GAO 

United States Government Accountability Office

Report to the Chairman, Special 

Committee on Aging, U.S. Senate 

STATE AND LOCAL 

GOVERNMENT 

RETIREE HEALTH 

BENEFITS 

Liabilities Are Largely 

Unfunded, but Some 

Governments Are 

Taking Action 

November 2009 

GAO-10-61 
What GAO Found

United States Government Accountability Office

Why GAO Did This Study

Highlights

Accountability Integrity Reliability

November 2009

STATE AND LOCAL GOVERNMENT RETIREE 

HEALTH BENEFITS 

Liabilities Are Largely Unfunded, but Some 

Governments Are Taking Action Highlights of GAO-10-61, a report to the 

Chairman, Special Committee on Aging, 

U.S. Senate 

Accounting standards require 

governments to account for the 

costs of other postemployment 

benefits (OPEB)—the largest of 

which is typically retiree health 

benefits—when an employee earns 

the benefit. As such, governments 

are reporting their OPEB 

liabilities—the amount of the 

obligation to employees who have 

earned OPEB. As state and local 

governments have historically not 

funded retiree health benefits when 

the benefits are earned, much of 

their OPEB liability may be 

unfunded. Amid fiscal pressures 

facing governments, this has raised 

concerns about the actions the 

governments can take to address 

their OPEB liabilities. 

GAO was asked to provide 

information on governments’ 

retiree health liabilities. GAO 

described (1) what has been 

reported in state and local 

governments’ comprehensive 

annual financial reports (CAFR) 

regarding OPEB liabilities, 

(2) actions state and local 

governments have taken to address 

retiree health liabilities, and (3) the 

overall fiscal pressures these 

governments face. GAO reviewed 

the CAFRs for 50 states and the 39 

local governments with at least 

$2 billion in total revenue. GAO 

also reviewed the actions taken to 

address retiree health liabilities by 

10 state and local governments, 

selected based on geography and 

variation in approaches to address 

their liability. Finally, GAO 

simulated the fiscal outlook for the 

state and local sector and 

projected health care costs for 

state and local retirees. 

The total unfunded OPEB liability reported in state and the largest local 

governments’ CAFRs exceeds $530 billion. However, as variations between 

studies’ totals show, totaling unfunded OPEB liabilities across governments is 

challenging for a number of reasons, including the way that governments 

disclose such data. The unfunded OPEB liabilities for states and local 

governments GAO reviewed varied widely in size. Most of these governments 

do not have any assets set aside to fund them. The total for unfunded OPEB 

liabilities is higher than $530 billion because GAO reviewed OPEB data in 

CAFRs for the 50 states and 39 large local governments but not data for all 

local governments or additional data reported in separate financial reports. 

Also, the CAFRs we reviewed report data that predate the market downturn. 

Finally, OPEB valuations are based on assumptions about the health care cost 

inflation rate and discount rates for assets, which also affect the size of the 

unfunded liability. 

Some state and local governments have taken actions to address liabilities 

associated with retiree health benefits by setting aside assets to prefund the 

liabilities before employees retire and reducing these liabilities by changing 

the structure of retiree health benefits. Approximately 35 percent of the 89 

governments for which GAO reviewed CAFRs reported having set aside some 

assets for OPEB liabilities, but the percentage of the OPEB liability funded 

varied. Among the 10 selected governments whose actions GAO reviewed in 

more detail, officials from the governments that were prefunding at least a 

portion of their retiree health liability reported using irrevocable trusts. 

However, these governments varied with regard to the source of the money 

used to prefund their retiree health liabilities and how they determined the 

level or amount to commit to prefunding each year. To address their retiree 

health liabilities, the governments GAO selected made three key types of 

changes to their retiree health benefits: changes to the type of retiree health 

benefit plan, to the level of government contribution, and to the eligibility 

requirements employees need to meet to qualify for retiree health benefits. 

Changes to the level of government contribution, such as reductions to the 

amount or proportion of health insurance premiums paid for by the 

government, was the most common benefit change reported. Some of the 

selected governments made more than one change to their retiree health 

benefit structure. The changes were most often applied to the retiree health 

benefits of newly hired employees or currently active employees. 

State and local governments face unfunded OPEB liabilities and decisions 

about addressing liabilities amid increasing fiscal pressure. Assuming the 

continuation of current policies, by 2050 the size of the projected operating 

budget imbalance for the state and local government sector is 4.7 percent of 

gross domestic product, attributable largely to increases in health-related 

spending. Though Medicaid is the largest health-related expenditure, spending 

on state and local government retirees’ health benefits is projected to more 

than double as a share of total operating revenues to 2.1 percent by 2050. 

View GAO-10-61 or key components.

