* Press release…
Interest-free loans will be available to state workers if the budget impasse means payroll checks will not be issued beginning July 15, Illinois Treasurer Michael Frerichs said today.
The loans will be issued through participating credit unions with money made available through the Treasurer’s Office linked-deposit program. Linked deposits provide financial institutions money for specific loan programs.
“The Treasurer’s Office uses tools to help our residents achieve more, such as saving for college, investing in a business, or planning for retirement,” Frerichs said. “This linked-deposit program is a tool that provides short-term loans for workers while the Governor and General Assembly resolve their differences.”
The state’s fiscal year ended June 30. The absence of a budget agreement means the state does not have the authority to pay certain bills, such as wages to some state employees.
An estimated 60,000 state workers might qualify for the loan program. Participating credit unions will decide eligibility. Loans cannot exceed 50 percent of pay. Loans are interest-free until 30 days after payroll resumes. A 9.9 percent interest rate will be charged beginning the 31st day. Frerichs’ office negotiated the rate down from 12 percent and it remains half of the typical credit card rate. The Treasurer’s Office will charge credit unions 0.01 percent interest.
As much as $50 million will be made available for the loans. The Illinois Credit Union League and Credit Union 1 were instrumental in creating this linked-deposit effort and recruiting other credit unions to participate. Their recruitment efforts continue and the Treasurer’s Office expects other credit unions to join the effort.
$50 million sounds like a lot of money, but if all 60,000 qualified workers applied, there’d be just $833.33 available to each of them.