Dear Legislators,
We know how much you fear public employee unions but in 2021 you must finally address an expense in their favor — let’s call it “The Giveaway” — needlessly costing the state, local governments, transit agencies and schools more than $10 billion per year.
You provide medical and prescription drug benefits to retired state employees and dependents. The extent of those benefits is unbelievable. You are subsidizing retired employees and their families at a rate 30x greater than Oregon does. For retirees on Medicare, you not only cover Part B premiums but even give credit if Medicare premiums are less than the subsidy you offer. You even provide an implicit subsidy that raises the cost of health insurance for active employees. All at a cost of $5 billion last year, That’s more than you spent on Courts, UC and CSU. You paid for it by subtracting $3 billion from the General Fund and adding the balance to debt that now totals $92 billion, more than outstanding General Obligation Bonds that, unlike these debts, were approved by voters.
Even worse, you don’t take advantage of federal premium support offered by the Affordable Care Act and administered by Covered California, which is a model of efficiency for those of us who — unlike retired CA public employees — use it.
Even worse, CA cities, transit agencies and schools pass up BOTH federal and state dollars, the latter via the Middle Class Subsidies you enacted into law in 2019 that provide premium support for high incomes (even retired police with the heftiest pensions could qualify!). Yet LA, SFUSD, BART, UC and other agencies leave all that money on the table while providing the highest subsidies in the land.
Active teachers, police, transit and other public employees are needlessly being threatened with layoffs and students and residents are needlessly being threatened with cuts because CA governments and agencies are needlessly subsidizing retirees on top of pensions. Ending this tragedy is a top GFC priority for 2021.
David Crane
President