For more information, contact John E. Dicken 

at (202) 512-7114 or dickenj@gao.gov, or 

Barbara D. Bovbjerg at (202) 512-7215 or 

bovbjergb@gao.gov. 
Page i GAO-10-61 

Contents 

Letter 1

Background 5 

Unfunded OPEB Liabilities for State and Local Governments 

Exceed $530 Billion 9 

Some State and Local Governments Have Taken Actions to 

Address Retiree Health Liabilities through Prefunding and 

Making Benefit Changes 14 

Health-Related Spending, Including OPEB Liabilities, Is Increasing 

State and Local Governments’ Fiscal Pressures 21 

External Comments 25 

Appendix I Supplemental Scope and Methodology for State 

and Local Government CAFR Review 27 

Appendix II Supplemental Scope and Methodology for 

Description of State and Local Governments’ 

Fiscal Pressures 29 

Appendix III Aggregate Other Postemployment Benefits 

Liability Data for States and Local Governments 

We Reviewed 36 

Appendix IV State and Local Governments’ CAFR Internet 

Addresses 41 

Appendix V GAO Contacts and Staff Acknowledgments 44 

Tables 

Table 1: Examples of Vehicles for Prefunding Retiree Health 

Liabilities 8 

Table 2: Examples of Retiree Health Benefits Changes Made by 

Selected Governments since 2004 19 

 State and Local Retiree Health Benefits 
Table 3: Aggregate OPEB Liability Data for 50 States, Based on the 

Most Recent Governmentwide CAFRs 36 

Table 4: Aggregate OPEB Liability Data for the 39 Largest Local 

Governments, Based on the Most Recent Governmentwide 

CAFRs 39 

Table 5: State and Local Governments’ CAFR Internet Addresses 

and Hyperlinks 41 

Figures 

Figure 1: Percentage of State and Local Government CAFRs We 

Reviewed Reporting Some Assets Set Aside for OPEB 

Liabilities, as of Their Most Recent CAFRs 11 

Figure 2: State and Local Government Operating Budget Balance, 

as a Percentage of GDP 22 

Figure 3: Health and Nonhealth Expenditures for the State and 

Local Government Sector, as a Percentage of GDP 24 

Figure 4: Receipt Classifications of State and Local Governments 30 

Figure 5: Expenditure Classifications of State and Local 

Governments 31 

Abbreviations 

ARC annual required contribution 

CAFR comprehensive annual financial report 

GASB Governmental Accounting Standards Board 

GDP gross domestic product 

NIPA National Income and Product Accounts 

OPEB other postemployment benefits 

SLGE Center for State and Local Government Excellence 

VEBA voluntary employees’ beneficiary association 

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Page ii GAO-10-61 State and Local Retiree Health Benefits
Page 1 GAO-10-61 

 

United States Government Accountability Office

Washington, DC 20548 

 

November 30, 2009 

The Honorable Herb Kohl 

Chairman 

Special Committee on Aging 

United States Senate 

Dear Mr. Chairman: 

When state and local governments (referred to in this report as 

governments) provide health benefits to their retired employees, they may 

do so by paying for a portion of the costs of these benefits. Governments 

have typically funded their share of the cost of retiree health benefits 

when they are paid or provided to retirees (i.e., during retirement), as 

opposed to during active employment.1

 Under accounting standards issued 

in 2004, governments are required to account for the costs of 

postemployment benefits other than pensions—referred to as other 

postemployment benefits (OPEB)2

—as employees earn the benefits and 

the costs are accrued, not when the benefits are paid or provided.3

 The 

largest OPEB is typically retiree health benefits.4

 Under the accounting 

standards, fiscal year 2008 was generally the first year that the largest 

governments were to begin reporting, in annual financial statements, the 

1

For example, see Governmental Accounting Standards Board, “Other Postemployment 

Benefits: A Plain-Language Summary of GASB Statements No. 43 and No. 45,” and 

Elizabeth K. Keating and Eric S. Berman, “Unfunded Public Employee Health Care Benefits 

and GASB No. 45,” Accounting Horizons, vol. 21, no. 3 (2007): 245-263.

2

OPEB include benefits such as health insurance, life insurance, and legal services. There 

are separate accounting standards for pension benefits. 

3

While compliance with the standards is necessary for governments to receive an 

unqualified, or “clean,” audit opinion under generally accepted accounting principles, the 

standards are not federal laws or regulations. 

4

For example, see The Pew Center on the States, “Promises with a Price: Public Sector 

Retirement Benefits,” and David Zion and Amit Varshney, You Dropped a Bomb on Me, 

GASB (Credit Suisse, March 2007). 

 State and Local Retiree Health Benefits 
 

amount of government’s obligation to employees who have earned OPEB;5

these amounts are known as OPEB liabilities. While the standards include 

requirements for the reporting of governments’ OPEB liabilities, they do 

not include requirements for funding OPEB, such as retiree health 

benefits. 

Because state and local governments have historically funded retiree 

health benefits when paid or provided rather then when the benefits are 

earned, much of their OPEB liability may be unfunded. This has raised 

concerns about the fiscal pressures that state and local governments will 

face in the coming decades and leads to questions about the actions state 

and local governments can take to address their OPEB liabilities, such as 

changing their retiree health benefits. 

In general, state and local retiree benefits are not subject to federal laws 

governing private sector retiree benefits. Nevertheless, there is a federal 

interest in ensuring that all Americans have a secure retirement. 

Additionally, reporting of governments’ OPEB liabilities has brought 

renewed focus on how governments will address these liabilities. Given 

concerns about state and local governments’ fiscal challenges and the 

potential erosion of retiree health benefits, you asked us for information 

on state and local governments’ retiree health liabilities. This report 

describes (1) what has been reported in state and local governments’ 

comprehensive annual financial reports (CAFR) about unfunded OPEB 

liabilities, (2) actions state and local governments have taken to address 

the liabilities associated with retiree health benefits, and (3) the overall 

fiscal pressures these governments face. 

