FRANKFORT, Ky. – The financial condition of the pension fund for most state workers became even more dire last year.

The pension fund for state employees in nonhazardous jobs has only 12.9 percent of the money it’s expected to need to pay future benefits. That’s down from a funding level of 13.6 percent reported a year ago.

That news came within an annual report presented Thursday to the Kentucky Retirement Systems trustees.

The particular plan covering most state workers is by far the worst-funded among all Kentucky public pension plans, and is considered to be the worst-funded public pension plan in America.

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The report reflects the financial condition of the five different plans managed by the Kentucky Retirement Systems as of June 30, 2018.

David Eager, executive director of Kentucky Retirement Systems, said the decline in the funding level for the main state employee plan is due partly to the large number of retirements last year that worsened the problem of fewer employees paying into the plan and more retirees drawing benefits from it.

“Benefits paid out were not offset by contributions from employers and employees. … We still have a negative cash flow,” Eager said.

But Eager said because of changes adopted by the KRS board last year and full funding by the 2018 Kentucky General Assembly of the pension plans, government contributions to the plans increased significantly starting July 1. Because of that, Eager said he expected the actuary’s report that will be made a year from now “will show meaningful improvement.”

The report by the actuary, GRS Retirement Consulting, said it is “imperative” that the main fund for most state government employees get a robust level of contributions.

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As of June 30, the actuary said, this particular fund had $13.6 billion in unfunded liabilities. That number was up slightly from $13.47 billion a year ago.

It is one of five pension plans managed by Kentucky Retirement Systems. Other plans are for Kentucky State Police; state government works in hazardous jobs; local government workers in hazardous jobs; and local government workers in nonhazardous jobs.

These other four plans are also underfunded, but are not nearly as bad off as the main plan for state employees, and some of them showed improvement in the past year.

Here’s what Thursday’s report by actuaries said about the funding levels of each:

Kentucky employees (hazardous) fund is 55.5 percent funded, up from 54.1 percent last year. Local government employees (nonhazardous) fund is 52.7 percent funded, down slightly from 52.8 percent last year. Local government employees (hazardous) fund is 48.4 percent funded, up from 48.1 percent last year. And the State Police fund is 27.1 percent funded, up slightly from 27 percent last year.

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Eager said in encouraging news, Thursday’s report showed improvement in the financial health of the separate health insurance plans for the five funds.

Thursday's report is considered a draft report until it is adopted by the retirement systems’ board, which is expected to do so next month.

Tom Loftus: tloftus@courierjournal.com; Twitter: @TomLoftus_CJ. Support strong local journalism by subscribing today.