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Unfunded Liability For Retiree Health Care Grows


It’s called the unfunded liability. From 2012 to 2013 it grew by $730 million.

That’s actually less than expected because there have been fewer health care claims and health care inflation was lower than expected.

But State Controller John Chiang says the state should stop covering only the minimum amount needed to fund health care costs as they are due.

Instead, some money should be set aside in a trust solely for future retiree benefits, just like a savings account.

“Get the benefit of some interest and you will grow your money, same thing for trying to take down the health care obligations for the state of California," says Chiang. "If you can’t make full payment, let’s make some payment and make the tax obligations that are going to be used in the future drop significantly.”

Chiang says the state could save more than $20 billion by pre-funding its obligation.
The legislature and Governor would have to approve the change.

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