. >> smith: today, betty pendergrass sits on the board of krs.here was the kentucky retirement system sitting 1999? >> it was sitting at, at nearly 100% funded. >> smith: but then, in000, the dot-com bubble burst. krs lost $1.2 billion. >> i've served in the best of times, and now is the worst of times. >> smith: kentucky was p suffering, biticians were reluctant to raise taxes to pay the full cost of their bills, and they began to divert pension money. >> what ll kentucky do? that's what you're assembled here in frankfort to decide. >> in kentucky, the pension was used basically as piggy bank. the problem was, once you started to short your state pensions to cover the budget shortfall, it's hard to just do it the one time. >> smith: one of the few local reporters paying attention was john cheves. >> i've been writing for 20 years now about the state's pensn system and its been, you know, sort of a slow-motion car crash. >> smith: cheves watched as one governor after another investeda in roads, bridges, les, and more. pension obligations were not