Taming the OPEB Beast
Originally posted by Charles Chieppo on 8/8/12
In "California's Neglected Promise," author Adam Tatum estimates that the besieged Golden State is facing more than $62 billion in unfunded liabilities for "other post-employment benefits" (OPEB), which mostly consist of health-care costs for retired public workers.
California's OPEB burden is just a small part of the picture. In 2004, the Governmental Accounting Standards Board (GASB) announced that beginning in 2008 cities and states would be required to calculate and make public their OPEB liabilities. Now, one estimate puts unfunded state and local OPEB liabilities at more than $2 trillion, while a survey of 126 state and local pension plans (representing 85 percent of public-pension assets) found unfunded pension liabilities of roughly $700 billion — and that was two years ago.
While many of us would like to change the way public pensions work, those systems do deduct money from current employee salaries to fund at least a portion of future costs. OPEB expenses, on the other hand, are generally funded on a pay-as-you-go basis from operating budgets.