WHAS coverage

FRANKFORT, Ky. (AP) -- Gov. Steve Beshear called on Kentucky lawmakers to set aside partisan differences and work toward a quick fix on the state's financially ailing pension system during the next three weeks.

Beshear, a Democrat, met with legislative leaders Thursday at the Capitol and offered to call them into a special session later this summer to pass legislation aimed at partially fixing the state's pension system. The governor also signed an executive order setting up a panel to study some of the more complex -- and hotly disputed -- proposals before the regular session that begins in January.

"We all agree that the state's public pension problem is a real mess," Beshear said at a press conference. "We must act now. We must stop the bleeding of taxpayer dollars now."

Kentucky's state retirement system covers more than 445,000 people, including state and county employees and public school teachers. But the system is facing a $26 billion unfunded liability, and lawmakers have said it risks an eventual financial collapse.

Proposed pension legislation stalled during the closing hours of the General Assembly's legislative session last month, leaving the problem unresolved.

Beshear said he would call a special session for June 23, if lawmakers could agree on a solution before then. The governor proposed lawmakers settle on a plan that covers areas in which they agree.

More difficult subjects such as whether to put future employees on a 401(k)-type retirement plan rather than a set pension should be further studied and addressed next year, Beshear said.

Among other things, Beshear proposed making future state employees work longer before coming eligible for retirement. He also proposed requiring new employees to contribute 1 percent of their salaries to health insurance.

Beshear said the state could save about $500 million per year under the proposal. Local governments throughout the state could also save more than $50 million combined, Beshear said.

Legislative leaders said they were planning to talk next week.

House Speaker Jody Richards, D-Bowling Green, said legislators would be working with the governor on a plan that could pass.

"It's important to save as much money as we can," Richards said.

Senate President David Williams, R-Burkesville, said the legislature may be able to agree on other areas of the pension proposal, but declined to elaborate.

"I am optimistic that we can do something," Williams said.

(Copyright 2008 by The Associated Press. All Rights Reserved.)