Monday, June 9, 2008

The High Costs of Retiree Health Care Benefits

By J. Scott Moody

Categories: Maine

A story from CNN/Money article why Mainers should be worried about the $4.5 billion unfunded retirement liability for state government workers and teachers.

The article states: "Here's the skinny: In late May, Vallejo, Calif., became the largest city in California history to declare bankruptcy . . . The final budget-crusher was the city's pension plan. Thanks to retroactive benefit enhancements approved by the city council in 2000, police officers and firefighters can now retire at age 50 and receive an annual pension equal to 90% of their final pay (assuming 30 years on the job), an amount that gets increased every year to help keep pace with inflation."

For an introduction to the issue, see my recent report on this topic titled: "Transparency-Shedding Light on Government Activities I: How Will Maine Afford Retiree Health Care Benefits for State Employees and Public School Teachers?"