State and local governments are going to face some unpleasant budgetary facts next year. The Governmental Accounting Standards Board is asking states and cities to start recognizing future liabilities for retiree health care costs on their balance sheets, starting in fiscal 2018.
According to a new analysis from the Pew Charitable Trusts of data from 2015, the latest available, U.S. states have retiree health care liabilities of $692 billion and assets of $47 billion, for a net liability of $645 billion. The recognition of these large and growing liabilities — Pew says retiree health care costs rose 6 percent in 2015, and will likely continue to rise as Baby Boomers age out of the state and local workforce — could hurt state bond ratings, driving up costs and creating political pressures to cut benefits.
