San Diego County First To Reduce Retiree Benefits
San Diego County supervisors last week approved a plan to stop contributing to retiree health care benefits for current county employees and recent retirees to avoid future problems that could raise taxes, according to county supervisors, Daniel Weintraub writes in the Sacramento Bee.
San Diego County's plan could save the county as much as $1.8 billion over 20 years as health care costs increase and new federal accounting rules take effect. The rules will require public pension systems to disclose the cost of future health care benefit payments to retirees.
Under the new plan, San Diego County's unfunded liability for retiree health care benefits will decrease from $640 million to less than $300 million, and the amount that the county will need to contribute annually to cover the cost will be reduced from $70 million to less than $30 million, according to Weintraub.
San Diego County Supervisor Dianne Jacob said that the county was forced to cut retirement contributions to avoid poor credit ratings, service cuts and other problems as officials consider strategies to fund retiree health benefits, according to Weintraub.
In the next year, state and local governments will face similar decisions as they comply with the account rules. Weintraub writes that San Diego County is "leading the way on this voyage of fiscal discovery," adding that the county's "experience is instructive," as well as "sobering" (Weintraub, Sacramento Bee, 12/14).