Nassau and Suffolk counties owe a complete of $13.1 billion for retiree well being care advantages, an obligation that is predicted to balloon additional over time, authorities officers and consultants stated.
The duty, often known as “Different Put up Employment Advantages,” was $6.6 billion for Nassau and $6.5 billion for Suffolk on the finish of 2021, in line with calculations by the 2 county comptrollers.
The counties’ complete obligation has elevated by $2 billion since 2017, county information present.
Pension advantages aren’t included within the projections.
Authorities watchdog teams and unbiased auditors say they’re rising more and more involved in regards to the potential for retiree, excluding pensions, to overwhelm municipal budgets in New York.
They stated municipalities ultimately may lack the funds to hold tempo with the duty, as staff or their beneficiaries proceed to dwell longer, and well being care prices develop.
If the expense have been to develop exponentially, governments may need to extend taxes or minimize companies, consultants warned.
Thad Calabrese, a professor at NYU’s Robert F. Wagner Graduate College of Public Service, instructed Newsday when municipalities resembling Nassau and Suffolk started to award such advantages to staff years in the past, “they have been low cost.”
“And over time, they turn into costlier … ,” he stated, citing subsequent contracts with worker unions.
Calabrese, who teaches public and nonprofit monetary administration, continued: “These are vital quantities of cash that the governments have to lift yearly, after which pay out yearly to beneficiaries. In doing so, they’re then unable to make use of that cash for different urgent points.”
The projections aren’t actual, and officers stated it is unlikely the profit prices may come due all of sudden.
Actuaries use a sophisticated components to provide such estimates yearly, together with inflation and mortality charges, tendencies in Medicare and pharmacy pricing and the low cost price used to worth cash over time.
“The so-called six-billion-dollar legal responsibility shouldn’t be a real legal responsibility in any respect, it’s merely an accounting entry,” Andrew Persich, Nassau’s funds director, stated in a press release.
“The so-called six-billion-dollar legal responsibility shouldn’t be a real legal responsibility in any respect, it’s merely an accounting entry,” Persich stated.
“The state of New York and Nassau County must go broke earlier than this legal responsibility turned actionable,” he stated. “It’s a lot ado about nothing which each municipality should document of their accounting information.”
Most municipalities aren’t approved underneath any state legislation to put aside funds to cowl the duty, though state Comptroller Thomas DiNapoli has backed proposed state laws to permit municipalities to create reserve funds to cowl the opposite submit employment advantages obligations.
New York State acquired “categorical statutory authority” in 2017 to put aside funding for state staff’ different submit employment advantages, DiNapoli’s workplace stated.
New York positioned a primary installment of $320 million right into a retiree well being profit belief fund in March
The state is predicted to deposit $320 million into the fund in 2023, and $375 million every year thereafter, in line with the state’s monetary plan.
The belief holds $4.6 billion, in line with state officers.
Based on the Authorities Finance Officers Affiliation in Chicago, knowledgeable group of public finance officers, greatest apply for municipalities is to determine, “a certified belief fund to prefund [Other Post Employment Benefit] obligations.”
Such obligations range throughout the nation, in line with a Pew Charitable Trusts report in 2018.
Forty-eight states that recorded the duty had $696 billion in complete nonpension retirement advantages for his or her staff in 2016, the report discovered.
Eight states funded 30% of their obligations, 11 funded between 10% and 29% whereas 10 states had much less 10% of the expense put aside.
Nineteen states had no funding put aside for the expense.
Auditors started paying nearer consideration to the trajectory of different post-employment advantages over the previous decade.
In 2004, the Governmental Accounting Requirements Board, which units typically accepted accounting ideas for state and native governments, required states and a few municipalities to report the quantity of the obligations in their year-end monetary evaluations.
It is just like how pension liabilities are recorded in funds paperwork. Which means totaling the advantages “accrued throughout an worker’s total interval of service,” in line with DiNapoli’s workplace.
Based on the accounting board, the tactic gives a, “extra complete, simply comprehensible snapshot of a authorities’s monetary place at a given second in time. With out it, customers are left with an incomplete image.”
If the opposite retirement profit expense will increase, municipalities’ bond scores may endure, resulting in larger borrowing prices, DiNapoli’s workplace has stated.
Adam Barsky, chairman of the Nassau Interim Finance Authority, a state board that controls Nassau County’s funds, known as the county’s obligation for such advantages, a “six billion-dollar, ticking time bomb.”
Barsky has cited the duty as among the many causes NIFA hasn’t lifted Nassau’s “management interval,” which since 2011 has given NIFA the authority to approve or reject county budgets and labor agreements.
“It’s an enormous quantity that’s on the market, $6 billion … ,” Barsky instructed Newsday.
Because it grows, “it begins to compete with assets that might be used for present bills,” Barsky stated.
“Both county companies must be diminished as assets get diverted to pay for post-retirement advantages, or taxes must go up exponentially,” he stated.
In 2021, Nassau paid $163.1 million for retiree well being advantages — $136.3 million for medical health insurance premiums, $26 million for Medicare reimbursement and $794,043 for imaginative and prescient insurance coverage, in line with the county Comptroller’s Workplace.
