By Mary Branham
California is facing massive budget problems by any measure. And among the major problems it faces is a $100 billion liability in its public retirement plans, said Jason Dickerson, principal fiscal and policy analyst, California Legislative Analyst’s Office.
Dickerson said local governments in California have taken action to reduce retiree benefits for current and future employees, as well as current retirees. That hasn’t gone over well, he said, and the state has no plans to take similar action.
The state has worked with the California Highway Patrol unions toward a plan in which officers will pay into the California Public Employee Retirement System—or CALPERS—trust fund in an effort to address some of the unfunded liability for that group. It won’t cover all of the annual required contribution, however, he said.
“The choice is whether they believe we can afford this type of pension system even longer,” he said.
That’s a choice many states are having to make, and some are making changes to address those pension shortfalls.
Utah, for instance, has addressed state employees’ other post-employment benefits—sometimes referred to as OPEBs—in an innovative way. The state uses a formula to take an employee’s accrued sick leave to come up with an amount that will go into a health reimbursement account for that employee. That plan replaces the previous benefit in which the state paid the employees’ full monthly health insurance premium.
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