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Ga. has little set aside for state retiree health care costs

ATLANTA — State leaders take pride that Georgia is one of only six states with a AAA bond rating, but Channel 2's Richard Belcher dug into a multibillion-dollar problem looming for state retirees and taxpayers.

The state's two pension funds are well-funded. Meanwhile, little is said publicly about a fiscal time bomb that is ticking away.

The same Georgia leaders who have protected Georgia's AAA credit rating over the years have done a poor job of setting aside enough money to pay for the health care costs of state retirees. Georgia has a nearly $20 billion unfunded liability, and fixing it will not be easy.

When state employees and educators retire, they draw a pension and get heavily subsidized health care benefits. Belcher compared the health care benefits to how much it will cost the state, and found that Georgia has not put aside nearly enough money to pay for it.

"It's huge," said Allen Buckley, a Cobb County lawyer who has run for U.S. Senate as a libertarian.

Buckley has written extensively about long-term financial commitments by the government. He told Belcher dealing with retiree health care costs is going to get ugly.

"Be looking for a lot more taxes out of the state and local governments in the relatively near future, or less service because more of this money is going to fund these benefits that have been promised," said Buckley.

A Pew survey said that there are "serious concerns" about retiree health care funding in Georgia and 21 other states. Georgia should have $19.8 billion set aside for retiree health care. Belcher questioned state Rep. Chuck Martin about how much we have set aside.

"There are no funds in place, on deposit to pay the post-employment health care," said Martin.

The legislature will appropriate money this session to pay for next year's retiree health care costs, but in all likelihood, not a dime to pay down the long-term liability.

"I take that very seriously," said David Cook, the commissioner of Community Health that oversees most of Georgia's retiree health care spending.

"We're not really paying this down, correct?" Belcher asked Cook.

"Correct, we are making pay-as-you-go payments," Cook responded.

His department has made changes that will force future retirees to pay more for health care. Previously, someone who retired after 20 years paid 25 percent of his or her premiums. A worker who starts now will pay 55 percent of his or her premiums after 20 years.

Chuck Martin wants the state to quit providing any retiree health care for future employees. He told Belcher two questions need to be asked.

"Can we afford them today and can the taxpayers in Georgia afford them going forward into the future? And I can't say 'yes' to either of those questions today," said Martin.

Cook told Belcher that he asked legislators to go beyond "pay-as-you-go."

"Even if it is a small amount, it would be something that I would like to see," said Cook.

Buckley told Belcher not to count on the General Assembly to get serious about future health care costs.

"You get no credit for that as a politician. You're just putting money that comes in from the tax system in a pot over here to pay future benefits when you are no longer in office, so it's a pretty tough sell to any politician," said Buckley.

Buckley also told Belcher that the rules for calculating both pension and health care liabilities are likely to get stricter. That means future adjustments will be even more painful for taxpayers, retirees or both.

Martin told Belcher the intent is to remove retiree health care for future state employees and not to affect current employees or current retirees.