- Associated Press - Monday, November 28, 2016

FRANKFORT, Ky. (AP) - Kentucky’s troubled pension systems continued their downward slide in 2016, with plans covering teachers and state employees losing more than $1.8 billion in value while obligations are increasing.

The Kentucky Retirement Systems said the debt for its largest plan covering most state workers increased by $1.5 billion while its assets decreased by $347.5 million for the fiscal year that ended June 30. That leaves the system with just 16 percent of the money it needs to pay retirement benefits over the next 30 years, putting it among the worst funded public pension plans in the country.

Compounding the problem is the state has far more retirees receiving benefits than employees paying into the system.

“Our workforce is so retiree oriented, we are running out of time to fund it,” said David Eager, the systems’ interim executive director. “If you think of it in a medical sense, we are in triage. It’s a serious funding problem.”

The Kentucky Teachers’ Retirement System lost nearly $1.2 billion during the fiscal year. But General Counsel Beau Barnes told the Public Pension Oversight Board on Monday the system will benefit greatly from the $973 million the state Legislature voted to give the system earlier this year.

“It is a complete game changer,” Barnes said.

Still, the pension system for teachers owes retirees $14.5 billion worth of benefits over the next 30 years that it does not have the money to pay. Combined with the five plans in the Kentucky Retirement Systems, the state’s pension debt is $32.6 billion. Smaller pension systems for state lawmakers and elected judges have more than enough money to cover benefits.

Republican Gov. Matt Bevin has made the state’s pension debt the priority of his administration. He cut spending for state agencies by 4.5 percent for the next two years, despite the state ending the fiscal year with a surplus. With Republican majorities in the House and the Senate for the first time in more than a century, Bevin has promised to push for solutions to the problem when the Legislature convenes in January.

But Republican leaders Monday were hesitant to offer details on how to fix the system until after the results of a state audit. State officials are paying the Philadelphia-based consulting firm PFM Group up to $556,300 for the audit, which is due by Dec. 31.

“I don’t think it’s fair to chart any strategy, honestly, until we get these audits back,” said state Sen. Joe Bowen, co-chairman of the Public Pension Oversight Board.

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