By Eric Stirgus, The Atlanta Journal-Constitution

A group of Atlanta homeowners has filed a class-action lawsuit against the city, charging its elected officials illegally increased pension benefits for its employees in 2001 and 2005, putting the city's finances at risk.

The residents want the city to stop contributing into the three pension funds and instead put the money into a court registry for safekeeping. The city is expected to contribute about $125 million, more than one-fifth of its general fund budget, into the pension plans during the 12-month period that ends June 30. Atlanta has a pension fund for police officers, fire rescue workers and general employees.

Unless Atlanta is stopped from making "illegal" contributions into those funds, the lawsuit says "the city will continue to face severe fiscal and financial crisis and could be forced into insolvency."

Current and former city employees who are responsible for the funds are angry about the lawsuit, which was filed late Monday in Fulton County Superior Court. They argue the lawsuit, if successful, would drastically reduce the monthly pension of retirees.

"(The plaintiffs) have definitely displayed that they have no concern nor care for the people who dedicated their lives to the safeguard, protection and well-being of the community that they live in," said Tony Biello, a retired police lieutenant who chairs the city's police pension board. "An action like this would take these dedicated employees and place them on the welfare lines, supported by the Fulton County taxpayers."

Acting City Attorney Roger Bhandari said in a statement, "the city believes the allegations are without legal merit and will aggressively defend against those claims."

The plaintiffs are members and supporters of the Fulton County Taxpayers Foundation, a citizen group largely based in the fiscally-conservative Buckhead community. The group has accused city leaders of out-of-control spending in recent years and urged officials to consider privatizing more services to cut costs. . The foundation claims about 10,000 members and supporters.

Foundation members, on the advice of their attorneys, declined comment on their lawsuit.

The lawsuit says the city didn't follow its guidelines in 2001 and 2005 when it made changes to its formula that resulted in higher employee pensions. The plaintiffs argue the changes were made without required written recommendations by the city attorney and chief financial officer.

Since 2001, the unfunded liability in Atlanta's pension funds has skyrocketed from $321 million to about $1.5 billion, according to a report released last week on city pensions by a special panel studying ways to reform the system. The benefit changes contributed about $160 million of that increase, the report says. The report attributes the bulk of the increase, an estimated $652 million, to the performance of the funds.

In 2002, the city spent about $36 million on pensions. That total is expected to quadruple to $160 million by 2015, according to the report. Mayor Kasim Reed, who took office in January, has said the rising pension costs leave the city to do little else, aside from policing the streets, fighting fires, and providing water and sewer service and trash pick up.

City workers can receive up to 80 percent of their highest average salary upon retirement. That percentage is similar to workers in Cobb and Fulton counties.

Fire pension board chairman Kelen Evans argues the pensions aren't lavish, noting the risks firefighters take and ailments many suffer into retirement, such as hearing loss.

"We're trying to protect ourselves into retirement," said Evans, a lieutenant in the department. "We deserve a good pension when we retire."