Retiree Health Care Liability Reaches $1B in San Diego

San Diego's unfunded liability for retirees' health care is estimated at nearly $1 billion, and could reach $1.8 billion by 2015 if the city continues paying the minimum for health costs each year, according to a report released on Tuesday, the San Diego Union-Tribune reports.

San Diego currently covers 100% of retiree health costs up to $7,225 per year. The limit increases by about 7% annually. The city will spend about $16.7 million on retiree health care this year and contribute $20 million to cover the minimum health care costs of retirees next year.

However, the report states that retiree medical costs could increase to $54.4 million by 2015 if the city pays no more than the minimum from year to year.

Mayor Jerry Sanders (R) said city officials must decide in the future whether to allow the liability to increase by paying the minimum cost each year, or pay to fully fund future retiree medical benefits each year. Sanders also suggested that the city could pay a portion of the required annual contribution and write the rest off as liability or try to negotiate reduced benefits with the city's unions.

City Attorney Michael Aguirre continued to call for reductions to benefits he says the city cannot afford (Hall, San Diego Union-Tribune, 3/15).