Bill would guarantee Lexington police, fire retirees full funding of health insurance premiums

jkegley@herald-leader.comFebruary 6, 2012 

A Nicholasville senator has filed a bill in Frankfort that would guarantee Lexington police and fire retirees full funding of health care insurance for life, a change that would cost "tens of millions of dollars" during the next 20 to 30 years, a Lexington city official said.

The bill comes at a time when the city is working to reduce a projected $221 million unfunded liability in the police and firefighter's pension fund.

Sen. Tom Buford, R-Nicholasville, said the purpose of Senate Bill 130 is to restore what Lexington firefighters and police officers have received under the past three mayoral administrations.

"That is, if they are retired, they get their health care insurance paid for in full," he said.

The bill would alter an existing state law that says the Urban County Government must pay retirees' health care costs, but not more than 100 percent of the sum they give to current employees.

In October, the city unveiled a new insurance plan that increased the amount many city employees paid for health insurance and effectively doubled the cost of the Platinum Plan, a high-end plan in which 89 percent of city employees were enrolled.

The increased rates also applied to retirees from the Lexington police and fire departments who draw pensions from a locally funded retirement system. The city previously has covered in full the costs for police and fire retirees, but that changed at the start of the year when the higher-cost insurance plans took effect.

"I think we're putting in an amount that is equal to what has been put in the past," said Geoff Reed, adviser to Mayor Jim Gray, of the city's contribution to retiree health care. "It's just that the cost of the top-of-the-line health care plan has gone up dramatically."

The city opposes the bill, in part because of the increased cost and in part because it was not given an opportunity to discuss the bill before it was filed, Reed said.

"We had no discussions prior to the filing of this bill. And now we are left scrambling trying to deal with the financial consequences," he said.

He said the city was working to prepare actuarial reports that would outline the cost of the bill over time, but preliminary numbers indicated it would cost about $3 million a year. He said the bill runs counter to what most cash-strapped governments are trying to do, which is reduce benefits among other significant cuts.

Buford said he did not know how much his bill would cost. He said he has asked legislative staff for a financial impact statement but has not received it.

Detective Mike Sweeney, president of the Fraternal Order of Police Bluegrass Lodge #4, which lobbied for the bill, said the bill would "clean up the language and eliminate ambiguity" in the existing law.

"It's paid health care, period, for retirees," he said.

Sweeney said the bill was about honoring an existing agreement with officers and firefighters who took the job and retired on the notion that their health insurance costs would be paid for. Those types of perks attract high-quality candidates for the job.

"It helps the employee. It helps the guy who's given 20-plus years of his life to this place," he said.

During a recent meeting of the Police and Fire Pension Task Force, Sweeney said the union was preparing a lawsuit over the issue. On Monday, he said union members would not take the issue to court pending the outcome of the bill.

He said legislators to which union members had spoken seemed to mostly support the bill.

"We want this bill to go through on its own merits, and so far everybody we've talked to has been behind it," he said.

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