What Could Go Wrong? For Public Pensions, More Than You Know
September 26, 2017
Here’s a loaded question for you: “What could go wrong?”
In some contexts, it can express mistaken confidence, as in, “Sure I’ll put my hand between that crocodile’s jaws. What could go wrong?”...
...Healthcare Goes on the Books
Local governments often give retired police officers, firefighters, teachers, and other workers a pension plus healthcare benefits.
Healthcare is expensive even in the best circumstances. Imagine your health insurer had promised to cover your medical expenses but hadn’t set aside any cash to pay for it.
Remarkably, that’s exactly what has happened. Governments currently disclose their retiree healthcare liabilities only in footnotes to their financial statements. Many have saved little to no money to cover those future expenses.
That’s about to change.
Starting in 2018, the Governmental Accounting Standards Board—the source of generally accepted accounting principles (GAAP) for state and local governments—will force officials to record healthcare liabilities on their balance sheets. Pew Charitable Trusts estimates the national shortfall will add up to $645 billion.
That’s on top of the estimated $1.1 trillion in unfunded pension liabilities they already had. In other words, this giant problem that no one knows how to solve is about to get 59% worse!
Or, more accurately, it’s going to look 59% worse. The healthcare shortfall isn’t new. What’s new is that local governments have to stop obscuring it.
What else could go wrong? Plenty.
Photo: AP
Unbudgeted Crisis Now, let’s add another crisis on top of the already-terrible one that just got 59% worse.
You’ve probably heard about the opioid drug abuse that is killing thousands of Americans. Putting numbers on it is tricky—often, multiple factors contribute to the same death. The Centers for Disease Control estimates opioids played a role in more than 33,000 deaths in 2015. No one thinks the numbers have improved since then.
The deaths aren’t evenly distributed. This Reuters graphic shows the heaviest concentrations in the Midwest, New England, and New Mexico.
It’s probably no coincidence that some of these states also suffered above-average economic pain in the last decade or two....MOREOops, cat's out of the bag.
After debating whether to post this, ah WTH.
Plague: 19 Dead in Madagascar as Black Death Continues to Spread
Cat, catch rat.
That takes care of the bubonic, leaving only the more contagious pneumonic type.
