FRANKFORT — A 23-member work group appointed by Gov. Steve Beshear started Friday trying to come up with recommendations to boost the financially strapped Kentucky Teachers' Retirement System.
Chairman David Karem, a former Democratic state senator from Louisville and former chairman of the state Board of Education, started off the group's first meeting by underscoring its arduous task.
"When the governor asked me to do this, I asked him 'what have I done to piss you off?" Karem said in his opening remarks to the KTRS Funding Work Group.
He added that the Democratic governor ignored his remark.
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The panel has until Dec. 1 to provide recommendations to Beshear, who leaves office days later, on how to lessen the system's $14 billion unfunded liability.
The retirement system has fallen on tough times. Its unfunded liability — the amount of money it lacks to pay projected future benefits — was $571 million in 2000, meaning it had about 96 percent of the money required to pay future benefits. It now has only 54 percent of the money it needs to pay future benefits.
That alarms Kentucky teachers, who do not enroll in Social Security.
The system serves more than 75,000 active and more than 45,000 retired members. About 92 percent of its members live in Kentucky.
Blame for the system's financial woes has many fathers. Some attribute the problem to bad financial markets in recent years, bad investment in the markets and failure of the legislature to adequately fund the system.
Past recommendations to fix its woes include requiring teachers to work longer than 27 years before being eligible to retire and paying more out of their salaries toward pension costs. There has been no call to raise taxes.
In this year's legislative session, House Democrats proposed issuing $3.3 billion in bonds for the system but Senate Republicans said they did not want to incur more debt.
Karem told the working group, which met Friday for nearly four hours, that Beshear gave him no instructions on how to address the problem.
He also said he has no preconceived ideas on any recommendations.
The panel is close to hiring an outside consulting group to help it with its work, Karem said.
Members of the panel include policy officials, including several legislators, and education leaders.
House Minority Leader Jeff Hoover, who is on the panel, has criticized it for containing too many "self-serving special-interest groups that have been part of the problem, not part of the solution."
Hoover, R-Jamestown, has said he would have liked to have seen more financial experts on the panel.
KTRS executive secretary Gary Harbin provided the panel with a history of the retirement system and its structure.
He noted that it started in 1938 and that the 1940 legislature appropriated $1 million for it to take care of benefits to former teachers who had retired.
"KTRS has been underfunded since day one," he said.
The working group is to meet again July 31 in room 169 of the Capitol Annex. Its other meetings are set for Aug. 28, Sept. 11, Sept. 25, Oct. 16, Nov. 6 and Nov. 20.