Report: Locals making ‘sweeping changes’ to retiree healthcare plans
The suffering economy has slowed the ability of local governments to address long-term funding of their retiree health care obligations, according to a new issue brief from the Washington-based Center for State and Local Government Excellence (CSLGE). The brief follows up on a 2009 survey in which 206 local governments indicated they were likely to adopt a long-term strategy to strengthen their retiree health care funding.
The new brief finds that many jurisdictions are making sweeping changes in their retiree health care plans, such as eliminating or planning to eliminate retiree health benefits for new hires (39 percent); increasing or planning to increase the years of service required to vest (36 percent); and increasing the retirement age (11 percent).
The long-term strategies discussed in the 2009 survey included establishing either a Section 115 or Voluntary Employee Beneficiary Association (VEBA) trust, a medical subaccount; issuing OPEB bonds; increasing the years of service for vesting for RHC; increasing the age at which RHC is available; terminating retiree health care for all new hires. However, the latest CSLGE brief found that the economy, insufficient revenues, and competing budget priorities have posed the greatest impediment to their plans.