. >> smith: today, betty pendergrass sits on the board of krs.here was the kentucky retirement system sitting in 1999? >> it was sitting at, rly 100% funded. >> smith: but then, in 2000, the dot-com bubble burst. s lost $1.2 billion. >> i've served in the best of times, and now is the worst of times. >> smith: kentucky was suffering, but politicians were reluctant to raise taxes to pay the full cost of their bills, and they began to divert pensiomoney. >> what will kentucky do? that's what you're assembledre n frankfort to decide. >> in kentucky, thpension was used basically as a piggy bank. the problem was, once you started to short your state rdnsions to cover the budget shortfall, it's o just do it the one time. >> smith: one of the few local reporters paying attention was john cheves. >> i've been writing for 20th years now aboustate's pension system and its been, you know, sort of a slow-motion car crash. >> smith: cheves watched as one governor after another invested in roads, bridges, libraries, and more. pension obligations were not met.

. >> sth: today, betty pendergrass is a trustee that has investment experience. >> ...are we gettingaid for the risk we're taking... >> smithi mean, you know that on wall street, they call pension funds dumb money.ug >> () that, that hts, but it's true. >> what i would say is, the bounds of reason are 350 above the ten-year treasuries... >> smith: john farris is an investment manag in lexington. until recently, he chaired the krs board. he says that wall street regularly exploits pension funds. >> stated as the board chairman that we were... >> smith: in 2008, only two members of the board had any investment management experience. >> they are much healthier... og i think that the pension board that was puther between 2008 and 2016 was probably the dumbest of money. >> smith: and thus you're $60 billion in the hole. >> exactly. >> smith: how did they amass ndreds of investments when they have no experience in how to choose? - >> wel >> smith: they just take anything that's recommended? >> it seemed that way. a lot of them that will say, will openly admit theye not even, you know, sure