In a new step to expose hidden debt, the Governmental Accounting Standards Board last week proposed that retiree health care debt or “unfunded liability” be reported on the face of government financial statements, not buried inside.
The board chairman, David Vaudt, said in a news release retiree health care is “a very significant liability for many state and local governments, one that is magnified because relatively few governments have set aside any assets to pay for those benefits.”
Most government retiree health care is pay-as-you go, covering part or all of annual insurance premiums. No money is set aside, as in a pension, and state worker retiree health care is unusually generous.
The state pays 100 percent of the premium of the retiree (the average of several large plans) and 90 percent of dependent premiums. For active workers, the state usually pays 80 or 85 percent of the worker premium and 80 percent of dependent premiums.
The governor mentioned retiree health care at a news conference last month while proposing a revised state budget plan that includes a long-term funding solution for the troubled California State Teachers Retirement System.
http://calpensions.com/2014/06/02/new-step-to-expose-hidden-retiree-health-debt/