To describe state and local governments’ unfunded OPEB liabilities, we 

reviewed the most recent CAFRs for the 50 states and 39 large local 

governments (cities and counties with total revenue of $2 billion or more 

according to U.S. Census Bureau data). We determined that the state and 

local government CAFR data were sufficiently reliable for our purposes, 

which were to describe the total unfunded OPEB liability reported; the 

 

5

The standard required implementation by the largest governments—defined as those with 

total annual revenues of $100 million or more in the first fiscal year ending after June 15, 

1999—for periods beginning after December 15, 2006. For the largest governments with 

fiscal years beginning in July, the month when most states begin their fiscal year, the 

standard applied for their fiscal year 2008 financial statements. Governments with total 

annual revenues of less than $100 million have an additional year or two, depending on 

their total annual revenues, before they are required to begin reporting OPEB liabilities. 

Page 2 GAO-10-61 State and Local Retiree Health Benefits
 

total OPEB liability, assets, and unfunded liability for each of the 

individual governments for which we reviewed CAFRs; as well as the 

ranges of unfunded OPEB liabilities, assets, and funded ratios reported. To 

complement our CAFR review, we contacted experts on public retiree 

health benefits and reviewed various studies and data sets that looked at 

state or local governments’ OPEB liabilities. Appendix I provides a more 

detailed methodology for that review and the limitations of our work. 

To describe actions taken by state and local governments to address their 

retiree health liabilities, we reviewed information about actions taken by 

10 selected state and local governments.6

 To select these governments, we 

reviewed available literature to determine what was known about the 

actions state and local governments have taken to address their retiree 

health liabilities. Based on that information, we selected the 10 state and 

local governments to obtain geographic diversity and variation in the 

approaches used to address retiree health liabilities.7

 Officials from the 

selected governments responded to questions about the governments’ 

OPEB liability, retiree health benefits, and activities to address the retiree 

health liability. Additionally, to supplement officials’ responses, we 

reviewed relevant information from the selected governments, such as 

laws and documents describing retiree health benefits. The information 

from our selected governments provides insight about state and local 

government actions to address retiree health liabilities, but cannot be 

generalized to other states or localities. To supplement our in-depth 

reviews of the actions taken by the selected governments, we reviewed the 

results of a 50-state survey conducted from December 2007 through March 

2008 by North Carolina State University researchers and published in 

December 2008 by the Center for State and Local Government Excellence 

(SLGE).8

 The survey included questions about states’ retiree health 

benefits and their current approaches and plans for addressing their 

retiree health liability. To assess the reliability of the survey results, we 

reviewed the survey methodology and interviewed the individuals 

 

6

The selected governments include four states—Alaska, Nevada, New Jersey, and South 

Carolina—and six local governments, including three cities—Gainesville, Florida; New 

York City, New York; and Thousand Oaks, California—and three counties—Montgomery 

County, Maryland; Harris County, Texas; and Oakland County, Michigan. 

7

When selecting the governments, we also considered available information about the 

existence of collective bargaining among public employees, a factor that individuals told us 

could affect a government’s management of its retiree health liability. 

8

Dennis M. Daley and Jerrell D. Coggburn, Retiree Health Care in the American States 

(Washington, D.C.: Center for State and Local Government Excellence, 2008). 

Page 3 GAO-10-61 State and Local Retiree Health Benefits
 

responsible for fielding the survey and analyzing the results. Based on our 

review, we determined that the data were sufficiently reliable to provide 

general aggregate information about the responses that were most or least 

common across the states related to their actions or plans for managing 

their retiree health benefits.9

To describe the fiscal pressures facing state and local governments, we 

used our model that simulates fiscal outcomes of the state and local sector 

in the aggregate for several decades into the future. The model is not 

designed to highlight the fiscal position of individual states; rather it 

projects the levels of aggregate receipts and expenditures of all state and 

local governments in future years based on historical spending and 

revenue patterns. Appendix II provides a detailed methodology for the 

model as related to projection of receipts and expenditures for the state 

and local government sector and projections of health care costs for state 

and local retirees. A January 2008 report provided a detailed description of 

how we constructed the model.10 In January 2009 GAO updated 

information regarding the fiscal challenges facing the state and local 

government sector.11

We conducted our work from October 2008 through November 2009 in 

accordance with all sections of GAO’s Quality Assurance Framework that 

are relevant to our objectives. The framework requires that we plan and 

perform the engagement to obtain sufficient and appropriate evidence to 

meet our stated objectives and to discuss any limitations in our work. We 

believe that the information and data obtained, and the analysis 

conducted, provide a reasonable basis for any findings and conclusions in 

this report. 

 

9

For each state, the survey was sent to five officials potentially knowledgeable about 

retiree health care in their state. In cases where multiple officials from a state responded to 

the survey, their responses were averaged, and then rounded to the nearest whole number, 

to determine an overall state response. As such, we determined that the data were not 

precise enough for us to report the number of states with a particular response. 

