Pensions & Entitlements
Most of Lexington's budget looks healthy. The balances year to year, revenue tracks spending, and the bond rating sits at Aa2/AA. But stacked underneath the operating picture is a longer obligation: a of about $244.0M that the city is paying down through FY2049, a retiree-health-benefit () balance that is one discount-rate change away from a $15M hole, and — including three series the city already issued specifically to plug the pension shortfall. This page surfaces what the audited and the state actuarial reports actually say. Read the plain-English explainer →
Headline · FY2024 measurement
The Three Obligations
Lexington owes $244M for retirement benefits already earned
The state runs the pension fund () on behalf of Kentucky local governments, but each city carries its proportionate share of the shortfall on its own balance sheet under . Lexington's share grew from 2.8% of CERS in FY15 to 3.1% in FY24 — the city is becoming a bigger slice of the state system, not smaller. Amortization is scheduled to finish on June 30, 2049 if every assumption holds.
Retiree health benefits look balanced — on one rate assumption
At a , Lexington's share of the CERS Insurance Fund shows a small surplus ($2.7M positive net position). A 1-percentage-point drop in that rate flips the position to a $14.8M shortfall — about 27% of the FY26 fund-balance buffer. Discount rates move regularly over 30-year actuarial horizons.
$337.9M outstanding, $73.2M due in FY26
Of the city's general-obligation bonds, $47.9M is — money the city borrowed on the public credit to put extra into the pension fund. That tells you the actuarial hole is durable enough that operating revenue alone wasn't sufficient to close it.
Net Pension Liability · 10-year history
| FY (measurement) | Net Pension Liability | Covered Payroll | NPL ÷ Payroll |
|---|---|---|---|
| FY2015 | $155.5M | $74.9M | 2.08× |
| FY2016 | $187.0M | $84.2M | 2.22× |
| FY2017 | $241.7M | $88.8M | 2.72× |
| FY2018 | $248.1M | $89.2M | 2.78× |
| FY2019 | $283.8M | $88.2M | 3.22× |
| FY2020 | $305.8M | $88.6M | 3.45× |
| FY2021 | $249.1M | $85.4M | 2.92× |
| FY2022 | $291.1M | $102.2M | 2.85× |
| FY2023 | $254.8M | $106.8M | 2.39× |
| FY2024 | $244.0M | $119.1M | 2.05× |
PLAIN ENGLISH · The pension shortfall peaked at $306M in FY20 (3.45× the city's entire payroll) and has been paying down steadily as Lexington contributes the full each year. It has not yet returned to the FY15 baseline.
What Lexington has actually paid in
| FY | Contribution Paid | Covered Payroll | % of Payroll |
|---|---|---|---|
| FY2016 | $17.0M | $84.2M | 20.14% |
| FY2017 | $13.8M | $88.8M | 15.50% |
| FY2018 | $14.2M | $89.2M | 15.88% |
| FY2019 | $16.7M | $88.2M | 18.95% |
| FY2020 | $20.1M | $100.5M | 19.94% |
| FY2021 | $19.3M | $95.7M | 20.19% |
| FY2022 | $23.7M | $108.6M | 21.84% |
| FY2023 | $28.1M | $116.2M | 24.22% |
| FY2024 | $30.5M | $129.6M | 23.57% |
| FY2025 | $28.2M | $137.9M | 20.45% |
PLAIN ENGLISH · Pension contributions doubled from $14M (FY18) to $28M (FY25) as the state phased in the full . The rate stays in the 20–24% of payroll band every year — this is a fixed cost the city cannot reduce by spending less.
Forward debt service · FY26 → FY45
| Period | Principal | Interest | Total Debt Service |
|---|---|---|---|
| FY2026 | $56.0M | $17.2M | $73.2M |
| FY2027 | $59.8M | $15.0M | $74.8M |
| FY2028 | $56.4M | $12.8M | $69.2M |
| FY2029 | $54.9M | $21.4M | $76.3M |
| FY2030 | $45.9M | $8.9M | $54.8M |
| FY2031–2035 | $163.0M | $26.4M | $189.4M |
| FY2036–2040 | $78.9M | $9.1M | $88.0M |
| FY2041–2045 | $22.7M | $1.6M | $24.4M |
The OPEB time bomb · discount-rate sensitivity
OPEB position flips to a deficit. Comparable scenario: a sustained sub-5% real-rate environment.
