Florida State University

College of Social Sciences & Public Policy

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Collins Institute Releases Report on Local Governments and Retiree Health Benefits

The Leroy Collins Institute released its newest report on the “Tough Choices Facing Florida’s Governments” in February 2015.

The seventh installment of the institute’s series of policy papers on government pensions, “Beyond Pensions: Florida Local Governments and Retiree Health Benefits,” was authored by David Matkin, formerly of FSU and now at the University of Albany.

The paper’s introduction says:

“The financial condition of public employee retirement systems is one of the most highly publicized and complex policy issues facing state and local governments. Most of the recent attention is focused on the cost and sustainability of public pensions, but pensions are not the only retirement benefits that can create significant taxpayer obligations. This report highlights another important potential ticking time bomb for many Florida local governments – commitments to subsidize healthcare insurance premiums for retired workers.

“There are several reasons for concern. First, few Florida local governments have set aside funds to cover the promises they have made to their employees to provide health benefit subsidies during their retirement. Instead, most governments opt to pass the cost of retiree health benefits that have already been earned onto future taxpayers. This delay will likely only increase how much those benefits will eventually cost taxpayers. Second, over the next twenty years the number of workers who will begin to draw retirement benefits is expected to increase significantly as the Baby Boomer generation retires. Third, it is widely expected that healthcare costs and insurance premiums will require an increasingly larger portion of household incomes in the coming years.”

Read the full report here.