Orange County Pursues New Deals To Cut Retiree Costs
New agreements with labor unions will help Orange County reduce its unfunded liability for retiree health care costs, the Los Angeles Times reports (Anton, Los Angeles Times, 3/21).
New federal accounting rules require public agencies to disclose unfunded health care and pension liabilities for current and future retirees. Most agencies, including the state, fund retiree costs on a pay-as-you-go basis and do not consider future liabilities.
The Legislative Analyst's Office estimates that the state's liabilities for current and retired state employees range from $40 billion to $70 billion (California Healthline, 3/12). A report by the California HealthCare Foundation found that public agencies are not contributing adequate money to fund future retiree health care benefits, noting that some counties, cities and schools could have to reduce services to offset the cost of retiree health benefits (California Healthline, 9/28/06).
Through new agreements with employees, Orange County has cut about $800 million from its estimated $1.4 billion deficit. The new agreements call for dividing current and retired employees into separate insurance pools to hold down insurance costs for current workers and reducing retiree health care benefits for current workers in exchange for pay increases.
Thomas Beckett, Orange County's public finance manager, said additional savings could result from a possible agreement with the Association of Orange County Deputy Sheriffs (Los Angeles Times, 3/21).