Calif. Grapples With Rising Public Retiree Health Care Costs

California's state and local governments are grappling with the rising cost of public retiree health benefits, the AP/Sacramento Bee reports.

Costs associated with health benefits for retired state workers have increased from $560 million annually ten years ago to a projected $1.7 billion in the next fiscal year. The costs are expected to double for state and local governments over the next decade (Lin, AP/Sacramento Bee, 4/21).

Projections and Recommendations

In February, state Controller John Chiang (D) released a report estimating that providing health care and dental benefits to state retirees will cost $62.1 billion over 30 years. Chiang urged the state to set aside extra funding to pay down retiree health costs. He noted that if the state paid an additional $160 million in obligations, it would shave $2.7 billion off the unfunded liability (California Healthline, 2/27).

Meanwhile, Gov. Jerry Brown (D) has proposed as part of his 12-point pension reform plan that new state workers be required to work 25 years to receive 100% of state retiree health benefits (California Healthline, 2/23). Current law allows many employees of the California State University system, the courts and the Legislature to qualify for full retiree health benefits after working for five years.

Amount Owed in Question

According to the AP/Bee, it is difficult to determine how much California cities, counties and school districts owe toward retiree health benefits.

The controller's office says it tracks only the payment obligations of the state government and does not examine benefits provided by local governments.