Kentucky is facing a serious pension problem. According to The Courier Journal, the Kentucky Retirement Systems for public employees has reported unfunded liabilities of approximately $17 billion. The Kentucky Teachers' Retirement System has approximately $14 billion in unfunded liabilities. KTRS officials have estimated the system needs nearly $500 million more per year from the state to make up the difference. The effects of the shortfall are beginning to show. Standard and Poor's Rating Services have now lowered Kentucky's credit rating by one notch, from “AA-” to “A+”. A downgrade in credit rating generally increases a state's cost to borrow money, which means Kentucky could be facing higher costs in borrowing for capital projects. The credit dip should be a signal to lawmakers that the state's underfunded pensions is an issue that must be dealt with now, not further down the road. To his credit, Gov. Steve Beshear has organized a task force to study the problem, and he is expecting a report before he leaves office in December. Right now, only New Jersey and Illinois have a lower S&P credit rating than Kentucky. That doesn't leave much further left to fall.