The Kansas public employee pension system made investment gains last year, but still faces significant funding problems that need to be addressed soon, officials said Thursday.

“We’ve had some modest improvement,” said Glenn Deck, executive director of the Kansas Public Employee Retirement System. “We still have a major long-term funding shortfall.”

The fiscal health of the system that has 250,000 members is gauged by a snapshot taken Dec. 31, 2009.

At that time, the unfunded actuarial liability — the difference between the system’s assets and future pension obligations — stood at $7.7 billion.

While that seems astronomical, it is lower than the Dec. 31, 2008, snapshot, which was a record $8.3 billion.

The improvement occurred because 2009 was a good year in the stock market, and KPERS was able to reduce its liability by $600 million.

The value of the system’s portfolio stands at $11.2 billion as investments increased 14.9 percent over the past year. But as of late, that market surge has stopped and consultants predicted slow growth for the next year.

The unfunded actuarial liability doesn’t impact current benefits, but officials say a plan needs to be implemented to address the issue over the long term.

Senate President Steve Morris, R-Hugoton, and chairman of the House-Senate Committee on Pensions, Investments, and Benefits, agreed.

One of the top priorities for 2011 Legislature, which starts meeting in January, will be to correct the KPERS situation, Morris said.

“We are not in a crisis, but if we don’t take action in the near future, we could be,” he said.

The fix is going to mean increasing the state’s contribution to the system, he said. One plan, which Morris said he favors, would increase the state’s contribution by approximately $58 million per year.

A recent report by Pew Center for the States rated KPERS as one of the most underfunded pension systems in the country.

Deck agreed, saying, “We are certainly one of the lower-funded systems, and one of the reasons, we are not contributing at the actuarial rate.”

Patrice Beckham, an actuarial consultant with Milliman, said the problems with KPERS are similar to those of most public and private pension plans that were hit hard by the recession.

“It’s a bit of a roller coaster ride,” she said.