10GAO, State and Local Governments: Growing Fiscal Challenges Will Emerge during the 

Next 10 Years, GAO-08-317 (Washington, D.C.: January 2008). 

11GAO, Update of State and Local Government Fiscal Pressures, GAO-09-320R 

(Washington, D.C.: Jan. 26, 2009). 

Page 4 GAO-10-61 State and Local Retiree Health Benefits
 

The costs to state and local governments that offer retiree health benefits 

can vary based on several factors. These include the design of the retiree 

health benefits that governments provide, the eligibility requirements that 

retirees must meet in order to receive those benefits, and the degree to 

which governments contribute to the cost of the benefits for their retirees. 

Background 

Funding Retiree Health 

Benefits 

As we have previously reported, most governments have typically funded 

their share of the cost of retiree health benefits when they were provided 

(i.e., during retirement) as opposed to during active employment.12 This 

practice is commonly referred to as pay-as-you-go. 

Accounting for Retiree 

Health Benefits 

Governments have typically accounted for the cost of their retiree health 

benefits on a pay-as-you-go basis, reporting just the amount paid each year 

for employees who have already retired. Recently adopted accounting 

standards, however, require governments to change the way they account 

for the cost of retiree health benefits, specifying that governments should 

account for these costs on an accrual basis. Under an accrual basis, the 

cost of retiree health benefits is recognized when an individual earns the 

benefits, not when the benefits are paid or provided. As such, a 

government would periodically estimate and report the value of benefits 

that are earned for both past and current employees as a liability in its 

financial statements. Specifically, in 2004, the Governmental Accounting 

Standards Board (GASB)—an independent, private sector organization 

that maintains standards for accounting and financial reporting for state 

and local governments—issued Statement 45, Accounting and Financial 

Reporting by Employers for Postemployment Benefits Other Than 

Pensions, which requires state and local governments to measure, 

recognize, and report future obligations for providing OPEB, the largest of 

which is generally retiree health benefits. Under Statement 45, 

governments should periodically have an actuarial valuation performed, 

through which an actuary estimates the amount that will be needed to pay 

for future benefits, assuming that the current provision for benefits 

remains in effect.13 More specifically, the actuary estimates the following 

 

12GAO, State and Local Government Retiree Benefits: Current Status of Benefit 

Structures, Protections, and Fiscal Outlook for Funding Future Costs, GAO-07-1156 

(Washington, D.C.: Sept. 24, 2007). 

13Changing the benefits offered will likely result in changes to an actuary’s estimates of the 

amount that will be needed to pay for future benefits. 

Page 5 GAO-10-61 State and Local Retiree Health Benefits
 

values, which governments are to report in their financial statements and 

related notes. 

• The “actuarial accrued liability” or “liability” reflects the value of benefits 

that are attributable to employees’ past service, assuming the current 

provision of benefits. 

• The “actuarial value of assets” represents the actuarial value of cash, 

investments, and other assets that are set aside to fund OPEB.14

• The “unfunded actuarial accrued liability” or “unfunded liability” equals 

the excess, if any, of the liability over the assets. Thus, unfunded liabilities 

indicate the amount of benefits earned for which no assets have been set 

aside. 

• The “funded ratio” is assets expressed as a percentage of the liability. The 

funded ratio indicates the extent to which a government has set aside 

enough assets to pay its liability. For example, a funded ratio of 80 percent 

indicates that there are enough assets to pay for 80 percent of the liability. 

• The “annual required contribution” (ARC) is an estimate of the amount 

that if paid in full each year would be expected to fund currently accruing 

costs as well as a portion of any unfunded liability. Although referred to as 

a “required” contribution, accounting standards do not establish funding 

requirements—governments can choose to pay more or less than this 

amount. 

Valuations of OPEB liabilities are inherently complex because they involve 

estimates of future events that affect the amount and timing of payments. 

Such estimates are developed through the application of actuarial cost 

methods and assumptions, such as health care cost growth, discount 

rates,15 and worker and retiree mortality. For example, there are six GASBapproved actuarial cost methods and each method has a different 

approach to allocating the value of future benefits. Under some cost 

methods, governments accrue more liabilities in the early part of 

employees’ careers than later. Differences in the actuarial cost methods 

 

14The actuarial value of assets is not necessarily the same as the current market value of 

those assets. Rather, it is typically an average of the market value of the assets over a 

period of 3 to 5 years. 

15A discount rate (also called the investment return assumption) is the rate used to adjust a 

series of future payments to reflect the time value of money. 

Page 6 GAO-10-61 State and Local Retiree Health Benefits
 

and assumptions used can result in significant differences in OPEB 

liability estimates, which can make it challenging to compare estimates 

across governments. 

