CSPP was in the news today in an article in the Marin IJ, Marin watchdog growls over public sector retiree health costs, by Richard Halstead.
When reading about the $540 million in unfunded retiree health care benefits for Marin County governments, it is important to keep in mind that health care benefits are not 'vested rights' under state law and can be reformed throughout the public employee Marin workforce through negotiations. Some public agencies have made strides in that effort to contain costs, but most have not.
One Marin town, not mentioned in this IJ article, has made efforts to control costs. I asked John McCauley of the Mill Valley City Council for some input regarding what they are doing and here is his reply (he has given permission for me to share it):
"With the approval of all MOU’s at our last City Council meeting the City of Mill Valley has made the OPEBS liability a “closed group”. With the cooperation of the bargaining units new employees will no longer receive an OPEBS benefit. We already moved to a practice where we pre-fund our full Annual Required Contribution (ARC) each year. The City is funding “normal cost” for each years service for all employees earning OPEBS and plans to cover our unfunded prior service cost over the next 22 years. At the end of this time the city should have accumulated sufficient funds and investment earnings to pay the full remaining estimated obligation. Of equal importance, the city has elevated the relationship with our actuary directly to City Council from the governance perspective rather than with City employees. “
John McCauley
It is encouraging to know that some local government entities are addressing the healthcare issue and we hope that others will follow. Unfortunately, most changes apply only to new hires, delaying relief for 20 to 30 years.
If the California Supreme Court sides with lower courts on their vested rights decisions, we could see some significant reduction in unfunded retiree debt - called a "Wall of Debt" by Governor Brown in 2011, and yet to be addressed in any meaningful way since his election.
Regards,Jody
CSPP