Gov. Steve Beshear says a recent federal ruling allowing Seven Counties Services to exit Kentucky’s beleaguered pension system is “very dangerous,” and he supports an appeal of the decision.

Earlier this month, a federal judge ruled that quasi-governmental agencies like the mental health provider Seven Counties Services aren’t government agencies at all, and can exit the Kentucky Retirement System to escape their pension debt.

The KRS decided to appeal that decision, and Beshear says he supports the move. .

“What it does is open up a lot more unfunded liability for the rest of the people on the system,” Beshear says. “Because, in effect, you will be able as a quasi-governmental entity to leave the system but not really be responsible for your part of the unfunded liability that you have helped to create, and that’s just unfair to the whole system.”

The KRS has come under fire in recent years for risky investments and underperformance, and has a current unfunded liability of about $17 billion.

If the decision is upheld, the state would have millions of dollars in new unfunded pension liabilities, Beshear says.

“It is a very dangerous ruling, in terms of the financial stability of our pension system,” he says. “And so I want to make sure that that gets a full hearing and hopefully will get overturned on appeal.”