the lawsuit, told the Herald-Leader that the decision will go a long way to ensuring the fund’s long-term fiscal health.

Puckett and others sued the city in 2003, saying it did not give enough to the public safety pension fund. Police and firefighters contribute 11% of their salary to the fund, and the city makes contributions – a percentage of the total salaries of all public safety employees that is set by the pension board based on actuarial analysis, the newspaper said.

The lawsuit contends the city has contributed much less than the rate set by the board. According to 2006 estimates, the police and firefighter pension system needs $220 million to fund all current and future beneficiaries.

Lexington is not alone in its struggle to keep its pension system properly funded – state leaders are also struggling to find ways to pump more money into the state pension system that some estimate could be as much as $18 billion short.

The Kentucky ruling is here

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