Herald-Leader Editorial

New blood for Lexington police, fire pension system

Too easy to join rolls; management needs new blood, transparency

March 17, 2013 

The compromise to save Lexington's police and fire pension fund, along with the city's economic stability, was so remarkable and rare that it's attracted national attention.

The Bond Buyer — not a household name but for a century a go-to source for news about municipal bonds — hailed the deal. Local officials and union representatives "may have set the stage for a new level of dialogue on how to solve unfunded pension liabilities," it declared.

That dialogue produced an agreement that preserved defined-benefit pensions and cost-of-living adjustments (COLAs) for the lowest paid pensioners, and benefits for workers seriously injured or killed. Employees and the city will pay more into the fund, COLAs shrink as pensions rise, the moderately disabled will get less and new hires will work longer to claim benefits.

The plan was approved by 76 percent of active and retired police and fire workers.

"It's hard to overstate how rare it is to reach a consensus," on such a complex, costly and emotional issue, Vijay Kapoor, a nationally known consultant who worked with the negotiators, told Bond Buyer. "I hope it serves as a model for other cities and states."

As it should. In Frankfort there's been virtually no progress on the state's pension problems, and governments throughout the country remain frozen in the face of billions of unfunded pension liabilities.

So, congratulations are well deserved. But there's more to be done.

Disability pensions remain a thorny problem that drain money and diminish public trust in the system. Although the agreement made them less lucrative, police and fire workers can still receive benefits with as little as a 1 percent disability. While 8 percent of state police have retired with disability pensions, some 38 percent of Lexington police and fire retirees receive the benefits.

Clearly some turn to it when their careers take a bad turn. Consider former Fire Chief Robert Hendricks, who refused to resign when Major Jim Gray asked but then, citing psychological issues, filed for disability retirement benefits. (They were ultimately denied.) All this as he collected a pension from previous service in the department.

More recently, a policeman who resigned after he was convicted of receiving sexual favors from a suspect filed a second disability application after being turned down once.

When the disability issue arose several years ago, the response was to amend state law to close many disability records to the public.

That circle-the-wagons mentality is symptomatic of larger governance and transparency issues. The police and fire pension fund is governed by a board of 12 persons, all of whom collect a city salary or pension: half are active or retired police and fire members, four come from the mayor's administration, and the police and fire chiefs have a seat. There are no term limits, no provisions to rotate officers.

It's time to open the doors and let some outsiders join the discussion.

We know that no one has as much skin in this game as the police and fire workers and retirees who rely on this pension fund. But it is a public fund and taxpayers will contribute over $30 million annually for a generation to assure its stability. They deserve a place at the table and open records.

The final negotiations to reach this historic pension agreement were private but it was the full, unblinking public examination of this complex problem that made it possible.

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