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City, former officers settle pension suit

The city and several former police officers have settled a lawsuit over the city's contribution to the ailing police and firefighters pension fund.

In court documents filed this week in Fayette Circuit Court, the two sides said that an agreement had been reached, ending the more than six-year court battle over how much the city should contribute to the cash-strapped fund.

This week the city put $70 million into the pension fund using bond money.

"This is historic," said Susan Straub, a spokeswoman for Mayor Jim Newberry. This is the first significant contribution the city has made to fixing the unfunded liability of the pension, Straub said.

A 2006 actuarial report put the unfunded liability at approximately $220 million. That means in the future — possibly 10 or 20 years — the fund would not have enough money to pay all of its retirees.

Tommy Puckett, a retired police officer and plaintiff in the lawsuit, said the former police officers agreed to the settlement as long as the city continues to make contributions to the fund. Puckett said the city has said that it will put an additional $30 million in additional bond money into the fund sometime later this year.

"We can always come back if they don't fund the pension properly," Puckett said.

Puckett said their accountants figured the city owed approximately $63 million in back payments to the fund. That's for pension payments from 2003 — when the lawsuit was filed — to March 31.

At issue in the legal battle was how much the city should contribute to the fund. Firefighters and police officers put 11 percent of their pay into the pension. The Policemen's and Firefighters' Pension Board then set the city's contribution rate — a percentage of its total police and firefighters' payroll.

The city has argued that the statute regarding its contribution says that it could also choose to pay a minimum of 17 percent of the public safety payroll.

The retirees countered that the city should contribute the percentage set by the pension board. In 2006, a Fayette Circuit Court judge sided with the retirees, a judgment that was later upheld by the state Court of Appeals.

The state Supreme Court declined to hear the city's appeal and the case was sent back to the Fayette Circuit Court to determine how much money the city owed the pension fund. The city and the police officers filed the documents on Monday saying that the matter had been settled.