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| May 05, 2024 |
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General News: Retiree Health Costs to Have Big Impact
November 03, 2010
A new accounting requirement is starting to weigh down the books of municipalities and school districts across New York state that must now begin to accrue for future health insurance costs of public sector retirees.
Last Monday, an auditor hired by the Cornwall Central School District reported that this year’s audit included a $2 million liability to fund this benefit long-term. In Cornwall, the town’s 2009 audit shows an unfunded liability for retirees’ future health care costs at $580, 021. The village has not started to track this liability, although its treasurer, Stephen Affredou, says that he is about to propose hiring an actuary to create an accrual for the future benefits of its 26 employees.
No Money is Currently Paid into this Fund
No money actually goes into this fund for either the municipalities or the school district but according to Affredou, the state will likely require that in the next three to five years. At present, retiree insurance benefits usually are paid out of a general benefit fund.
A new study by the Empire Center for New York State Policy estimates that New York’s total unfunded liability for public-sector retiree health insurance comes to $205 billion.
Future Impact Will Be "Mammoth," Study Says
The study authors warn that “this figure represents a mammoth potential transfer of wealth from future taxpayers to current government employees and retirees—for a type of benefit that is not available to the vast majority of private-sector workers.”
While each municipality and district negotiates its health insurance coverage separately, Affredou says that the village is responsible for 100% of a insurance costs for retirees and their spouses until Medicare begins at age 67, then it only pays for a Medicare supplement. According to the town’s audit, retirees there will be responsible for 25 to 65% of their health care cost, depending on their length of service.
The Empire Center report recommends a four-step plan for curbing retiree health care costs to avoid a burden it calls “unattainable and unaffordable.”
Comments:
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Maybe we can do a "Euro-Bond" offering where we can raise all of this money ($205 Billion) from our European brethren ( they seem to be doing pretty well over there right now). Then we can have Goldman Sachs or one of the "TFTF's" write a few "credit default swaps" that we New Yorkers can buy (secretively of course through an unnamed third party clearing house) and when we can't pay it back, we can collect on the credit default swaps ( I think Goldman has already done a similar trade like this via the residential mortgage market). I guess the other option would be to quietly sell our homes and leave NY before the state starts to impose this future tax burden on us.
posted by PETER MALONE on 11/03/10 at 9:42 PM
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