Implementation of the OPEB reporting standards is being phased in over a 

3-year period, with the largest governments—governments with total 

annual revenues of $100 million or more—to report their liabilities 

generally beginning in their fiscal year 2008 financial statements and apply 

other requirements of the standard. State and local governments are 

required to follow GASB standards to receive an unqualified, or “clean,” 

audit opinion on financial statements prepared in conformity with U.S. 

generally accepted accounting principles. Additionally, many state laws 

require local governments to follow GASB standards, and bond raters 

consider whether GASB standards are followed when assessing the fiscal 

health of state and local governments.16

Addressing Retiree Health 

Liabilities 

While governments may continue to fund their retiree health benefits on a 

pay-as-you-go basis, one option for addressing their liability is to prefund 

some or all of the retiree health benefits before employees retire. By 

prefunding, governments can reduce the unfunded liability reported in 

their financial statements, take advantage of the compounding effects of 

investment returns on plan assets, and provide greater benefit stability for 

employees and retirees. To reduce a government’s liability, funds must be 

deposited into a trust or equivalent arrangement, as GASB Statement 45 

only considers funds in such an arrangement as assets.17 Several funding 

vehicles that can be established as trusts are available under the federal 

tax code to help facilitate state and local government efforts to prefund 

their retiree health liabilities. (See table 1.) While prefunding is generally 

more cost effective for a government in the long term, in the short term it 

will require a higher level of government contribution. 

 

16A government’s bond rating affects its cost of borrowing money by affecting the interest 

rate it must pay to lenders. 

17GASB established minimum requirements for what is considered a trust or similar 

arrangement. Among the requirements are that the assets in the trust must be dedicated to 

benefits for retirees and their beneficiaries, cannot be recovered by the government, and 

must be sheltered from claims of creditors of the government. 

Page 7 GAO-10-61 State and Local Retiree Health Benefits
 

Table 1: Examples of Vehicles for Prefunding Retiree Health Liabilities 

Funding vehicle 

Section of the 

Internal Revenue Code Vehicle description 

Health benefits subaccount 401(h) A separate subaccount of a defined benefit pension trust that 

allows up to 25 percent of the total employer contribution to the 

pension fund to be allocated to retiree health benefits. Investment 

income on assets in the subaccount accumulates tax free, and 

retiree health benefit payments made from the subaccount are not 

taxable to retirees. 

Governmental trust 115 A trust established by a governmental employer to fund an 

essential government function, which may include providing retiree 

health benefits. Contributions to the trust are not limited. The 

investment income on the trust is not taxed, and the benefits ought 

to be tax free to the retiree when received, with confirmation from 

the Internal Revenue Service. 

Voluntary employees’ beneficiary 

association (VEBA) 

501(c)(9) A tax-advantaged entity, usually a trust, for the benefit of a 

voluntary membership of active and retired employees, and from 

which tax-free distributions may be made for qualifying health care 

expenses of retirees. 

Sources: Internal Revenue Code and Congressional Research Service, 2006. 

Prefunding retiree health benefits has its advantages, but it does not 

change actual health care costs. Reducing health care costs by making 

benefit changes may be another way for governments to address their 

retiree health liabilities.18 The extent to which benefit changes can reduce 

a government’s liability depends on the nature of the changes and whom 

the changes affect. For example, reductions in the liability would be 

greater if the government were to make benefit reductions effective for all 

current and future retirees. In comparison, if changes were only effective 

for future retirees, it could be some time before the government would 

experience significant savings from the changes. 

 

18State and local government employee pension benefits are often defined in state statutes 

or constitutions and local ordinances or charters and, in that sense, are protected from 

change. Retiree health benefits for those employees, however, may not have the same 

degree of protection. To the extent retiree health benefits receive legal protection, it is 

generally because they are defined in labor contracts negotiated subject to collective 

bargaining. 

Page 8 GAO-10-61 State and Local Retiree Health Benefits
 

We found that the total reported unfunded liabilities for OPEB (which are 

primarily retiree health benefits) for state and select local governments 

exceed $530 billion.19 The $530 billion includes about $405 billion for states 

and about $129 billion for the 39 local governments we reviewed. We 

reported in 2008 that various studies available at that time estimated the 

total unfunded OPEB liability for the states and all local governments to 

be between $600 billion and $1.6 trillion, although the studies’ estimates 

were based on limited government data.20 It is not surprising that our total 

is on the low end of that range because we did not review data for all local 

governments, though we did review reported liability data for the largest 

local governments and all 50 states. Five-hundred and thirty billion dollars 

is still a large unfunded liability for governments. As variation between 

studies’ totals shows, totaling unfunded OPEB liabilities across states and 

local governments can be challenging. This may be attributable, in part, to 

some OPEB data being reported in plans’ separate financial reports that 

are not included as part of the government’s CAFR. In addition, over time 

valuations of OPEB reflect more up-to-date assumptions, policy decisions, 

and data. For example, the variety of actuarial approaches used can result 

in variations among the OPEB data reported in the CAFRs, such that two 

valuations of the same underlying OPEB can differ.21

Unfunded OPEB 

Liabilities for State 

and Local 

Governments Exceed 

$530 Billion 

Reported state and local governments’ unfunded OPEB liabilities 

varied widely in size. For example, unfunded state liabilities ranged from 

$71 million for Arizona to $62 billion for California, and unfunded local 

government OPEB liabilities ranged from $15 million for a county in 

Arizona to over $59 billion for New York City. (See app. III for individual 

state governments’ and large local governments’ aggregate OPEB 

liabilities, assets, unfunded OPEB liabilities.) However, the significance of 

 

19To determine this total, we reviewed the most recent governmentwide CAFRs as of 

June 30, 2009, for 50 states and the 39 largest local governments. Of the 89 CAFRs 

reviewed, 7 were for fiscal year 2007 and the rest were for fiscal year 2008. 

