Retiree Health Benefits Contribute to Public Agencies’ Projected Unfunded Liabilities
The state's largest public agencies have $108 billion in unfunded liabilities for retiree pensions, retiree health benefits and workers' compensation, the Los Angeles Daily News reports. The Legislative Analyst's Office estimated public agencies statewide had an unfunded liability of about $10 billion three years ago.
Experts expect liability estimates to further increase as more agencies calculate liability projections to comply with new federal accounting regulations, the Daily News reports.
Currently, CalPERS has total unfunded liabilities -- including retiree health benefits -- of $22.3 billion, and the California State Teachers Retirement System has unfunded liabilities of $24.2 billion.
Tom Henry, CEO of the Fiscal Crisis and Management Assistance Team, said many school districts and other public agencies have not calculated their unfunded liabilities for providing retiree health benefits. Statewide, 70 school districts provide lifetime health benefits, 134 provide health benefits after age 65 and 554 provide health benefits to retirees up to age 65, according to a survey by FCMAT.
Experts project the agencies' unfunded liabilities "will likely be in the tens of billions of dollars" and could be compounded by rising medical costs, the Daily News reports.
For example, unfunded liabilities for workers' compensation and health benefits for retirees of the Los Angeles Unified School District are estimated at $6.9 billion, according to a February report by LAO.
In addition, the City of Los Angeles has $3.2 billion in unfunded liabilities, while Los Angeles County has unfunded liabilities of $16 billion, the Daily News reports.
Los Angeles County Chief Administrative Officer David Janssen said county supervisors and public employee unions last week agreed to an expanded health benefits package that will offset costs by requiring copayments for hospital emergency department visits and prescription drugs (Anderson, Los Angeles Daily News, 9/18).