Wednesday, March 09, 2005

Herald & Review on pooling funds

This seems like a good place to begin the discussion of Blagojevich's proposal.

Herald & Review editorial
Governor's education 'pooling' requires care

One of the more questionable aspects of Gov. Rod Blagojevich's proposed budget is the pooling of several state funds to finance an increase in education spending.

As with many of the intricacies involving the state budget, the concerns about this proposal are in the details, and not all of the details have been released by the governor's office. But still, there is plenty of reason to keep a watchful eye on this process.
This editorial explains how Blagojevich plans to save money.

In general I'm skeptical of "money for nothing" proposals, but it seems like there could be some savings from combining the funds by reducing the need for total reserves by spreading the risk. However, if the economy does poorly they will all want to dip into the fund at the same time, right?

Also, the Blagojevich team uses some "optimistic" accounting assumptions. We should be watchful that he's not just passing the problem to the future.


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