Thursday, May 18, 2006

Repeat after me: Gaz-bee...

So I don't usually read USAToday, but it's in the hotel I stayed at last night. The front page story is all about the national problem of large pending health care liabilities just for public sector retirees. Basically, changes being proposed by the Government Accounting Standards Board (i.e. GASB), in particular GASB rule 45, are mandating (a misused verb when it comes to government accounting) that retiree health care costs be accounted for actuarially the same way retiree pension costs must be accounted for. The bottom line: money should be set aside now to pay the big bills that are coming due down the line. The problem is that few local governments have anywhere near the resoruces needed to put extra money into a fund for future retiree health care cost. Per the USAToday, New York City is socking away a billion dollars just this year for just this reason.

Just because of the scale of population and workforce downsizing in the city of Pittsburgh, this may be a bigger issue here than in any other large municipality in the country. The city now has something like 4,500 retirees right now, so the bills coming due are real. It's not a new story here. However, it is only beginning to be addressed. It is true that GASB rules are not binding for the most part on local governments. Thus the City need not actually start setting aside cash for future health care costs, but with the rash of Act 47 or otherwise induced retirements in recent years, the retiree health care bills are coming in much quicker than anticipated.