First the good news: The state controller says the cost of providing healthcare to retired public employees did not rise as fast as expected.
Now the bad news: Over the next three decades, the bill is expected to be $63.84 billion more than Sacramento has set aside to pay for it, and state officials don’t have a clear plan to cover those costs.
The updated figures were released Thursday by state Controller John Chiang.
“The current pay-as-we-go model of funding retiree health benefits is shortsighted and a recipe for undermining the fiscal health of future generations of Californians,” Chiang said in a statement. “However, today’s challenge won’t necessarily become tomorrow’s crisis if policymakers can muster the fiscal discipline to invest now so that we can pay tens of billions of dollars less later.”
The unfunded liability for retiree healthcare, considered one of the most troublesome threats to California’s financial health, was previously pegged at $62.1 billion.
When pensions for state workers, judges and University of California employees are factored in, the state’s total unfunded liabilities are expected to crack the $180-billion mark over the next 30 years.
Chiang noted that the state’s fledgling financial recovery leaves little leftover money to set aside for healthcare costs. But he said an payment increase of only $170 million could cut the total unfunded liability by $2.74 billion.