Pension Pinch is Bad...so is Healthcare

WPRI's indefatigable investigative team has turned up the fact that RI cities and towns owe a combined $3.6 billion in healthcare benefits (Sen. Dennis Algiere wrote about this a few days ago). From the WPRI report:

The state's municipalities have promised to provide nearly $3.6 billion worth of medical coverage to their current and future retirees over the next three decades, but government financial reports show they've put aside almost nothing to pay the bill – just $27.5 million, or less than 1 percent of the future cost.

To put it in perspective, the $3.6 billion unfunded liability for city and town retiree health care is significantly larger than their pension plans' shortfall of roughly $2.2 billion.

As with pensions, communities do not need to come up with the money for these so-called "other post-employment benefits," or OPEB, all at once. But most have barely begun to grapple with the cost.

"You've heard the general treasurer recently say pension reform for state employees and municipal employees isn't a problem – it's the problem," said Dan Beardsley, executive director of the Rhode Island League of Cities and Towns. "Well, I would say OPEB obligations and dealing with those obligations is either equal to or just a notch down from the needed pension reform."