Pension Pain

From the Heartland Institute:

Blagojevich appointed the Governor's Pension Commission in 2004 to study the state's pension system and recommend improvements. The 13-member commission's recommendations went largely ignored by the governor and lawmakers.

The state issued $10.1 billion in pension obligation bonds in 2003 to reduce unfunded liabilities. The borrowing is a gamble because the state must repay the money with interest over 30 years. To do this without turning to taxpayers, the state will have to earn average annual returns on investments that exceed the 5.05 percent interest rate on the obligation bonds. There is no guarantee that will happen.

Unfunded Liability Is Huge

Despite the infusion of borrowed money, the state's unfunded pension liability stands at an estimated $38 billion, the largest unfunded liability in the nation, according to State Sen. Bill Brady (R-Bloomington), who served on the Governor's Pension Commission.....

"The governor has begun stealing $4 billion from the pensions," Brady said, "$1.1 billion last year, $1.2 billion this year, and then smaller amounts in the later years. What the governor did is drop the numbers [the amounts for pension funding] now and through 2010. Now instead of putting in 20 percent of payroll over 40 years, we will pay 22 percent over 40 years, which dramatically increases the total cost but gives him short-term monies to do with what he wants."