IL Borrowing Plan Without Much Precedent
Springfield, Ill. – Illinois Governor Rod Blagojevich's plan to borrowed money to pay for government workers' pensions has little precedent in other states.
The National Conference of State Legislatures says the idea has surfaced in Illinois, California, West Virginia, and Wisconsin because of states' bad financial shape.
New Jersey passed a similar plan in 1997 and has seen mixed results. That state borrowed against the pension fund with the hope it would average a 7.6% return on investments. But the fund has instead earned about 5.5% percent; the state faces mandatory payments into the fund because its value has dropped too far.