News Headlines Article

California State Controller John Chiang Urges Action on State’s $72 Billion Unfunded Retiree Healthcare Liability
Sierra Sun Times

State Controller John Chiang today released a new report showing the unfunded liability of providing health and dental benefits for state retirees under the current funding policy is $71.8 billion. The amount represents the present-day cost to provide benefits earned as of June 30, 2014, which is expected to be paid over the lifetime of current and future retirees.

The total unfunded obligation grew $7.2 billion from the $64.6 billion obligation identified as of June 30, 2013. Healthcare claims did not grow as rapidly as expected, and design changes in health systems also helped to lower costs, but those positive events were outweighed by new mortality assumptions that alone added $7.1 billion to the liability. Specifically, men are assumed to live approximately 2 years longer than previously expected. For women, the new mortality assumptions increase life expectancy by up to 1.8 years.