Gov. Brown’s plan to reduce state worker retiree health care costs got only a small nod in a tentative CSU faculty contract agreement last week. But three unions have agreed to begin paying down one of the state’s fastest-growing costs and largest debts.
Part of the plan Brown proposed last year hit a wall of opposition in the Legislature. An optional low-cost health plan would have taken less from the paycheck, but more from the pocket before insurance begins paying medical expenses.
The new state budget Brown proposed in January still expects major long-term savings from the retireee health care plan requiring state workers to begin paying some of the cost while on the job, work longer to become eligible, and pay higher premiums after retiring.
“Even though the private sector is eliminating these types of benefits, the state can preserve retiree health benefits for career workers,” said the governor’s Finance department budget summary...
Brown’s plan, as in his previous pension reform, calls for the state and its current employees to pay equal shares of the “normal cost,” a contribution to the investment fund to cover the estimated cost of the retiree health care earned during a year.
But as with pensions, only the state, not the employee, has to pay for the debt from previous years often caused by investments failing to earn the expected amount, a big risk at the center of the public pension debate.
Brown’s plan also requires five more years of service to become eligible for retiree health care. Current workers are eligible for 50 percent coverage after 10 years on the job, increasing to 100 percent after 20 years. The new thresholds are 15 and 25 years...
The nonpartisan Legislative Analyst’s Office suggested last year that there is “some ambiguity” about whether retiree health care is, like pensions, a “vested right” widely believed to be protected against cuts by a series of state court decisions.
Possibly strengthening the right to retiree health care was not mentioned as an incentive in the negotiations that led to the first contract that the state budget summary said “lays out the approach” for the Brown retiree health care plan.