Controller: San Francisco Faces $4.36B Unfunded Liability for Health Care
San Francisco currently faces about $4.36 billion in unfunded liabilities for retiree health care, according to a new report from the San Francisco Office of the Controller, the San Francisco Chronicle reports (Knight, San Francisco Chronicle, 12/17).
San Francisco has set aside $9.7 million to cover the costs of providing lifetime health benefits to municipal retirees and their dependents.
Controller Benjamin Rosenfield said that if the city does not take action to address the obligation, San Francisco's unfunded retiree health care liability could increase to $9.7 billion by 2033.
Background on City's Health Benefits
All San Francisco workers hired before 2009 were promised lifetime health benefits -- including coverage of dependents -- after five years of employment. Such workers are not required to contribute to their health coverage.
Last year, San Francisco adopted changes requiring new city employees to pay 2% of their salary into a health care trust fund. The city also tightened requirements for receiving lifetime health benefits.
Rosenfield said tens of thousands of city employees still are entitled to lifetime coverage under the pre-2009 regulations, even though they do not pay into the health care trust fund (Lesly Stevens, New York Times, 12/16).
Recommendations
According to Rosenthal, San Francisco would need to begin paying 15.4% of its salary costs toward health care every year to address its unfunded liability. The plan would require the city to pay about $370 million annually out of its $2.4 billion annual salary base (San Francisco Chronicle, 12/17).
If the city is not able to dedicate large sums to the growing liability, Rosenthal recommended that current city workers contribute more "over time and through collective bargaining" (New York Times, 12/16).
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