Cities piling up unfunded retiree liabilities, study shows

City News Service

Thirteen cities in San Diego County have a combined unfunded retiree health care liability of $45 million, according to a report released Thursday by the San Diego County Taxpayers Association.

The study was made possible by recent changes to public accounting rules that give increased insight into a category called Other Post-Employment Benefits,’' which mostly are used for retired employees’ health care coverage.

The $45 million figure represents 13 percent of the cities’ estimated payroll, according to the report.

According to the SDCTA, the underfunding of the benefit needs to be corrected or the cities will eventually have to cover their liability with funds that would otherwise go to provide basic services.

These benefits present significant future financial burdens for governments not adequately prepared to deal with them,’' said Lani Lutar, SDCTA president and CEO.With health care costs projected to continue to rise nationwide, the situation is only going to become more challenging and costly if elected officials, management and employee unions don’t come to grips with them now.’'

The study encompassed Carlsbad, Chula Vista, Coronado, El Cajon, Encinitas, Imperial Beach, La Mesa, Lemon Grove, National City, Oceanside, San Marcos, Santee and Solana Beach. The city and county of San Diego were not included in the report. Del Mar, Escondido, Poway and Vista do not offer retiree health coverage.

The SDCTA suggested that retiree healthcare be reduced to a level that can be 100 percent funded — possibly by barring spouses or family members from receiving the benefits and capping taxpayer contributions to premiums — and enrolling new workers into a defined contribution plan.