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The public pension crisis has been a staple in the news cycle for the last decade. Headlines feature scary stories of firefighters being laid off and teachers on strike trying to secure better retirement benefits. State and local governments have promised these benefits to public workers, but have set aside less than 72 cents on average for every dollar of promised pension benefits. Now that number may not scare some of you because 72 percent would have been considered passing in grade school. But what the newspapers and others have failed to notice is the growing crisis of other post-employment benefits (OPEB), otherwise known as retiree health care.
Along with a pension, many government workers are also promised free or heavily subsidized health care when they retire. However, Truth in Accounting’s most recent report found that the 50 states have less than seven cents set aside to pay for every dollar of promised OPEB. Seven percent is nowhere near passing.
Wisconsin, for example, is one of eight states that has significantly more OPEB debt than pension debt, yet the most recent articles on Wisconsin’s finances feature only stories about the state’s pension crisis. Wisconsin owes $1.21 billion in unfunded OPEB promises, which is 100 percent more than what the state owes in unfunded pension benefits.
State and local governments have long hidden retirement benefit obligations, including pensions and OPEB, off their balance sheets. In fiscal year (FY) 2018, however, the most recent fiscal year, state and local governments that use Generally Accepted Accounting Principles were required to report their unfunded liabilities related to other post-employment benefits.
Since 2009, Truth in Accounting (TIA) has been reporting the amount of all state unfunded retirement liabilities, despite the fact that those numbers were not counted on state government balance sheets. Maybe now that they’ve appeared the balance sheets, the media and others will start paying attention.
Racine County Eye and Patch are partnering up to provide readers with more local content and provide local advertisers with a larger audience to connect with.
Based in New York, Patch is a hyperlocal platform that currently serves over 1,200 communities, towns and cities across the U.S. Known as “The Patch” by its users, Patch is the go-to destination for hyperlocal news and discussion about your community.