L.A. Schools Face $15 Billion Dollar Timebomb for Retiree Health Care

L.A. schools facing timebomb of retiree health care costs

A new report on the health costs for Los Angeles Unified School District retirees will reportedly show that the district has nearly $15 billion in unfunded health care costs for current employees and retirees. 

Reason Magazine obtained a copy of the forthcoming report and there's a lot to unpack in there. 

The headline? The district's obligations for "Other Post-Employment Benefits" (which includes the cost of medical, dental, and other benefits that fall outside the standard pension system) have skyrocketed in recent years - from 13.5 billion in 2015, to $14.9 billion in 2017. 

The increase in costs come from an adjustment in how school districts and other public employers can use artificially high estimates on future investment returns to justify the upcoming expenses. Under the new rules, future returns are estimated at a rate of 3.6 percent, instead of the previous rate of 4.7 percent. 

Because school districts in California receive funds based on the number of students who are enrolled, declining enrollment in the LAUSD means there is less funding to cover the increasing costs. 

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