Los Angeles County Mulls Options To Pay Retiree Health Costs
Los Angeles County over the next three decades will face up to $20.3 billion in health care benefits for retired employees, according to an actuarial report released Tuesday, the Los Angeles Times reports.
New federal accounting rules require public agencies and governments to fully disclose the cost of retirement benefits.
Gregg Rademacher, chief executive of the county employee retirement association, said the county does not set aside funds for retiree health care benefits and instead covers the costs on a pay-as-you-go basis.
The county's liability over the next 30 years ranges from $12 billion to about $20 billion, depending on the estimate.
Retiree health costs for the current fiscal year are expected to cost the county an estimated $348 million, according to the Times. The cost by 2016 is expected to increase to an estimated $1 billion, according to the report.
David Janssen, county executive, said the county in 20 years will spend about 5% of its budget on retiree health care costs, up from about 1.8% today. Janssen said county and union officials have been meeting to discuss how to reduce retiree health care costs for new employees. Reducing benefits for current employees is more difficult, he said.
Janssen added that a possible solution might be to establish a health care trust fund to which employees and the county can make contributions (Rosenblatt, Los Angeles Times, 5/30).