Oklahoma City’s retiree funds fall short

Oklahoma City funds for insuring retired workers face multimillion-dollar shortfalls

BY JOHN ESTUS Modified: May 10, 2010 at 6:23 am •  Published: May 10, 2010
Advertisement
;
Insurance funds for retired Oklahoma City government employees face multimillion-dollar shortfalls.

For instance, the city firefighter insurance trust has $133 million in liabilities tied to providing retiree insurance, but only $8 million to do so, records show. That’s a $125 million shortfall.

"Anybody that is looking at that, if they’re not worried, I think they’re a fool,” said Phil Sipe, president of International Association of Firefighters Local 157.

The fund for retiree insurance for all other city employees has an even bigger gap — about $350 million — between cash-on-hand and retiree insurance liabilities, city Finance Director Laura Johnson said.

Liabilities are long-term costs of insuring current retirees and their dependents throughout retirement.

"It’s what you’ve committed to today that you have to fund in the future,” city Budget Director Craig Freeman said.

Unfunded liabilities faced by Oklahoma City and its fire union aren’t unique.

Other government employee retirement plans nationwide have similar shortfalls, according to a labor watchdog and Oklahoma City officials.

"This nation has a retirement crisis for unions and public sector employees,” said Brian M. Johnson, executive director of Alliance for Worker Freedom.

Freeman said Oklahoma City’s unfunded long-term liabilities won’t cost retirees their health insurance because the city has enough money to pay for the insurance on a yearly basis.

This past fiscal year, for example, the city paid about $18.6 million to meet its insurance requirements for about 5,400 retirees even though the city’s long-term liabilities to insure them exceed $630 million, records show.

Freeman also said expensive or frequent insurance claims, such as major illness costs, wouldn’t bankrupt the fund because the city budgets for such costs with insurers.

Not all governments and labor unions provide health insurance for retirees.

"For example, the city of Tulsa doesn’t pay anything toward their retirees’ health, so they have no post-employment liability,” Laura Johnson said.

Fire union has its own insurance
About 950 active firefighters and 180 retirees get health, dental and life insurance from the seven-year-old firefighter insurance trust, city records show. Many of their spouses and family members also are covered.

Fire union officials expect the trust will insure about 500 retirees by 2020. Half of those likely will have retired on disability due to job-related health problems that could lead to high health care costs, Sipe said.



Trending Now


AROUND THE WEB

  1. 1
    Sex Valley: Tech's booming prostitution trade
  2. 2
    Colorado Is Consuming Way More Pot Than Anyone Ever Believed
  3. 3
    What Dan Gilbert said to LeBron James to get him to return to Cleveland
  4. 4
    Female Yahoo Exec Sued By a Female Employee for Sexual Harassment
  5. 5
    A company wants you to experiment on Facebook — by quitting
+ show more