Lexington's Urban County Council approved increasing the city's contribution to the police and firefighters pension fund by more than $3 million for fiscal 2013.
Finance Commissioner Bill O'Mara said the action is to cover the city's commitment to the fund. The city and the police and firefighters unions negotiated pension reform calling for the city to pay $20 million a year for the next 30 years to eliminate the unfunded liability created when, for several years, the city did not contribute its share.
The pension plan was approved by the state legislature earlier this year. Lexington is the only Kentucky city whose police and fire pension fund is controlled by the state.
The additional payment was needed because this is the transition year when the pension reform was passed, but not all the elements of the reform have taken effect, O'Mara said.
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To make the increased payment, $2 million will be taken from the payroll contingency fund and $1.2 million from the city's fund balance. In 2014, the pension payment is expected to return to $20 million.
Without the reform, the city's full pension contribution would have been $29 million for the current fiscal year, rising to $37 million in 2014, said Scott Shapiro, senior adviser to Mayor Jim Gray, who helped negotiate the reform.
Council approved the additional payment in the form of a budget amendment that passed 15-0.