Cost of Public Retiree Health Care Soars in Calif.
As Stockton stands on the brink of insolvency, cities, counties and school districts throughout California are grappling with the same problem of paying the health insurance of its retired workforce.
San Francisco, which once allowed its public employees to qualify for full retiree medical benefits after working just five years, is projected to pay $153 million in retiree health care costs this year. Cities like Thousand Oaks and school districts like the Los Angeles Unified School District are also facing long-term unfunded liabilities.
The looming crisis is similar to the one involving public employee pensions. The difference is that retiree health care has largely been handled on a pay-as-you-go basis, meaning the state and municipalities rarely set aside funds.
In each case, taxpayers are responsible for billions of dollars.