Retiree Health Costs Weigh on County, City Budget Decisions
New federal accounting rules requiring state and local governments to disclose future retiree health care liabilities have pushed Sacramento County and other government entities to consider eliminating or reducing benefits for current and future retirees, the Sacramento Bee reports.
The rules -- GASB 45 -- require government entities to account for the retiree costs in financial reports that are reviewed by rating agencies. If governments choose to continue offering benefits but do not begin saving for future costs, they risk lower credit ratings.
However, saving for future retiree costs may affect the budget for other services and programs, according to the Bee.
A 2005 study by the California State Association of Counties found that more than half of the 49 counties surveyed paid at least a portion of retiree benefits. Six counties paid the entire cost.
Some counties and cities might face difficulty proposing changes to retiree benefits because of negotiated labor contracts, according to the Bee (Fletcher, Sacramento Bee, 2/14).