NCPA - National Center for Policy Analysis


July 5, 2007

In San Francisco's effort to pay the soaring cost for retiree health benefits, it's $500,000 down, $4.9 billion to go, say John Wildermuth and Robert Selna in the San Francisco Chronicle.


  • The $4.9 billion unfunded liability confronting San Francisco, California's only combined city-county, is bigger than that of the city of Los Angeles ($3.2 billion), San Diego County ($1.38 billion) and San Mateo County ($469 million).
  • It only trails the state of California at $48 billion, Los Angeles County at $16 billion and Los Angeles Unified School District at $10 billion in costs.

Part of the reason San Francisco's burden is particularly heavy is that health care benefits are among the most generous in the state:

  • After five years of service, city employees are guaranteed lifetime health benefits for themselves and 50 percent benefits for a spouse or domestic partner.
  • The state of California, by contrast, provides 50 percent health benefits after 10 years of service and full benefits after 20 years.

As a result, the city would like to model a new health fund based on its successful pension plan, which has used combined city and worker contributions to fund the system:

  • The money going in each year, combined with the investment growth of the pension fund, pays for retiree pension benefits, now and in the future.
  • If the city can make regular contributions to a new retiree health care fund, the city's $4.9 billion liability -- money the city must pay from its general fund over the next 30 years - would drop to $3 billion, according to a 2006 study done for the city.

Source: John Wildermuth and Robert Selna, "S.F. incurs huge costs for public retirees," San Francisco Chronicle, July 5, 2007.

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