Wednesday, February 10, 2010

Unfunded Liabilities and the City

I caught this morning's Sun story about a Council hearing regarding a state law that would require future City retirees to switch from Master Medical over to Medicare:

Lynch added that the city's current unfunded health-care liability for all current retirees and active employees who will be retiring is $433 million, a figure than can be slashed considerably by the adoption of the statute. For instance, if a retiree who had been on the city's Master Medical plan enrolled in Medicare upon retirement, the city would save $3,105 annually.
Now multiply that times a whole lot of retirees, and factor in that the unfunded liability cost is just going to spiral "up, up, and away." Also, as CM Lynch notes in the article, the city (err...the taxpayers) are paying twice for nothing by paying the Medicare payroll tax for workers while they're in the system, then paying again for a separate plan, and then not reaping the benefits of Medicare for those people down the road.

I'm glad to see there's an effort out there to rein in the runaway cost of entitlement spending, especially as it relates to retirements and pensions. It may seem politically unpalatable (good luck to the pol who runs on a platform of cutting benefits people currently enjoy) but it can work as long as it's written in a way that works it into the future (i.e. let's raise the raise where people can receive such-and-such a benefit, but not implement it until some really futuristic-sounding year).

As a next step, I'd like to the sacred cow of "20 years" slain for a lot of public professions. If someone's occupation is truly hazardous or exceptionally stressful, I'm on board and I get it, but if someone finishes their schooling at 22, and works in an office job for 20 years, that only puts them at the very spry young age of 42 -- young enough to have full mental capacity, physical mobility, etc. Since that person is most likely capable of continuing to make meaningful productions to the workforce (and our payroll taxes!) for many more years, I don't want to pay him or her not to.


C R Krieger said...

I am with you on the retirement issue.  Some occupations deserve an early retirement, but most not.  I was still flying jets, and loving it, when I was 45.  And, a military retirement at 20 (it could be kicked out a few years) is at 50% of BASE PAY and there is no extra retirement money based upon drawing flight pay or housing allowance or any of the other extras.

If we don't rein in the retirement liability there is going to be a train wreck.

And Heaven help the politician who brings this up.

Regards  —  Cliff

The New Englander said...

Ahh..but hopefully the "politican who brings this up" can do so in a crafty enough way to make it happen without alienating too many people. It could be a doomsday prophet with a JFK-esque message "...Ask not.." proposing something that would only affect people who hadn't already bought into the system.

Either that, or we'll have a real no kidding catastrophe and we'll all just agree that someone HAS to fix it, and how-could-we-all-have-been-so-stupid-in-the-first-place (as we give ourselves a collective forehead slap)