Texas Fights To Keep Health Care Costs Under Wraps

Texas officials have sought to avoid a new Governmental Accounting Standards Board rule that requires public employers to report the cost of retiree health benefits, the New York Times reports (Williams Walsh, New York Times, 3/12).

GASB, a not-for-profit organization that establishes accounting standards for public employers, established the rule in 2004.

Under the rule, public employers with a minimum of $100 million in annual revenue will have to begin to report the cost of retiree health benefits in the first fiscal year after Dec. 15, 2006. Public employers with annual revenue of $10 million to $100 million will have to report the cost of retiree health benefits in the first fiscal year after Dec. 15, 2007, and those with annual revenue of less than $10 million will have to report the data in the first fiscal year after Dec. 15, 2008.

The rule requires public employers to report the current and future costs of health care and other benefits -- such as dental, vision and life insurance -- for the estimated 24.5 million public employees.

States must pay their liabilities over a 30-year period, and liabilities will count against net assets for states that do not allocate funds to cover the costs each year (California Healthline, 11/9/06).

Under the rule, Texas would have to begin to report the cost of retiree health benefits on Dec. 15, 2007.

However, state Sen. Robert Duncan (R) has proposed a bill that would make the rule inoperable in Texas, and the state House has similar legislation under consideration.

In addition, state Comptroller Susan Combs recently wrote a letter to GASB Chair Robert Attmore, "saying she doubted that the rule had any validity in Texas," the Times reports.

Combs sent copies of the letter to comptrollers in the 49 other states and asked them to join the effort by Texas to make the rule inoperable.

Duncan said, "The way we look at it is that this is probably not an accurate measurement for the type of retirement programs that we do."

Texas state employees do not have formal labor contracts, in part because no unions exist for state workers.

Combs said that, without formal labor contracts, GASB cannot require Texas to disclose the cost of retiree health benefits. In addition, she said that the cost of future retiree health benefits is difficult to calculate because Texas could cancel them at any time.

However, Attmore said that retiree health benefits for Texas state employees "are a form of compensation for services, in the same way as salaries and pensions are." He added, "They're deferred compensation. So there is a real obligation there, whether there is a written contract or not."

Attmore said, "This standard was passed in 2004, after many years of due process. It's kind of late to be raising these issues."

Andy Homer, director of government relations for the Texas Public Employees Association, raised concerns that the rule might prompt Texas lawmakers to eliminate retiree health benefits for state employees. Homer said, "Legislators see these big numbers and they don't understand it, and they want to do away with the benefit" (New York Times, 3/12).