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 →
⚠ canonical figures shown — API pension seed pending
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.
$570.2M outstanding, $73.2M due in FY26
The city carries backed by its taxing authority. Three series — 2009B, 2017B, and 2020B — are the city issued specifically to put extra money into the pension fund. The bond rating (Aa2/AA) is solid, one notch below the top tier.
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 |
|---|
Forward debt-service schedule will populate once the seed runs.
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 |
|---|---|---|---|---|
| Bond portfolio will populate once the seed runs. Canonical total: $570.2M across 21 Governmental Activities series + sewer/landfill revenue bonds. | ||||
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