FRANKFORT, Ky. (WYMT) - The Kentucky Retirement System is facing a roughly $35 billion deficit over the next 26 years.
A task force was formed earlier this year to find ways to preserve the K.R.S. fund.
The task force is making several recommendations to the General Assembly.
First, members say the state needs to begin paying the full amount it owes into the K.R.S fund, instead of only the minimum amount.
They are also calling for the repeal of automatic cost of living adjustments for state pensioners, and they want a guaranteed annual return of four percent.
The task force says these and other measures will set the K.R.S. on a path of sustainability.
The Public Pension Task Force's recommendations are in response to a $35 billion liability the state owes to state workers. Task force members say the gap in funding is largely due to a weak economy the last ten years.
"We've had in that period two major economic downturns, and the investment returns have been nowhere near where we expected them to be," said State Representative Mike Cherry, who co-chaired the task force.
During that time, the state has been paying the minimum amount into the K.R.S. fund, much like making the minimum payment on a credit card.
Cherry says the situation is like "robbing Peter to pay Paul."
"Now Paul's back in town and every single day that goes by, or year that goes by that we don't fully fund the system, we dig the hole even deeper," he said.
Cherry says the state will have to pay an additional $300 million in the next budget cycle to reach the recommended 100 percent employer contribution.
Economists we talked to say the task force has failed to address where that funding will come from.
"The task force didn't come up with the money. The governor doesn't know where the money is, and so what they're kicking around is the idea of taxing pensions on the workers who will start drawing them," said retired economist Richard Crowe.
Time will tell what action the General Assembly will take to address the pension crisis.
We are told legislation is being drafted now to be pre-filed for next year.
The task force also wants to prevent double-dipping, where pensioners go back to work while still drawing retirement.
They also want to increase K.R.S. transparency and add members to the K.R.S. board.