Q&A: State Pension Funding Crisis

Kellogg's Joshua Rauh says the possible solutions to mounting pension debts are politically difficult

April 7, 2010 | by Brendan Cosgrove

EVANSTON, Ill. --- Illinois is one of many states in the nation now coping with a budgetary crisis due to large amounts of pension obligations. In this Q&A, Joshua Rauh, associate professor of finance at Northwestern University's Kellogg School of Management, discusses the basics of defined benefit pension plans and why many states have amassed huge debts as a result of their plans.