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State government union reaches deal on retiree healthcare

State officials and union leaders have negotiated the first labor agreement to address the growing cost of retiree healthcare since Gov. Jerry Brown made that a goal this year. 

The agreement affects 13,000 employees who are members of the Professional Engineers in California Government. If approved by the Legislature and the full union, it would require new contributions from union members and the state.

Brown previously pledged to address big bills for retiree healthcare, which is slated to cost roughly $72 billion more than state officials have set aside. Right now the state pays almost all the bills out of its general fund, rather than investing money to reap investment returns, as typical of pension systems.

Under the deal, employees’ contribution would start at .5% of salary in 2017 and rise to 2% by 2019. The state would fork over an equivalent amount of taxpayer money.

"We ended up working out something that was satisfactory to them as well as to us," said Bruce Blanning, the union's executive director. 

The state would also pay less for healthcare for new employees once they retire -- 80% of the average premium, down from 100% for current workers.

On the flip side, union members would also get a 5% raise next summer and a 2% boost in 2017.

Follow @chrismegerian for more updates from Sacramento.

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