Topeka ? The system that provides pensions to tens of thousands of Kansans needs a long-term funding fix, according to a new report to the Kansas Public Employees Retirement System.

Glenn Deck, executive secretary of KPERS, quickly noted Monday that no one’s benefits were in danger.

But the state’s failure to adequately contribute to the pensions of public employees, combined with a beating in the stock market, had left the multibillion-dollar system in trouble.

“This dramatic deterioration in the System’s financing supports our continuing concerns about the long-term funding of the System and the need to continue to consider additional changes in the funding plan, as previously discussed,” the report by Milliman USA Inc. said.

The company is hired by the state to produce an annual actuarial report on KPERS.

At the height of the economic boom on June 30, 2000, KPERS assets had a market value of $10.527 billion. Thirty months later, on Dec. 31, 2002, assets had fallen nearly 22 percent to $8.241 billion.

As of last week, as assets have risen with the upturn in the stock market, the market value was $8.988 billion.

But an underlying problem in the system, officials said, is the unfunded liability, or the gap between current assets and projected benefits paid to retirees.

That unfunded liability averaged $1.4 billion from 1997 to 2000, then jumped to $1.8 billion in 2001 and $2.83 billion in 2002.

“Given the current funded status of the System … the unfunded actuarial liability is expected to grow,” the report said.

Having an unfunded liability is not a bad thing, but if it continues to grow, additional costs are passed to future generations, Deck said.

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Deck said the growing unfunded liability was equivalent to someone paying off only a small portion of their credit card bill each month — they will end up paying a lot more in interest than if they tried to pay off the debt quickly.

The report comes as state officials are grappling with ways to shore up the KPERS system.

One proposal is to issue $500 million in taxable bonds to reduce the unfunded liability.

Supporters of the bond issue say the state could borrow the money at a low interest rate, invest it and make more than the interest payments on the bonds. Critics say given the ups and downs of the stock market, the strategy is too risky and could put retirees’ pension funds in jeopardy.

According to the actuarial report, nearly 58,000 people are receiving benefits from KPERS with the average retiree receiving $10,425 per year.