How Big a Burden are State and Local OPEB Benefits ?


Summary:

This brief attempts to answer the question: How big of a burden are OPEB benefits to state and local governments?

Author(s):
Alicia H. Munnell, Jean-Pierre Aubry, and Caroline V. Crawford
Publication date:
March 2016
Filed under:
Research Studies
Key findings:
  • Aggregate unfunded OPEB liabilities are an estimated $862 billion – nearly two thirds of which is held at the local level;
  • These unfunded liabilities are equivalent to 28 percent of the unfunded liabilities of pensions when pension liabilities are calculated with an interest rate comparable to OPEBs; and
  • While OPEB liabilities are large, several factors – such as  sponsors’ flexibility to scale back benefits – limit their potential drain on resources.
Download publication:
16-03-SLGE-OPEB(web)

Since the Great Recession, state and local governments have been making substantial changes to their health care benefits, including benefits for retirees.  While some of these changes have been driven by tough economic times and rising health care costs, governments also have been concerned about new accounting requirements.