Los Angeles Schools Facing $15 Billion Debt for Retiree Health Care

A forthcoming report on the Los Angeles Unified School District’s retirement costs will show that the district has nearly $15 billion in unfunded health care costs for current employees and retirees.
The district’s so-called OPEB liability—that’s actuarial jargon for “other post-employment benefits,” which includes the cost of medical, dental, and other health care benefits that fall outside the traditional pension system—has climbed from $13.5 billion in 2015 to $14.9 billion in 2017, according to the report, a copy of which was obtained by Reason. It has not yet been released publicly by the district. A spokeswoman for Aon Hewitt, the accounting firm that completed the assessment on the school district’s behalf, confirmed the report’s legitimacy.
The increase in the district’s unfunded liability is driven by an adjustment in accounting standards that prohibits school districts and other public employers from using artificially high estimates for future investment returns, a strategy that in the

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