No matter who won the Empire State’s 2010 elections, they’re going to have to deal with the portentous problems boldly outlined in a recent report by E.J. McMahon, director of the Manhattan Institute’s Empire Center for New York State Policy.
New York’s total unfunded liability for public-sector retiree health insurance, a benefit not available to the vast majority of private-sector workers, comes to $205 billion, McMahon reported.
That’s right, $205 billion with a B.
“The burden of retiree health care is clearly unsustainable and unaffordable,” McMahon concluded.
Governments in the state, from the Big Apple to little Liverpool, spend billions annually on health insurance for retired employees. Unlike pensions, which are partly pre-funded through big investment pools, public-sector retiree health care comes out of annual budgets on a “pay-as-you-go” basis.
“But the expense of retiree health insurance – which accountants call Other Post-Employment Benefits or OPEB – is just the tip of a massive iceberg,” McMahon wrote. “We’re finally starting to learn the full, long-term cost of the public sector’s retiree health-care promises.”
And it’s not a pretty picture.
‘Unfunded liability’
How hard does this hit us here in Liverpool?
Consider this: The Liverpool Central School District has a $330 million unfunded liability for retirees’ healthcare, according to school board member Joe Unangst.
“The $330 million is being absorbed onto our financial statements over 10 years,” Unangst said. “The McMahon Report says school districts in N.Y. have $6.5 billion – which I believe must be low if the LCSD has one-third of a billion dollars by itself…We have a problem Houston!”
Guess who ends up paying for these currently “unfunded” contractual liabilities.
You, the taxpayer.
Tapping taxpayers
After a decade in which the New York state pension fund’s annual return on assets averaged less than half its target rate, McMahon wrote, the fund will need to jack up its taxpayer-funded contribution rates next year. Comptroller Thomas DiNapoli said the 2011-12 rate would rise from 11.5 percent of salary to 16.3 percent for members of the Employee Retirement System (ERS) and from 18.2 to 21.6 percent for members of the police and Fire Retirement System, (PFRS).
Albany’s most prominent newscaster, Elizabeth Benjamin host of YNN’s “Capital Tonight,” called the public-sector retiree health insurance cost “New York state’s hidden ticking time bomb.”
If you can bear the bad news, check out nyfiscalwatch.com
LCSD administrators get raises
While largely ignoring the impending financial calamity, the Liverpool school board went ahead and approved raises for administrators last month.
School board member Patricia Rosier, a former teacher who lives in Liverpool, cast the sole NO vote against granting eight percent raises to LCSD executives.
Many parents and district taxpayers are upset that the board approved the increased spending, especially after laying off so many teachers. One parent in particular, Sharon Yager, urges district residents to attend the Nov. 8 BOE meeting at the district office at Craven Crawford to register their concerns.
“Is it right to be the owner of a business, lay off employees but give yourself a raise?” Yager asked.
Taxpayers who think enough is enough can contact Yager at [email protected].
Ace Ward back from bypass
Former Salina Town Supervisor Richard “Ace” Ward, who lives in Liverpool, underwent quadruple heart bypass surgery late last month. The operation was successful, and Ace is now recovering at home said his wife, former Liverpool Mayor Marlene Ward.
