The Treasury Department announced Tuesday that it is “committed” to financing a $6.9 billion bailout of a troubled $1.4 trillion pension fund for retirees in Illinois.
The Treasury Department is expected to announce the deal by the end of the week.
The deal, which would have been announced Thursday, is part of the $4.8 trillion government-backed bailout package approved by Congress earlier this year.
“The pension system is in dire need of urgent funding to avoid a bankruptcy and, more importantly, to help the state address its pension crisis,” said a statement from Treasury Secretary Jacob Lew.
The announcement comes as lawmakers in Illinois continue to fight over how to fund the pension system.
The pension funds are expected to need $2.8 billion each year in payments to pay workers, the agency said in a statement.
Illinois is the last state in the country to file for bankruptcy protection.
The State Pension Fund is responsible for covering workers in the state’s government, school districts, hospitals and other public entities.
It has $716 billion in assets under management, with $539 billion held by individual state workers and the state.
The state will receive a $500 million loan from the Treasury that the state can use to purchase $4 billion in public assets, including a $1 billion building on the Illinois Central Railroad tracks that was slated for demolition.
The state will also receive $100 million to pay for infrastructure projects.
The rest of the money will be distributed through a special tax credit program for state employees.
The Illinois legislature has approved a $3.4 billion package to support the pension funds.