20GAO, State and Local Government Retiree Benefits: Current Funded Status of Pension 

and Health Benefits, GAO-08-223 (Washington, D.C.: Jan. 29, 2008). A study issued more 

recently than those cited in that report puts the states’ total unfunded OPEB liability at 

$440 billion. Like our total, that study did not estimate the unfunded OPEB liabilities for 

the universe of local governments. Robert L. Clark, Melinda Sandler Morrill, Health Plans 

for Retired State Employees: Is There a Funding Crisis?, (July 2009). 

21Various actuarial approaches are allowed under GASB and are commonly used among 

governments. OPEB valuations require long-term projections and are estimates based on 

assumptions that vary among state and local government entities. Actuarial estimates are 

sensitive to these assumptions. For example, changing the health care inflation rate 

assumption by a small amount can significantly change the resulting estimate of liability. 

Page 9 GAO-10-61 State and Local Retiree Health Benefits
 

each government’s unfunded OPEB liability is relative to its ability to fund 

those benefits through currently available assets, future revenues, or a 

combination of the two. In addition, reported liabilities may vary based on 

various factors, including differing plan benefits, assumptions, and 

government contributions. 

Most state and local governments for which we reviewed CAFRs have not 

set aside assets to fund OPEB liabilities (see fig. 1).22 Approximately 

35 percent of the governments for which we reviewed CAFRs—18 of 

50 states and 13 of 39 local governments—reported having set aside at 

least some assets for OPEB liabilities for one or more entities in the 

government, as of their actuarial valuation.23 Setting aside assets for OPEB 

indicates that a government may have prefunded at least a portion of its 

liability associated with retiree health benefits.24 In total, the state and 

local government CAFRs we reviewed reported having set aside at least 

$25 billion in assets to fund their OPEB liabilities, constituting less than 

5 percent of the $559 billion total OPEB liabilities reported.25 Thus, most 

state and local governments included in our review are paying for their 

OPEB liabilities for active and retired workers in a given year from their 

current revenues. 

 

22In the absence of assets set aside for OPEB liabilities, most state and local governments 

are paying for benefits for retired workers in a given year as they do for those of their 

active workers—from their current revenues. State and local governments have generally 

managed retiree health benefits together with active employee benefits. GAO-07-1156. 

23Governments typically report OPEB data for separate plans (e.g., plans for university 

employees, public safety workers, and judges). CAFRs for three states—Nebraska, Nevada, 

and West Virginia—did not include data about OPEB liabilities and assets. Additionally, 

three local government CAFRs did not include data about OPEB. They were for San 

Bernardino County, California; San Diego County, California; and Cook County, Illinois. 

Therefore, we do not know if these six governments have set aside assets for OPEB. 

However, under GASB standards there is no reporting requirement when a government’s 

OPEB liability is not material or nonexistent. 

24The assets set aside may be for prefunding OPEB liabilities other than those associated 

with retiree health benefits. 

25The percentage of the OPEB liability funded—called the funded ratio—varied across 

government entities. Among the minority of government entities with assets set aside, 

about 38 percent had a funded ratio of less than 10 percent, while 30 percent had a funded 

ratio of 50 percent or more. There was also variation in the funded ratio across the entities 

reported in individual governments’ CAFRs. For example, among the six entities reported 

in Kentucky’s CAFR, the funded ratios reported ranged from 4 percent to 106 percent. 

Page 10 GAO-10-61 State and Local Retiree Health Benefits
 

Figure 1: Percentage of State and Local Government CAFRs We Reviewed 

Reporting Some Assets Set Aside for OPEB Liabilities, as of Their Most Recent 

CAFRs 

Notes: The CAFRs for three states and three local governments did not include any OPEB liabilities 

data. As a result, it cannot be determined from the CAFR review if these governments have liabilities 

or have set aside assets for OPEB; under GASB standards there is no reporting requirement when a 

government’s OPEB liability is not material or nonexistent. The CAFRs reviewed were the most 

recent CAFRs as of June 30, 2009. One of these CAFRs was for fiscal year 2007, before the 

reporting standard for OPEB was required. CAFRs issued more recently for those governments may 

include OPEB data. 

35%

65%

Source: GAO review of the most recently issued CAFRs for the 50 states and the 39 local governments.

Some assets set aside for OPEB

No assets set aside for OPEB reported

The total unfunded OPEB liability for state and local governments is larger 

than the roughly $530 billion because we reviewed OPEB data in select 

governmentwide CAFRs. Although we reviewed CAFRs for all the states 

and focused our review on CAFRs for the 39 largest local governments, 

and included some of the largest unfunded liabilities, we did not review 

OPEB data for all governments.26 Thus, a review of all local government 

CAFRs would show a higher total unfunded OPEB liability than what we 

found. In addition, we reviewed governmentwide CAFRs and not 

information for component entities or cost-sharing multiple-employer 

plans that is reported in separate financial statements and not in the 

 

26The 39 local governments we selected were the largest based on Total Revenue, as 

reported by the most recent U.S. Census Bureau data. See U.S. Census Bureau, 2002 

Census of Governments, vol. 4, no. 3, Finances of County Governments: 2002 GC02(4)-3, 

U.S. Government Printing Office (Washington, D.C., 2002); and U.S. Census Bureau, 2002 

Census of Governments, vol. 4, no. 4, Finances of Municipal and Township Governments: 

2002 GC02(4)-4, U.S. Government Printing Office (Washington, D.C., 2002). 

Page 11 GAO-10-61 State and Local Retiree Health Benefits
 

CAFRs.27 For example, in fiscal year 2008, $2 billion in unfunded OPEB 

liabilities for one state’s public employees’ retiree health and life insurance 

plans was reported in the plans’ own financial statements and not in the 

state’s CAFR. Consequently, the $2 billion is not included in our total for 

states’ unfunded OPEB liability. 

