Retirees outpace pension funds

first_imgJust 4 percent of California’s counties have fully funded their retirees’ health benefit costs, a California State Association of Counties survey has found.The survey of 48 of the state’s 58 counties also found the number of retirees statewide has grown by 12 percent in the past five years, while the amount counties are spending annually on their health care has tripled from $169 million to $567 million.“What’s been really dramatic is the substantial increase in costs due to the increased number of retirees as a result of the baby boom phenomena and medication inflation,” CSAC Legislative Coordinator Steve Keil said Thursday.The findings come as counties begin calculating the total unfunded liabilities of providing health care to retirees under a Government Accounting Standards Board rule going into effect next year.Los Angeles County Chief Administrative Officer David Janssen said the county has a “pay-as-you-go” system and plans to hire an actuary this spring to calculate its unfunded liability for retiree health benefits.The county grand jury recently estimated the unfunded liability at $9 billion.Janssen said the CSAC survey is to help counties explore how to either reduce or pay the future costs.One option being considered is issuing bonds, similar to the $2 billion pension bond the county issued in the early 1990s.While other counties have the option of negotiating with employee unions to limit or eliminate retiree health benefits, Janssen said a 1982 state law requires Los Angeles County to provide retiree health benefits.“We’d have to change the law first,” Janssen said. “We obviously want to take a look at attempting to minimize the cost in the out-years in discussions with the unions.”Keil said he expects many counties to explore bond issues and reducing health benefits provided to retirees.“There will be no easy fixes,” Keil said. “There will be significant new costs if they want to prefund the liabilities and amortize over 20 years. It could increase by 300 percent to 400 percent the cash flow costs as they pay down the unfunded liabilities.”Although the survey did not estimate the total unfunded liabilities for retiree health care, Keil noted Los Angeles County has about 140,000 active and retired employees while the state has 1.5 million city, county, state and special district active and retired employees.The survey also found that 98 percent of retirees are eligible for health benefits and about nine out of 10 plans provide benefits past age 65 to dependents and survivors.In Ventura County, Chief Deputy Executive Officer Paul Derse said the county’s unfunded liability for retiree health care costs is about $40 million.But he said the county has already eliminated retiree health benefits for new managers and is considering eliminating a subsidized retiree health benefit program.“We don’t expect this to have a significant impact on our budget,” Derse said. “We knew they were out there, have started to have a little more serious discussion on the issue and have already eliminated one program.” [email protected](213) 974-8985 AD Quality Auto 360p 720p 1080p Top articles1/5READ MORERose Parade grand marshal Rita Moreno talks New Year’s Day outfit and ‘West Side Story’ remake160Want local news?Sign up for the Localist and stay informed Something went wrong. Please try again.subscribeCongratulations! You’re all set!last_img

Leave a Reply

Your email address will not be published. Required fields are marked *