Net surplus today — driven by the assumed 6.5% long-run return on plan assets.
Surplus grows. Comparable to today's higher-real-rate environment persisting through retirement of current workforce.
PLAIN ENGLISH · OPEB stands for "Other Postemployment Benefits" — retiree health insurance. The total promised value is $152M; the fund's current assets are $155M; so on paper, fully funded. But the math depends on a discount rate that's a footnote assumption. Hold that rate, and it's fine. Move it 1% in the wrong direction, and the city carries a new $15M liability — bigger than the FY26 annual capital budget.
Outstanding bonds · 21 series
| Series | Purpose | Outstanding | Due FY26 | Maturity |
|---|---|---|---|---|
| General Obligation, Series 2025A | Senior center, paving, police vehicles | $42.4M | $2.3M | 2044-05-01 |
| General Obligation, Series 2022B | CIP projects (detention ctr roof, paving) | $35.2M | $2.3M | 2042-08-01 |
| General Obligation, Series 2024A | CIP projects (Phoenix Park, radios, fire) | $32.5M | $2.6M | 2043-12-01 |
| General Obligation, Series 2018A | CIP projects (convention ctr renovation) | $25.9M | $3.2M | 2038-10-01 |
| General Obligation, Series 2014A | Refunding of 2010A | $23.2M | $3.6M | 2030-09-01 |
| General Obligation, Series 2022A | CIP projects (fire, police, paving) | $21.7M | $2.0M | 2041-11-01 |
| Pension Obligation, Series 2009BPOB | Police/Fire Pension Fund | $20.3M | $4.6M | 2029-04-01 |
| General Obligation, Series 2020D | Refunding of 2014B | $16.7M | $1.6M | 2034-11-01 |
| General Obligation, Series 2016C | CIP projects (fire station, convention ctr) | $16.1M | $2.5M | 2036-10-01 |
| General Obligation, Series 2020BPOB | Refunding of 2012A Police/Fire Pension | $15.3M | $1.8M | 2032-10-01 |
| General Obligation, Series 2016A | Historic Courthouse Renovation | $14.7M | $1.1M | 2036-08-01 |
| General Obligation, Series 2017A | CIP projects (fire stations, police) | $14.6M | $2.5M | 2037-09-01 |
| General Obligation, Series 2017BPOB | Refunding of 2010D Police/Fire Pension | $12.3M | $2.3M | 2030-06-01 |
| General Obligation, Series 2019A | CIP projects (fire, voting machines) | $11.2M | $1.6M | 2039-11-01 |
| General Obligation, Series 2020C | Refunding of 2013C | $9.9M | $1.1M | 2033-11-01 |
| General Obligation, Series 2015B | CIP projects | $9.5M | $1.8M | 2035-10-01 |
| General Obligation, Series 2015A | Refunding of 2006C, 2009A, 2010G | $5.1M | $1.7M | 2028-10-01 |
| General Obligation, Series 2020A | CIP projects (police, paving) | $4.4M | $675.0K | 2030-11-01 |
| General Obligation, Series 2016B | CIP projects (Town Branch, streetscape) | $3.8M | $775.0K | 2036-08-01 |
| General Obligation, Series 2014C | QECB Detention Center | $2.8M | $0 | 2027-06-01 |
| General Obligation, Series 2013B | Refunding of 2004, 2005C, 2006B | $345.0K | $345.0K | 2025-07-01 |
PLAIN ENGLISH · The highlighted "POB" rows are — $47.9M of debt the city issued specifically to put extra money into the pension fund. The city borrowed on the public credit because the actuarial hole was durable enough that operating revenue alone wasn't closing it.
This page presents observations, not accusations. Every number is traceable to a specific page of either the FY2025 ACFR (lexingtonky.gov/departments/accounting) or the 2025 KPPA CERS Actuarial Valuation (kyret.ky.gov/Publications). See /methodology#pensions for the full extraction methodology and /pensions/explained for a plain-English walkthrough.
Round 5 · 2026-05-27 · pension & OPEB seeding