In Suffolk, the county pays 100% of retiree well being care advantages on a pay-as-you-go foundation, in line with the comptroller’s workplace.
Suffolk County paid a mean $16,800 per worker in 2021, and $411 million complete in different post-employment advantages, officers stated. By comparability, the invoice totaled $378 million in 2018.
Nassau County covers well being look after 8,005 present staff, and 11,260 retirees or their beneficiaries, in line with the state Division of Civil Service, which administers the New York State Well being Insurance coverage Program, wherein county employees and retirees are enrolled.
Suffolk’s plan covers 8,724 present staff and 11,046 retired staff and their beneficiaries.
DiNapoli stated New York counties’ obligations are “vital and rising.”
Municipalities resembling Nassau and Suffolk have been overlaying advantages prices “on a pay-as-you go foundation,” DiNapoli instructed Newsday.
“However while you take a look at the growing longevity and life span of staff, there isn’t any doubt that people who retire immediately from public service, a lot of them are going to dwell properly into their 90s,” DiNapoli stated. “And as we all know, the older you get, the extra you are going to entry the well being care advantages.”
DiNapoli argued, “to simply look ahead to these prices to proceed to develop and never put cash apart in reserve to have the ability to handle and pay for these prices, in the long term, that might be disruptive to sound monetary planning, and in the long term, may price extra.”
He continued: ” If it is a ballooning expense, and if you have not put something apart to assist cope with it, it will crowd out cash that maybe individuals would need to see spent on different applications, or on tax aid, or no matter competing pursuits could also be on the market.”
Suffolk County Comptroller John Kennedy Jr. stated the post-employment “quantity is a crucial quantity to proceed to report out and be conscious of, however it’s predicated on a 30-year projection.”
Total, the “price of care goes up. This does have the potential to turn into an ever-increasing legal responsibility for us, and it’s one thing that may replicate ever-increasing parts of our funds,” Kennedy instructed Newsday.
Nassau and Suffolk counties owe a complete of $13.1 billion for retiree well being care advantages, an obligation that is predicted to balloon additional over time, authorities officers and consultants stated.
The duty, often known as “Different Put up Employment Advantages,” was $6.6 billion for Nassau and $6.5 billion for Suffolk on the finish of 2021, in line with calculations by the 2 county comptrollers.
The counties’ complete obligation has elevated by $2 billion since 2017, county information present.
Pension advantages aren’t included within the projections.
WHAT TO KNOW
- Nassau and Suffolk counties owe a complete of $13.1 billion for retiree well being care advantages, an obligation that is predicted to balloon additional over time.
- The $13.1 billion obligation — $6.6 billion in Nassau and $6.5 billion in Suffolk — has jumped by $2 billion since 2017, county information present.
- The projections estimate what counties will owe retirees and their eligible dependents and survivors over the course of people’ lives for advantages resembling well being care, incapacity and life insurance coverage.
Authorities watchdog teams and unbiased auditors say they’re rising more and more involved in regards to the potential for retiree, excluding pensions, to overwhelm municipal budgets in New York.
They stated municipalities ultimately may lack the funds to hold tempo with the duty, as staff or their beneficiaries proceed to dwell longer, and well being care prices develop.
If the expense have been to develop exponentially, governments may need to extend taxes or minimize companies, consultants warned.
Thad Calabrese, a professor at NYU’s Robert F. Wagner Graduate College of Public Service, instructed Newsday when municipalities resembling Nassau and Suffolk started to award such advantages to staff years in the past, “they have been low cost.”
“And over time, they turn into costlier … ,” he stated, citing subsequent contracts with worker unions.
Calabrese, who teaches public and nonprofit monetary administration, continued: “These are vital quantities of cash that the governments have to lift yearly, after which pay out yearly to beneficiaries. In doing so, they’re then unable to make use of that cash for different urgent points.”
The projections aren’t actual, and officers stated it is unlikely the profit prices may come due all of sudden.
Actuaries use a sophisticated components to provide such estimates yearly, together with inflation and mortality charges, tendencies in Medicare and pharmacy pricing and the low cost price used to worth cash over time.
“The so-called six-billion-dollar legal responsibility shouldn’t be a real legal responsibility in any respect, it’s merely an accounting entry,” Andrew Persich, Nassau’s funds director, stated in a press release.
“The so-called six-billion-dollar legal responsibility shouldn’t be a real legal responsibility in any respect, it’s merely an accounting entry,” Persich stated.
“The state of New York and Nassau County must go broke earlier than this legal responsibility turned actionable,” he stated. “It’s a lot ado about nothing which each municipality should document of their accounting information.”
Counties cannot depend on reserve funds
Most municipalities aren’t approved underneath any state legislation to put aside funds to cowl the duty, though state Comptroller Thomas DiNapoli has backed proposed state laws to permit municipalities to create reserve funds to cowl the opposite submit employment advantages obligations.
New York State acquired “categorical statutory authority” in 2017 to put aside funding for state staff’ different submit employment advantages, DiNapoli’s workplace stated.