In addition, the ultimate cost of OPEB may significantly differ from 

estimated OPEB liabilities because (1) the CAFRs we reviewed report data 

that predate the market downturn and (2) significant uncertainties affect 

the estimation of OPEB liabilities. We reviewed the most recently issued 

CAFRs, as of June 30, 2009, which reported OPEB assets valued and 

liabilities based on discount rate assumptions set before the market 

downturn. In most cases, the most recently issued CAFR was for fiscal 

year 2008.28 The value of those assets has likely fallen, which means the 

total unfunded OPEB liabilities are likely higher in mid-2009 than the total 

we found, at least for the minority of entities with at least some assets. In 

addition, when market interest rates fall, to the extent that actuaries apply 

lower discount rates to OPEB valuations, the value of unfunded OPEB 

liabilities will increase—all other factors remaining equal. Uncertainties 

affecting the estimation of OPEB liabilities include potential differences 

between assumptions used and actual experience, as well as potential and 

 

27GASB Statement 45 indicates that employers (e.g., governments) that participate in costsharing multiple-employer plans that meet certain requirements are not required to report 

the unfunded OPEB liability for such plans in their financial statements. Employers are 

required to disclose whether such an OPEB plan issues a stand-alone financial report or is 

included in the report of a public employee retirement system or another entity, and, if so, 

how to obtain the report. If the cost-sharing plan in which an employer participates does 

not issue and make publicly available a stand-alone plan financial report prepared in 

accordance with the requirements of GASB Statement 43, and the plan is not included in 

the financial report of a public employee retirement system or another entity, the costsharing employer should present certain information as required supplementary 

information in its own financial report. In addition, discrete component entities may have 

unfunded OPEB liabilities, which are not included in our total if they are not reported in 

the CAFR. Discrete component entities are related to the government entity, but are not 

part of the government entity, and the governmentwide CAFRs report only limited detailed 

information on them. 

28Of the 89 CAFRs reviewed, 7 were fiscal year 2007 CAFRs, and the rest were fiscal year 

2008 CAFRs. OPEB valuations are estimates based on assumptions that vary among state 

and local government entities. Any adjustment to the assumptions used can have a large 

effect on the size of the unfunded OPEB liability, even holding the benefit plan and 

employee population constant. A discount rate (also called the investment return 

assumption) is the rate used to adjust a series of future payments to reflect the time value 

of money. The discount rate is applied whether there are assets or not. 

Page 12 GAO-10-61 State and Local Retiree Health Benefits
 

future changes to eligibility and government contributions.29 Governments 

have some discretion in what assumptions they use. Two significant 

assumptions used in OPEB liability calculations are the discount rate and 

the health care inflation rate. When governments value their OPEB 

liabilities, a decrease in the discount rate or increase in the health care 

inflation rate used results in higher unfunded OPEB liabilities, holding 

other factors, like the benefit plan and employee population, constant. A 

July 2009 study prepared for SLGE reported that one state’s unfunded 

OPEB liability increased by almost 20 percent based on a 1 percent 

increase in the health care inflation rate assumed. As the July 2009 SLGE 

study showed, actuarial valuations for state OPEB assumed discount rates 

ranging from 3 percent to 8.5 percent.30 Our review of 10 states’ most 

recently issued CAFRs found that 5 states used discount rates on the high 

end of that range.31 Further, in accordance with GASB guidance, when 

governments value OPEB liabilities, governments apply a health care 

inflation rate based on expected long-term future trends. According to the 

July 2009 SLGE study, virtually all state governments assume their 

expected long-term future rate to be about 5 percent, although actual 

health care inflation rates from 2002 to 2005 ranged from 16 percent to 

10.3 percent, respectively.32

 

29These assumptions vary among state and local governments and even the different 

reporting entities within a government. A health care cost trend rate is the rate of change in 

per capita health claims costs over time as a result of factors such as medical inflation, 

utilization of health care services, plan design, and technological developments. 

30Richard C. Kearney, Robert L. Clark, Jerrell D. Coggburn, Dennis M. Daley, and Christina 

Robinson, At a Crossroads: the Financing and Future of Health Benefits for State and 

Local Government Retirees, a report prepared for the Center for State and Local 

Government Excellence, July 2009. Discount rates for OPEB are based, in part, on the 

amount of assets set aside for OPEB, which may explain some of the variation in rates 

used. 

31We did not review the reasonableness of the assumptions state and local governments 

used in calculating their liabilities. 

