Monday, September 25, 2006

Public Benefits Could Break the Bank, Part One

Once public employees became unionized, unions did what unions do and benefits increased. No one really kept track of the future cost, until now, and it’s a whopper, super-sized.

It is quantifying what the case we have been making that the best way to take care of the Parkway, not only the maintenance needs, but actually improving it, is to have a nonprofit organization contract with government (running short of money now and increasing in the future) as is being done with the Sacramento Zoo locally and great parks like Central park in New York.

An excerpt.

AP Enterprise: States could be overwhelmed by health care burden
By BOB PORTERFIELD, - Associated Press WriterPublished 12:04 am PDT Monday, September 25, 2006

The bill is coming due for years of generous benefits bestowed upon the nation's public employees, and it's a stunner: hundreds of billions of dollars over the next three decades.

California will almost certainly owe more than any other state, threatening to bankrupt local governments and all but guaranteeing cuts in services like education and public safety.

These staggering numbers are coming to light because of new accounting rules issued by the Government Accounting Standards Board. They require public agencies to disclose the future cost of health care and other benefits - such as dental, vision and life insurance - promised to retirees alongside traditional pensions.

"There will be horrific financial implications," said Steven Frates, president of the Center for Government Analysis in Newport Beach. "More money will be needed for providing health care benefits that could otherwise be used for fighting fires or keeping libraries open."

According to preliminary estimates, keeping California's approximately 2.3 million active and retired employees healthy through their sunset years could cost taxpayers more than $200 billion over the next 30 years.

"When you start putting these costs on the books and understand what they involve and the size of the obligation - it's big," said Marian Mulkey of the California Healthcare Foundation's Health Insurance Program. "Either way they have to pay for it or somebody has to go back on their promises."

Retiree health care costs have been quietly mounting for decades while public agencies have passed out generous retirement benefits during labor negotiations - often in lieu of salary increases. But government negotiators rarely considered the long-term financial consequences of awarding such perks, according to Brian Whitworth, a retirement benefits specialist with JP Morgan Chase and Co.