Court of Appeals rules Lexington shorted police, fire pension fund by millions

A three-judge panel of the Kentucky Court of Appeals ruled last week that Lexington may have to pay millions more into its police and fire pension fund.

The unanimous decision released Wednesday reverses an earlier Fayette Circuit Court ruling.

At issue is whether a 2013 agreement between the city and police and firefighters to shore up the unfunded pension system meant the city still had to contribute its 2011 payment into the fund. The 2013 agreement outlined several changes to how the system was funded and the city’s payments into it. Lexington lawyers argue that the 2013 agreement covered all prior city contributions including the 2011 payment.

Tommy Puckett and Mario Russo, who filed the lawsuit on behalf of police and firefighters, have argued the 2013 agreement did not cover the city’s 2011 payment into the fund. The city had estimated that payment at $16 million. A forensic accountant hired by police and fire estimated the payment at $19 million.

Susan Straub, a spokeswoman for the city, said the city plans to appeal the Court of Appeals decision.

“We plan to seek further appellate review,” Straub said.

Puckett, a retired Lexington police officer and pension board member, said Monday that if the judgment against the city stands, the amount the city may owe could top more than $23 million — the original amount plus interest. Lexington city officials have given the fund an additional $700,000 over the past two months after realizing that the city shorted the fund due to some accounting and other errors. The shortfall was discovered after a Lexington police officer on the pension board asked the city for a breakdown of the city’s contribution into the fund over the past three years.

Fayette Circuit Court Judge Ernesto Scorsone had originally sided with the city. But the three-judge panel of the Court of Appeals ruled that despite the 2013 agreement, the city still was required to make its annual contribution into the fund, including its 2011 payment.

“If the LFUCG did not make such a contribution, it must do so,” wrote Chief Judge Joy Kramer. Judge Denise Clayton and Judge Debra Lambert concurred with the opinion.

This story was originally published November 28, 2016 at 3:48 PM with the headline "Court of Appeals rules Lexington shorted police, fire pension fund by millions."