Fayette County

New-hire pension plan urged

A city task force wants to solve Lexington's public safety pension problems by starting a less-generous plan for new employees.

The proposal, which faces strong opposition from police officers and firefighters, must clear the Urban County Council and the Kentucky General Assembly before taking effect.

Officials hope state lawmakers will approve the measure this year, but there are only 22 working days left in the legislative session.

Under the proposal, new police officers and firefighters in Lexington would get largely the same benefits as those offered under a state plan that serves public safety workers in other Kentucky cities.

Chris Bartley, president of the local International Association of Fire Fighters 526, said he doesn't like the idea of mirroring the state's county retirement system.

"It's a low standard pension and I don't think we need to go with that," said Bartley, who voted against the pension task force's recommendations. "It's pretty much a quick fix for them ... It's a money-saving move is all it is. They really don't care about the employees."

Over the years, Lexington's police and fire pension system has been underfunded to the point that it has a more than $246 million unfunded liability.

Last month, Mayor Jim Newberry and the pension board reached an agreement to fully fund the system by 2015 through a combination of cash contributions and bonds. But the funding problems will probably continue as long as the same benefits are offered.

City and public safety leaders agree that something needs to be done, but the question is, what?

The task force wants to mirror the county retirement system with one major exception: the city would calculate occupational disability pay using a more generous formula.

In particular, the formula would better compensate an officer or firefighter who is injured early on in their career, said Bill Lear, chairman of the task force.

"The state system doesn't compensate for that at a level that I thought was appropriate," he said.

If approved by lawmakers this year, the plan would go into effect for all police officers and firefighters hired after June 30.

The city is working on a draft bill and has tentatively identified a sponsor, said Susan Straub, Newberry's spokeswoman. She declined to identify the potential sponsor. The last day to file new legislation in Frankfort is Feb. 23.

Lear said he was concerned about the proposal's prospects in Frankfort because the task force did not approve the recommendations unanimously. The private sector members of the group support the recommendations while the current and former public safety members, including the heads of the police and fire unions, oppose it.

"The time to formulate and present something to the legislature is really short, even if they accept all the recommendations ...," Lear said. "In a short session of the legislature, the goal is to walk over with all constituencies in agreement."

Consensus is ideal, but the city has been working on this issue since last March, Straub said. "There comes a point at which you have to move forward. Additionally, consensus does not mean unanimity."

Last March, Newberry made a pitch to legislators for Lexington to take full control of the retirement benefits for police officers and firefighters hired after July 1, 2008. The request came with less than 10 days left in the session. Police officers and firefighters were opposed to the idea and Rep. Bob Damron, D-Nicholasville, recommended that Newberry work with the council, police and firefighters to come up with an agreement supported by all.

State Rep. Bill Farmer, R-Lexington, and state Rep. Tom Buford, R-Nicholasville, said they were hesitant to support the proposed pension changes without the agreement of the Fraternal Order of Police and the International Association of Fire Fighters.

"It has always been a standard rule, and I trust that we would have that in this session, that we would like to see agreement from the FOP and the firefighters before we make changes to the pension plan," Buford said.

"Since the public safety people aren't on board, I think you're going to have a hard time finding a legislative sponsor," Farmer said.

In addition to state legislative approval, Newberry wants the council to sign off on the changes, Straub said. No presentation date to the council has been scheduled.

Still, councilman Julian Beard said he thinks the council will approve the recommendations.

The proposal, which creates a new pension plan within the existing public safety pension fund, isn't the direction we "want to go, but it's one we have to go," Beard said.

Mike Sweeney, president of Bluegrass Lodge No. 4 of the Fraternal Order of Police, said he voted against the recommendations because he thinks the city is rushing things.

"Why try to shove it through this February?" Sweeney said. "Why don't we take a deep breath and take our time?"

Members of the proposed pension system would be eligible to retire with full benefits after 25 years of service. They would contribute 9 percent of their salary to the pension system. Retirees would receive an annual 1.5 percent cost-of-living adjustment on their pensions and $15 for each year of service for health insurance.

Currently, members of Lexington's Policemen's and Firefighters' Retirement Fund are eligible to retire after 20 years of service. Members contribute 11 percent of their salary to the system. The retirees receive between a 2 percent and 5 percent cost-of-living adjustment, which is determined by the pension board, and receive the same health insurance benefits as active employees.

In addition to the changes to the pension plan, the task force also recommends:

■ Giving disability retirees priority in hiring for any city vacancy they are qualified to fill;

■ setting the maximum hiring age for police officers and firefighters at 34;

■ approval of a state statute that would mandate full funding of the pension system within 25 years;

■ approval of a state statute that would give the city the ability to create a property tax to pay off the unfunded liability.