New York positioned a primary installment of $320 million right into a retiree well being profit belief fund in March
The state is predicted to deposit $320 million into the fund in 2023, and $375 million every year thereafter, in line with the state’s monetary plan.
The belief holds $4.6 billion, in line with state officers.
Based on the Authorities Finance Officers Affiliation in Chicago, knowledgeable group of public finance officers, greatest apply for municipalities is to determine, “a certified belief fund to prefund [Other Post Employment Benefit] obligations.”
Such obligations range throughout the nation, in line with a Pew Charitable Trusts report in 2018.
Forty-eight states that recorded the duty had $696 billion in complete nonpension retirement advantages for his or her staff in 2016, the report discovered.
Eight states funded 30% of their obligations, 11 funded between 10% and 29% whereas 10 states had much less 10% of the expense put aside.
Nineteen states had no funding put aside for the expense.
A “ticking time bomb”
Auditors started paying nearer consideration to the trajectory of different post-employment advantages over the previous decade.
In 2004, the Governmental Accounting Requirements Board, which units typically accepted accounting ideas for state and native governments, required states and a few municipalities to report the quantity of the obligations in their year-end monetary evaluations.
It is just like how pension liabilities are recorded in funds paperwork. Which means totaling the advantages “accrued throughout an worker’s total interval of service,” in line with DiNapoli’s workplace.
Based on the accounting board, the tactic gives a, “extra complete, simply comprehensible snapshot of a authorities’s monetary place at a given second in time. With out it, customers are left with an incomplete image.”
If the opposite retirement profit expense will increase, municipalities’ bond scores may endure, resulting in larger borrowing prices, DiNapoli’s workplace has stated.
Adam Barsky, chairman of the Nassau Interim Finance Authority, a state board that controls Nassau County’s funds, known as the county’s obligation for such advantages, a “six billion-dollar, ticking time bomb.”
Barsky has cited the duty as among the many causes NIFA hasn’t lifted Nassau’s “management interval,” which since 2011 has given NIFA the authority to approve or reject county budgets and labor agreements.
“It’s an enormous quantity that’s on the market, $6 billion … ,” Barsky instructed Newsday.
Because it grows, “it begins to compete with assets that might be used for present bills,” Barsky stated.
“Both county companies must be diminished as assets get diverted to pay for post-retirement advantages, or taxes must go up exponentially,” he stated.
In 2021, Nassau paid $163.1 million for retiree well being advantages — $136.3 million for medical health insurance premiums, $26 million for Medicare reimbursement and $794,043 for imaginative and prescient insurance coverage, in line with the county Comptroller’s Workplace.
In Suffolk, the county pays 100% of retiree well being care advantages on a pay-as-you-go foundation, in line with the comptroller’s workplace.
Suffolk County paid a mean $16,800 per worker in 2021, and $411 million complete in different post-employment advantages, officers stated. By comparability, the invoice totaled $378 million in 2018.
Nassau County covers well being look after 8,005 present staff, and 11,260 retirees or their beneficiaries, in line with the state Division of Civil Service, which administers the New York State Well being Insurance coverage Program, wherein county employees and retirees are enrolled.
Suffolk’s plan covers 8,724 present staff and 11,046 retired staff and their beneficiaries.
Advantages obligations “vital and rising”
DiNapoli stated New York counties’ obligations are “vital and rising.”
Municipalities resembling Nassau and Suffolk have been overlaying advantages prices “on a pay-as-you go foundation,” DiNapoli instructed Newsday.
“However while you take a look at the growing longevity and life span of staff, there isn’t any doubt that people who retire immediately from public service, a lot of them are going to dwell properly into their 90s,” DiNapoli stated. “And as we all know, the older you get, the extra you are going to entry the well being care advantages.”
DiNapoli argued, “to simply look ahead to these prices to proceed to develop and never put cash apart in reserve to have the ability to handle and pay for these prices, in the long term, that might be disruptive to sound monetary planning, and in the long term, may price extra.”
He continued: ” If it is a ballooning expense, and if you have not put something apart to assist cope with it, it will crowd out cash that maybe individuals would need to see spent on different applications, or on tax aid, or no matter competing pursuits could also be on the market.”
Suffolk County Comptroller John Kennedy Jr. stated the post-employment “quantity is a crucial quantity to proceed to report out and be conscious of, however it’s predicated on a 30-year projection.”
Total, the “price of care goes up. This does have the potential to turn into an ever-increasing legal responsibility for us, and it’s one thing that may replicate ever-increasing parts of our funds,” Kennedy instructed Newsday.
Retiree well being care, incapacity and life insurance coverage obligations
Nassau County
2021: $6,580,900
2020: $6,311,284
2019: $5,207,599
2018: $6,317,941
2017: $5,623,397
Suffolk County
2021: $6.543 billion
2020: $6.901 billion
2019: $5.996 billion
2018: $5.116 billion
2017: $5.575 billion
Supply: Nassau and Suffolk County Annual Complete Monetary Studies
Scott Eidler covers Nassau County authorities and politics for Newsday. Scott has labored at Newsday since 2012 and beforehand coated municipal authorities and schooling.
