GAO: State, Local Governments Face Health Shortfall

Many state and municipal employers have failed to prepare to meet their obligations to pay retiree health benefits.

Researchers at the U.S. Government Accountability Office make that argument in a report on retiree pension and health benefit obligations at state and local government employers.

Most government employers studied have done a reasonably good job of setting aside cash or using other means, such as buying annuities, to fund pension obligations, the GAO researchers report.

But the shortfall in funding arrangements for paying state and local retiree health benefits appears to range from $600 billion to $1.6 trillion, Barbara Bovbjerg, a GAO director, warns in a discussion of the GAO researchers’ findings.