California’s state retiree health care liability grows

We know CalPERS has a $1.4 trillion unfunded liability, per Stanford University Pension Institute.  CalSTRS is only about $200 billion in unfunded liabilities, but by 2020, three years from now, teachers will be paying 19.1% of their salaries just to keep those doors open.  Now or the bad news from the State health care program.

“If each and every Californian, citizen, resident alien, undocumented alien – all 40 million — would just fork over $1,917 and change, then they would pay off what’s owed to retired state employees for health and dental benefits.

Put another way, the state’s cost for retiree health and dental benefits has grown to $76.68 billion, according to a report Wednesday from state Controller Betty Yee.

The liability represents the present-day cost to provide retiree health and dental benefits earned as of June 30, 2016 – one of the state’s largest long-term debts.

Almost $1.7 trillion in underfund liabilities—and in 2017 CalPERS debt will grow by $280 billion.  The State has a $.15 trillion debt—we are in severe economic distress and Brown and his Democrat buddies, with the media’s cooperation, have keep the finances of the State hidden.  Be aware—YOU will hold the bag.  Ready for the economic collapse of California government?

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California’s state retiree health care liability grows

Central Valley Business Times,  1/26/17

  • Now exceeds $76 Billion
  • “One of the greatest fiscal challenges facing California is the mounting cost of providing health care benefits”

If each and every Californian, citizen, resident alien, undocumented alien – all 40 million — would just fork over $1,917 and change, then they would pay off what’s owed to retired state employees for health and dental benefits.

Put another way, the state’s cost for retiree health and dental benefits has grown to $76.68 billion, according to a report Wednesday from state Controller Betty Yee.

The liability represents the present-day cost to provide retiree health and dental benefits earned as of June 30, 2016 – one of the state’s largest long-term debts.

The total liability grew $2.49 billion compared to the prior fiscal year, but the size of the increase was $1.45 billion less than estimated in last year’s report. That’s because health care claims did not grow as rapidly as expected, and changes in health care delivery helped to lower costs by $3.78 billion, Ms. Yee says.

Conversely, demographic shifts and changes in assumptions about long-term health trends added $2.33 billion to the liability.

These costs have increased dramatically over the past 15 years. In 2001, retiree health care costs accounted for 0.6 percent of the state General Fund budget. This year, they will total $1.92 billion, or about 1.5 percent of the budget (FY 16-17).

“One of the greatest fiscal challenges facing California is the mounting cost of providing health care benefits to public sector workers,” says Ms. Yee, the state’s chief fiscal officer and a board member of the two big public pension funds, CalPERS and CalSTRS.

“Through collective bargaining, there is positive progress towards the long-term security and sustainability of retiree health benefits,” Ms. Yee says. “Barring drastic cuts into other public spending, these changes will not happen overnight but, in time, our long-term liabilities will be paid down.”

State pensions are prefunded with contributions from employees and the state, allowing investment returns to reduce liabilities. By contrast, California has traditionally paid for retiree health benefits on a pay-as-you-go basis, covering costs as they come due.

A prefunding approach to health benefits more like that used for public employee pension funds is under study.

 

About Stephen Frank

Stephen Frank is the publisher and editor of California Political News and Views. He speaks all over California and appears as a guest on several radio shows each week. He has also served as a guest host on radio talk shows. He is a fulltime political consultant.