Commerce Lexington and the Lexington Industrial Foundation have offered $80,000 to help pay consultants working to help the city solve its pension-fund crisis.
Consultants from Public Financial Management Inc., better known as PFM, have been enlisted to help reduce the unfunded liability of the Lexington police and firefighter's pension fund. If unchecked, the unfunded liability, last measured at $258 million, could make pension fund for police and fire retirees insolvent or bankrupt the city.
The city acknowledged the hiring of the consultants last week, saying part of their $160,000 fee would be paid by private donations, but it was unclear who the donors were or how much they planned to donate.
The identity of the donors emerged at an Urban County Council work session Tuesday. The donations will cover half of PFM's fees; the city would be responsible for $80,000, plus an additional $50,000 to enlist the help of an actuary, said Scott Shapiro, senior advisor to Mayor Jim Gray.
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Downtown developer and attorney Bill Lear spoke on behalf of Lexington's business leaders about the necessity of the consultants.
"This situation is the darkest cloud on Lexington's economic horizon, and it's getting closer," he told council members.
Even though the council has not yet approved PFM's hiring, the firm already has begun interviewing the pension fund's stakeholders. The donations will pay for the work they have done if they are not hired, Shapiro has said.
Council members voted Tuesday to bring the matter before the full council at a future meeting.
If PFM is hired, the consultants will continue working alongside the mayor's pension fund task force to change the pension system and reduce the unfunded liability.
The task force hopes to present potential changes to Kentucky's General Assembly during the upcoming legislative session in January.