A subcommittee exploring state retiree health plans on Monday voted to recommend that the General Assembly codify putting 1% of the state budget into a fund that pays retiree benefits to lower the billions of dollars of deficit.
The State Employee Benefits retiree subcommittee also Cheiron, a consulting firm, to look into additional ways for the state to lower the state’s unfunded liability.
The recommendation concerns post employment benefits paid for out of what’s called the OPEB Trust Fund. It includes retiree benefits such as healthcare, life insurance and disability, but not pensions.
Money for those benefits should be accrued in advance of needing them, but Delaware has not done that.
Financial experts said there is an $8.3 billion shortfall as of July 1, 2022, and estimates will increase to $20.7 billion by 2042 if no way is created to close that gap.
Last year, Gov. John Carney put 1% of the state budget into that trust fund and has proposed doing it again this year with $51 million. It will not help close the gap fast enough, but does satisfy rating agencies who are aware that the deficit is hanging over the state finances.
The subcommittee, which was formed after the state tried to move retirees off their generous health plan to a more-restrictive Medicare Advantage plan because of budget fears, wants the state to make adding that 1% every year a law.
Even so, that money would only add up to about 60% of the gap by 2052.
Jeff Taschner, executive director of the...
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