School district continues to grapple with unfunded retirement liability

Contra Costa Times ^ | 8/1/8 | Kimberly S. Wetzel, West County Times

[SmithL]

West Contra Costa school district workers have a perk that many employers no longer offer: lifetime retiree health benefits.

But that comes at a high cost to the district: an estimated $495 million, which covers benefits for all currently eligible employees and their spouses and amounts to almost twice the district's annual operating budget.

According to a recent study on the issue presented to the school board this week, the estimated cost will grow to $727 million once currently ineligible employees become eligible.

District officials, who have been aware of the swelling liability for years, cover the cost on a $15 million annual pay-as-you-go basis, unable to afford more.

But now the district is being asked to disclose its unfunded liability under new requirements by the federal Governmental Accounting Standards Board, which recently mandated that governmental entities account for post-employment benefits on an accrual basis rather than pay-as-you-go. That means that each employee's benefits will accrue throughout their working lifetime, and employers must show those accruals as a current-year expense.

The district would not be required to pay more, but must account for and report on its financial statements the annual required contribution. The difference between the amount accrued and amount owed will continue to grow if the district doesn't pay it off, and that could hurt the district's bond ratings long-term.

Board member Charles Ramsey said the cash-strapped district cannot afford to pay more than it already does.

"This district does not have any money at all to fund this," Ramsey said. "We're not in a situation where we can do anything."

The district has grappled for years with its unions to place employer caps on benefits with some success. Employees now are required to work for the district 10 years instead of five before becoming eligible. And the district in June rejected an offer from the teachers union to roll over its recently expired contract without pay raises for another year, possibly to take another stab at reducing teacher benefits. The district and teachers union will meet for bargaining Aug. 13.

In other action this week, the board listened to a presentation of a 10-year district draft demographics study. According to the firm Davis Demographics and Planning, the district can expect to see a continued decline of its 30,000-student population through 2013 to about 28,900, but could see a slight increase beginning in 2014, which could put the district back to around 29,500 students.

Authors of the study used geographic maps, student data and births by ZIP code, among other information, to determine the results.

[SmithL]

I'm guessing WCCUSD is watching the City of Vallejo very closely.

[STONEWALLS]

....huge tsumani of unfunded liabilities coming to government at all levels....massive government growth since World War Two means massive retirement packages that have to be met...hmm...is this the real reason for government opening the flood gates to immigration?

[EagleUSA]

Just more GROSS MISMANAGEMENT and INCOMPETENCE in government. This will go the same way as the ‘welfare state’ that the Big-Three in Detroit set up. Unions should be abolished and people AND government should stand on their own two feet — its called responsibility.

Liberalism, socialism and big government has done wonders in the destruction of America....