LEXINGTON, Ky. (June 26, 2012) — Mayor Jim Gray today asked his Task Force on Pension Reform to redouble its efforts to find agreement on a plan to address the growing unfunded liability in Lexington’s pension fund.
Gray appointed the Task Force last October and charged it with forging an agreement on changes that need to be made to the fund to bring it back into balance, financially.
“This Task Force has worked hard, but we gave them a tall order. We shouldn’t be surprised it has been tough to find common ground, since some members of the group have different and occasionally opposing interests,” Gray said.
Police officers and firefighters, business leaders and the Council have representation on the Task Force.
Gray also urged Police Chief Ronnie Bastin and Interim Fire Chief Keith Jackson to redouble their efforts to address the issue, specifically asking them to put together a police-fire work group to identify what pension rules can be changed easily, more difficult changes that are needed and what benefits should remain in place to keep Lexington competitive with other cities.
“This is a tough problem and it’s going to take all of us working together to solve it, from management to the rank and file,” Gray said. “We’ve got to overwhelm this problem with talent and people willing to examine it, get to the bottom of it, put a bear-hug around it and wrestle it to the ground.”
If the group cannot agree on a plan by December, Gray said he will ask Frankfort legislators in the next session to give Lexington control of its pension fund.
“Problems like this don’t get better by ignoring them or by avoiding them,” he said. “There’s just too much at stake to look the other way any longer.”
The mounting pension unfunded liability — now estimated at $500 million — is unsustainable and threatens the city’s ability to provide basic services, Gray said. “This unfunded liability is double the city’s current annual General Fund budget. In trying to catch up, we’ve put in $182 million over the past four years in cash and bonds. It hasn’t made a dent.”
Gray said his predecessor and the last city council also tried to address the unfunded liability through a Task Force, but was unable to get reforms passed in Frankfort.
Currently, the legislature makes the rules for the pension fund while Lexington residents pay the bills, a system Gray described as fundamentally unfair. “If Lexington is paying the bills, and Frankfort cannot enact meaningful reform, then we deserve home rule,” he said.
The unfunded liability is threatening the city’s ability to provide other services Lexington residents have come to depend upon, and that includes services in police and fire, Gray said.
“We cannot wait to tackle pension reform,” he said.