Pennsylvania Gov. Ed Rendell wants to invest the $10 billion+ he hopes to get for selling the Pennsylvania Turnpike (after paying off its debt) with the State Employees' Retirement System, which Rendell expects will earn 12 percent a year, or $1.1 billion, based on its reported returns for the last 20 years. Inquirer story here.
  SERS is more conservative in its expectations. SERS's own experts "expect the fund will earn 8.5 percent per year each year between now and 2012. The struggling financial markets at the outset of 2008 should remind us that it may not be possible to meet, let alone outperform, our investment goal every year," SERS chairman Nick Maiale, a Philadelphia lawyer, Harrisburg lobbyist and longtime Democratic Party ward leader, cautioned in a letter accompanying the system's annual report to state legislators earlier this year.
  See Maiale's letter, which also discusses state taxpayers' subsidies to the pension system, on Page 2 of the SERS report, here.
  Also, it's not yet clear how and when the state would recover the returns SERS reports. A majority of the system's reported profits are based on its managers' estimates of the value of investments in hedge funds, private equity, venture capital, real estate, and other untraded assets that are held for years and aren't throwing off cash on a regular basis.
  Taxpayers and tollpayers can look forward with interest to more details of the governor's plan.