California Uses One State Credit Card To Pay Off Another
Christian Britschgi|Jun. 1, 2017 10:40 am
California Gov. Jerry Brown has a plan to address his state's hundreds of billions of dollars in unfunded pension liabilities: Borrow money at low rates and invest it in a hopefully higher-yielding state pension fund.
Over the past two decades, several states and localities have borrowed to cover exploding pension liabilities. But the practice is fraught with risk, and it has backfired spectacularly on more than a few occasions. The City of Oakland, for instance, lost $250 million on a similar borrow-and-invest pension funding scheme when projected returns did not pan out. When New Jersey tried borrowing to cover pension obligations, it ended up being charged with securities fraud.
http://reason.com/blog/2017/06/01/california-gov-jerry-brown-uses-one-stat
