No matter who won the Empire State's 2010 elections, they're going to have to deal with the portentous problems boldly outlined in a recent report by E.J. McMahon, director of the Manhattan Institute's Empire Center for New York State Policy.
New York's total unfunded liability for public-sector retiree health insurance, a benefit not available to the vast majority of private-sector workers, comes to $205 billion, McMahon reported.
That's right, $205 billion with a B.
"The burden of retiree health care is clearly unsustainable and unaffordable," McMahon concluded.
Governments in the state, from the Big Apple to little Liverpool, spend billions annually on health insurance for retired employees. Unlike pensions, which are partly pre-funded through big investment pools, public-sector retiree health care comes out of annual budgets on a "pay-as-you-go" basis.
"But the expense of retiree health insurance - which accountants call Other Post-Employment Benefits or OPEB - is just the tip of a massive iceberg," McMahon wrote. "We're finally starting to learn the full, long-term cost of the public sector's retiree health-care promises."
And it's not a pretty picture.
How hard does this hit us here in Liverpool?
Consider this: The Liverpool Central School District has a $330 million unfunded liability for retirees' healthcare, according to school board member Joe Unangst.
"The $330 million is being absorbed onto our financial statements over 10 years," Unangst said. "The McMahon Report says school districts in N.Y. have $6.5 billion - which I believe must be low if the LCSD has one-third of a billion dollars by itself...We have a problem Houston!"
Guess who ends up paying for these currently "unfunded" contractual liabilities.
You, the taxpayer.
After a decade in which the New York state pension fund's annual return on assets averaged less than half its target rate, McMahon wrote, the fund will need to jack up its taxpayer-funded contribution rates next year. Comptroller Thomas DiNapoli said the 2011-12 rate would rise from 11.5 percent of salary to 16.3 percent for members of the Employee Retirement System (ERS) and from 18.2 to 21.6 percent for members of the police and Fire Retirement System, (PFRS).