Retiree Benefits Face a Crunch
Starting in fiscal year 2018, new widely followed Governmental Accounting Standards Board principles will urge officials to record all health-care liabilities on their balance sheets instead of pushing a portion of debt to footnotes.
This change will highlight that U.S. states as a group have promised hundreds of billions more in retiree health benefits than they have saved up, possibly reducing or scraping benefits as a way of coping with ballooning future costs. In New York, our health-care liabilities (as reported on its balance sheet) will jump to $72 billion up from $17 billion, ten times the current level.
Least you feel this change is ‘much to be about nothing’ please be advised when the city of Aurora, Ill. made this change and closed its books last December, $150 million disappeared from the city’s bottom line affecting 200,000 residents.
The American Federation of State, County and Municipal Employees, which represents public-sector workers is opposed to the new standards. Their position, it’s not time to tell “people who gave the best years of their lives you have to figure out a way to bridge to Medicare.”
New York State Comptroller Thomas P. DiNapoli has drafted legislation that would set money aside for retiree health costs without success. Ignoring the new guidelines is, in my opinion, no longer an option. A real wake-up call is now a matter of record.