Ed Lane - 12th District Council

Letter to the Editor
Lexington Herald-Leader

The Herald-Leader's front page stories on how early disability costs have and will negatively impact the LFUCG Police and Firefighter's Pension Fund were very informative, but failed to address the most critical issue - who is going to pay for the escalating costs of pension benefits?

The answer is Lexington's taxpayers. The long-term actuarial estimate of underfunding over the life of the police and firefighters pension fund as of 6/30/04 was $137.7 million. (1) The current portion of the underfunded balance reflected as a liability on Lexington's balance sheet as of 6/30/04 was $18.2 million.

Lexington's general fund budget for FY05-06 is $253.5 million. Obviously, this pension fund is a major financial liability relative to Lexington's annual revenues and expenditures.

Early disability benefits are not necessarily the primary reason the pension account is underfunded. Retirement - after 20 years of service, the amount of money contributed into the pension fund by employees and government, low compensation of firefighters and police officers (prior to recent pay increases) which encouraged early retirement, the economy's impact on pension fund investments, mortality rates, and early buyouts are all significant factors.

Recent pay raises for police and firefighters may also increase pension fund costs. Pension benefits are based on an annual average of an officer's compensation during the last few years of his or her employment.

Now is the time to evaluate the police firefighters pension fund. Our government must address and fix this important financial issue. Immediate attention is in the best interest of Lexington's public safety employees and taxpayers. Without a fix, each day that passes will likely escalate the taxpayers' future pension fund liability.

Your comments and suggestions are always appreciated.

If you would like to contact Ed Lane he can be reached via at EdLane@LFUCG.com ; and by letter at 200 East Main Street, Lexington, KY 40507.

Councilman Ed Lane represents the 12 th District on Lexington Urban County Council. He is the owner of a commercial real estate services firm and publishes a statewide business magazine.

“I want to conservatively spend our tax dollars,
eliminate waste, and bring sound business ideas
to local government.”

To contact Ed Lane's 12th district council offices, e-mail him at edlane@lfucg.com.

Paid for by the committee to elect Ed Lane; Ron Switzer, treasurer.