Jerry Brown

Jerry Brown

By Jon Ortiz
01/09/2015 11:38 PM

Gov. Jerry Brown says he wants state workers to begin contributing toward their retiree health benefits and that he will take up the issue at the bargaining table beginning this year.

“I want to get the best deal I can get for the workers and the taxpayers,” Brown said during a Friday morning press conference to unveil his 2015-16 budget proposal.

California faces a $72 billion unfunded liability over the next three decades to pay for retirees’ medical expenses. For the most part, the state sets nothing aside for those anticipated costs. The pay-as-you-go method is the most expensive way to handle the obligation, say experts and state Treasurer John Chiang.

Retiree health benefits are “one of the fastest growing areas of the state budget,” according to a summary of the governor’s budget plan. In 2001, retiree medical bills comprised 0.6 percent of the general fund budget, or $458 million. This year, those costs have grown 1.6 percent of the general fund, or $1.9 billion.

“(W)ithout action, the state’s unfunded liability will grow to $100 billion by 2020‑21 and $300 billion by 2047‑48,” Brown’s budget summary states.

His budget proposal also leaves open the door to “various measures to lower the growth in premium costs” for retirees, such as ensuring seniors enroll in federally subsidized Medicare programs when they’re eligible instead of remaining on “more expensive state-paid plans.”

The governor’s budget also envisions health-benefit changes for active workers. A federal health insurance law takes effect in 2018 that will levy a tax on the most generous medical insurance plans, leaving “the state – and employees – vulnerable to the pending Cadillac Tax,” Brown’s budget proposal notes.

The state would begin offering a high-deductible health plan and health savings accounts, the budget summary states, and lengthen how long employees must work to qualify for lifetime benefits.

The administration is proposing changing the structure of health benefits, establishing a health savings account and extending how long state workers must serve to receive subsidized retiree medical coverage, currently 10 years to 20 years, depending on when they hired on. New hires would have to work 15 years to 25 years under Brown’s proposal.

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