State Worker Retirement Cost: $48.2 Billion

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If there's any issue facing state government that's not quite reared its ugly head... but will... it's the price tag for retirement benefits of state employees. And today, a new estimate of those costs may only reinforce the notion that the issue is a ticking fiscal time bomb.

Controller John Chiang has released a new report, conducted by outside researchers, that pegs California will have to shell out some $48.2 billion to cover its current state worker retiree obligations on medical and dental care.

That's an increase of about $340 million since the last report on the issue from Chiang, almost two years ago. (And if there's a silver lining, it turns out to be less than what the 2007 report projected for 2009, thanks to some actions taken in the interim.)

The $48.2 billion liability is over a 30-year period. And as we all know, it comes on the heels of the divisive battle to solve a $41 billion budget shortfall, a battle that left many Californians with the distinct impression state government is already teetering on being flat broke.

So, how does the state meet its multi-billion dollar worker retirement obligation? That's a discussion that Chiang says the report should prompt inside the state Capitol.

The report makes it clear that the earlier the state sets aside money, the lower the long-term cost (thanks to interest payments that could be earned).

Currently, the state is using a 'pay as you go' policy, an annual contribution toward the overall cost... but no pre-payment of retiree health care obligations.

Trouble is, not enough money is being set aside. Today's report says that such a policy should have meant $3.72 billion would be set aside in the current fiscal year. Actual amount being set aside, says Chiang: $1.36 billion.

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About John Myers

John Myers is senior editor of KQED's new California Politics & Government Desk. He has covered California politics for most of the past two decades, serving previously as Sacramento bureau chief for KQED News and most recently as political editor for KXTV News10 (ABC) in Sacramento. In 2014, he was named one of the nation's top statehouse reporters by The Washington Post. Follow him on Twitter @johnmyers.

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