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Costs for Funding State Retiree Health Benefits Grows

Feb 21, 2013

California State Controller John Chiang
Credit California State Controller's Office

A new report shows the unfunded liability for state retiree health benefits in California has grown to more than $63 billion.

As Amy Quinton reports from Sacramento, State Controller John Chiang says some increases in future liability could be prevented.

Chiang says the unfunded obligation for state retiree benefits has grown almost two billion dollars from 2011 to 2012. That’s less than expected because of fewer and less expensive healthcare claims.

But Chiang says the pay-as-you-go model for funding retiree health benefits is short-sighted and could undermine the state’s fiscal health.

He says if the state shifts to fully pre-funding the costs, the state’s liability would be cut by more than $21 billion.

California would have to pay almost $5 billion this fiscal year to do that. The state only allotted about $2 billion.

Chiang says 22 percent of California Public Employees’ Retirement System health expenses are related to conditions that could be changed through diet and exercise.