The Pefect Storm - Reporting ACTUAL Liabilities for Municipal Retireee Health Benefits...

If you've been in HR for more than 5 years, you've been a part of what I'll call the "Great Benefits Crunch", which has forced your company to reduce overall benefit levels and/or pass along greater costs to employees.

You don't have to explain it to me.  I've had to explain those decisions to employees, and I'm aware that you didn't create the economic problem that is the "state of health care".  Sadly though, if you're in HR, you're left to explain the realities to a set of employees that doesn't feel great about costs being shifted their way.

You and I can understand that, because we're employees too.  Just because you manage the plan doesn't mean your health insurance is free. 

With all that said, a crazy day of reckoning is probably on the horizon for city employees nationwide. From the Whittier Daily News:

"For the first time ever, cities in the San Gabriel Valley are providing realistic estimates on the future costs of retirement benefits for their municipal employees - and the amounts are in the hundreds of millions of dollars.  But in the San Gabriel Valley and Whittier areas, only 12 of the 24 cities that responded to public records requests seeking retirement cost estimates know what their actual anticipated employee retirement obligations are.

Of those 12 cities, only four have started socking away money in preparation for the increasing costs, which total more than $200 million in the two eastern county regions.This year alone, 24 cities in the Valley and Whittier area will spend nearly $11 million on retiree health benefits. That number is expected to grow exponentially as the number of retirees grows, life expectancy rates increase and health premiums continue to rise.

"Up until this point, no one knew how big these unfunded obligations were," said Dean Mead, research manager for the Governmental Accounting Standards Board (GASB), a nonprofit board that sets financial reporting standards for public agencies.

That changed three years ago, when the standards board implemented regulation GASB 45, which requires public agencies to report what retirees' health benefits will cost before they retire."

Just so you know, here's what the public meetings look like when the city in question comes to the conclusion that in order to survive the real cost structure, they need to reduce retiree benefits.  Watch it and ponder...

Comments

[Joe Rice]

Ouch... for the retirees, city employees, and peeps that had to deliver the news.