In 2006, shortly after then-Gov. Rod Blagojevich borrowed an unprecedented $10 billion that he argued would help taxpayers and inject some cash into weak state pension funds, those pension funds collectively had unfunded liability of $44.5 billion. Eleven years later, that unfunded liability has tripled to at least $129 billion.

That's about all you need to know as a state House committee tomorrow is set to take up another, nearly identical miracle cure to Illinois' pension woes: a stunning $107 pension bond issue, 10 times the size of Blagojevich's.

As was the case then, some advocates are arguing that Illinois can borrow its way out of trouble by playing the arbitrage game: borrowing money at X percent, investing it at an expected return of 7 percent, and pocketing the difference as profit.

Indeed, some Wall Street types make a fine living doing just that. But financial experts are far, far from being convinced that it makes sense for a state.

Earlier: Illinois ponders a $107B pension fund moonshot

"I don't see the market welcoming such a deal," says Richard Ciccarone, Chicago-based president of Merritt Research Services, conceding that he's being gentle in his analysis. "Experience has shown you can't take offerings like this for granted." Illinois would be "no less than tripling its annual debt service, if not quadrupling it."

"The simple answer that we can borrow our way out of our past mistakes is one we have to take a hard look at," says Laurence Msall, president of the Civic Federation, a Chicago watchdog group. "There's always reason to explore other options, but we'd need to see a lot more evidence that the state is capable of issuing $100 billion in debt and that it will pay off."

The idea for the huge new pension obligation bond issue comes from the State Universities Annuitants Association, which like other government worker groups has watched with concern as the financial condition of the state's pension funds has weakened. It's been working with University of Illinois' Runhuan Feng, an associate professor of mathematics and director of the school's actuarial studies program.

Feng, in a phone interview, says he was asked to devise a solution that counted on no cuts in benefits but instead relied strictly on boosting revenues.

Blagojevich's POB has earned an average of 7.62 percent, he says, with average borrowing costs of about 5.5 percent. Multiply that by doing the same thing on a much larger scale and the state would be able to have its pensions 90 percent funded by 2045.

The House pensions committee, chaired by Chicago Democrat Rob Martwick, has agreed to take a look at the idea tomorrow. In an interview, Martwick said he's "not smart enough to know whether (Feng) is right or wrong," but the idea has enough merit to consider. Still there also are staggering financial drawbacks.

The most basic is that even if the market does allow Illinois to borrow $100 billion at a taxable rate of 5.5 percent—Ciccarone is skeptical—there is no guarantee the stock market will return 7.62. Indeed, according to a PowerPoint of Feng's presentation that was prepared in advance of the meeting, there would be an almost $100 billion difference in the condition of the pension funds if the market corrected 20 percent over the next two years and then returned only an average of 7 percent a year, rather than 7.62 percent with no correction. Feng says taxpayers at least wouldn't lose anything under that "adverse scenario," but they wouldn't have made anything for their trouble.

Then there's political reality: Politicians like to spend money and might well be tempted to book those expected arbitrage gains years in advance so they could spend it on other things.

That's what happened under Blagojevich. The state used earnings from​ the scheme to eliminate its normal pension contributions for two years, while it boosted spending on schools and other popular recipients. That's a main reason why the pension funds are so cash-poor today.

Feng says he would avoid that temptation by requiring the state to pay as much each year through 2045 as it does now, $8.5 billion a year. But that figure would not rise as it is scheduled to under current law, so the state would be doing the same thing it did under Blagojevich to a lesser degree: spending the money on other stuff, rather than paying off pension debt.

For what it's worth, I asked the candidates for governor what they think. I got a response from one: Democrat Daniel Biss: "Daniel Biss believes we need a sustainable solution to our pension debt. Instead of reamortizing or moonshot bond sales, we need the political will to reform our outdated tax code so that billionaires and millionaires and major corporations finally pay their fair share, and we have the revenue needed to make the actuarially responsible payments to the pension fund every month."

You may agree or disagree on taxing rich folks. But does financially reeling Illinois really need to borrow $100 billion to take a flier on an arguably overbought stock market? I think not.