A California official says he has come up with a plan for increasing the odds the state workers will get their retiree health and dental benefits.
John Chiang, the state’s controller, says the state could ease into prefunding “other postemployment benefits” (OPEB) costs by at least setting aside enough cash each year to fund the OPEB benefits current workers have earned that year.
Prefunding a year’s worth of benefits each year would not be as effective as fully prefunding all expected OPEB costs, but, by 2018-2019, it could cut the state’s current $65 billion unfunded OPEB liability by about $18 billion, Chiang estimates.
Full prefunding would cut the liability by about $22 billion, Chiang says.
California has been paying OPEB costs during the year the retirees actually incur the costs.
For the fiscal year that started July 1, 2013, for example, lawmakers scraped up $1.8 billion for retiree health benefits funding.