Orange County Required To Increase Budget Allocation for Retiree Health Benefits
Officials on Tuesday said that Orange County may have to budget at least $110 million annually beginning in July to cover retiree health care benefits -- nearly five times the current plan -- because it soon must identify funding for covering the benefits for the next 30 years, the Los Angeles Times reports.
If the county provides health benefits for current retirees next year without setting aside funds for future use, it is expected to spend $23 million. However, new government accounting standards require the county to outline the amount of health care costs due over the next 29 years, estimated at more than $1 billion.
The increased medical costs could affect the county's ability to recover from a bankruptcy debt from 1994, according to the Times.
Supervisors on Tuesday hired a financial adviser to restructure the county's bankruptcy debt by applying $116 million in reserves to reduce its annual bankruptcy payments.
Board Chair Bill Campbell said he did not want to cut other county services to cover future medical premiums.
Treasurer John Moorlach suggested the county pay as much of the cost as possible now. "It's a debt that needs to be addressed," Moorlach said. "If you can't hit the target, then you need to get as close as you can. The best way to address debt is to pay if off."
Any changes county supervisors make to employee and retiree medical benefits would be subject to approval by the labor unions that represent county employees. Current employees pay 1% of their pay toward health care coverage. The county cannot negotiate increasing contributions for current employees or retirees until contracts with unionized county workers expire in 2008.
Supervisors voted to study retiree medical expenses for 60 days before deciding on a course of action (Reyes/Pasco, Los Angeles Times, 4/20).