NY Estimates Retiree Health Care at $47B

August 11, 2006 (PLANSPONSOR.com) - New York's Budget Office estimates that the cost of providing health benefits to government retirees stands at about $47 billion spread over the next three decades, the Associated Press reported.

The estimate makes New York one of the first states to fall in line with new standards released by the Governmental Accounting Standards Board in 2005, which requires large governments to apply the same accounting standards used for pension liabilities to payments and services provided for retirees other than pensions (See GASB Issues New Standards for Post-Retirement Benefits).

GASB’s requirement mirrors pressures already imposed on private employers in reporting post-retirement obligations, and follows in the wake of accounting changes designed to increase the balance sheet prominence of these longer-term retirement obligations. A paper more recently issued by GASB in Mayexplains how pensions and post-retirement benefits are similar for the private sector and for state and local governments (See Paper Addresses Why Different Accounting Standards Apply to Government ).

The figure, which could reach $54 billion, was unveiled by Governor George Pataki’s Budget Office this week, but does not change the obligation the state has to fund retiree health care.E.J. McMahon of the Empire Center for New York State Policy, a group that tracks the state’s finances, warned the total cost for taxpayers could reach $200 billion when including local government retirees, the AP reported.

There are 125,000 retirees and 194,000 current state workers.