And this week, the Legislative Analysts Office released a report that the cost of retiree health benefits will be in the range of $40 billion to $70 billion, and perhaps more. The report identifies two reasons for this increased cost; (a) increased health care costs; and (b) legislatively mandated increased health benefits.
Health care costs have increased significantly in the last six years for one reason: legislatively mandated minimum requirements for health care. From 1999 to 2000, the Legislature passed over 30 different mandates on health insurers, and as a result, costs increased over 40%.
In addition, the Government Standards Accounting Board (GASB) passed new rules on how to account for these increases. GASB statement 45 (GASB 45) increases the information the governments must report to properly assess their liabilities. No longer can the government employee unions, and their management allies, cook the books to understate the liabilities. Once all these liabilities are reported, the government agency must pay for all of the costs of those liabilities.
To the state of California, GASB 45 would require $6 billion in payments, compared to $1 billion today. This is in addition to the states already $2-3 billion increase in pension costs, and the existing $5 billion structural deficit, the state is on the brink of a crisis.
Pension problem ping to post #8 and this thread in general.