32Kearney et al., At a Crossroads. The health care inflation rate for 2002 to 2005 was cited 

in this report as reported by The Kaiser Family Foundation/Hewitt Associates 2005 Retiree 

Health Benefits Survey. Some governments use a combination health care inflation rate, 

which drops from a higher rate in the first few years of the valuation to a lower long-term 

rate. 

Page 13 GAO-10-61 State and Local Retiree Health Benefits
 

Some state and local governments have taken actions to address their 

liabilities associated with retiree health benefits by setting aside assets in 

order to prefund the liabilities and reducing these liabilities by changing 

the structure of retiree health benefits. 

Some State and Local 

Governments Have 

Taken Actions to 

Address Retiree 

Health Liabilities 

through Prefunding 

and Making Benefit 

Changes 

Some State and Local 

Governments Have Taken 

Steps to Prefund Their 

Retiree Health Liabilities 

and Have Done So to 

Varying Degrees 

Prefunding at least a portion of OPEB costs is one action that some state 

and local governments have taken to address their retiree health liabilities. 

As noted earlier, approximately 35 percent of the 89 governments for 

which we reviewed CAFRs reported having set aside some assets for 

OPEB liabilities for one or more entities in the government as of the time 

of their actuarial valuations. Setting aside assets for OPEB indicates that a 

government may have prefunded at least a portion of its liability 

associated with retiree health benefits.33 The CAFRs that we reviewed also 

showed that the percentage of the OPEB liability funded—the funded 

ratio—varied. 

Among the 10 selected governments whose actions we reviewed in more 

detail, officials from the governments that were prefunding at least a 

portion of their retiree health liability reported using irrevocable trusts. As 

noted earlier, under GASB accounting standards, only assets held in a trust 

or equivalent arrangement count toward reducing a government’s 

unfunded liability. Furthermore, officials from some of these governments 

reported using a section 115 governmental trust, which is a trust 

established by a governmental employer to fund essential government 

functions. Similarly, according to results from a survey of state officials 

published in December 2008, more states reported having adopted, or 

being likely to adopt, a section 115 governmental trust than a section 

401(h) health benefits subaccount or a VEBA, two other funding vehicles 

available to state and local governments under the federal tax code.34

 

33The assets set aside may be for prefunding OPEB liabilities other than those associated 

with retiree health benefits. 

34See Daley and Coggburn, Retiree Health Care in the American States. 

Page 14 GAO-10-61 State and Local Retiree Health Benefits
 

Some of the officials we spoke with, as well as the literature, indicated 

that section 115 trusts are simpler and more flexible than the other options 

available to governments.35 For example, officials from New York City told 

us that they chose a section 115 trust because it was simple to establish 

and operate, satisfied GASB Statement 45 standards for assets, and is 

exempt from taxation. According to officials from some of the selected 

governments, the governments’ trusts were administered by the same 

board or individuals that administered the governments’ pension fund. 

Government officials told us that the pension boards were chosen to 

manage the retiree health funds because they had the necessary 

experience, expertise, and resources to effectively manage the trusts. For 

example, the City of Thousand Oaks chose to invest its assets in a trust 

established and administered by the California Public Employees’ 

Retirement System. The trust, called the California Employers’ Retiree 

Benefit Trust, is available to all public employers in the state to prefund 

retiree health costs. A city official told us that the city chose to use this 

pooled trust because the pension system had a successful track record 

investing local governments’ pension funds and because of the trust’s low 

administrative costs. 

The governments we selected varied with regard to the source of funds 

used to prefund their retiree health liabilities. Officials from some of the 

governments reported utilizing funds from multiple sources. Among the 

selected governments, some officials reported that sources of money for 

prefunding retiree health liabilities were contributions from government 

employers such as agencies—generally, obtained as a specified percentage 

of an employer’s payroll—and general revenue. For example, officials 

from the City of Thousand Oaks reported that in fiscal year 2010, city 

agencies are contributing 4.15 percent of their payroll to prefund the 

government’s retiree health liability. Officials from some governments 

reported prefunding at least a portion of their retiree health liabilities by 

borrowing money, for example, through the issuance of bonds.36 However, 

results from a survey of state officials published in December 2008 

indicated that at the time of the survey few states had reported issuing, or 

 

35According to an article by a manager at the Government Finance Officers Association, 

section 115 trusts do not have limits or restrictions on eligibility, funding, or benefits. In 

contrast, both 401(h) subaccounts and VEBAs have funding limits, and VEBAs have 

membership requirements. See John Ruggini, “In an OPEB Trust We Trust?” Government 

Finance Review, vol. 24, no. 1 (2008): 34-40. 

36Among the governments we selected, only local governments reported borrowing money 

to fund their retiree health liability. 

Page 15 GAO-10-61 State and Local Retiree Health Benefits
 

reported being likely to issue, bonds to finance their OPEB liabilities, 

including retiree health benefits.37,38

The governments we selected also varied in how they determine the level 

or amount to commit to prefunding their retiree health liabilities each 

year. While officials from some of the selected governments indicated that 

they rely on formulas or plans to help them determine these prefunding 

levels, some officials from the selected governments noted that actual 

amounts depend on appropriations. For example, officials from New York 

City specified that any funding above the government’s pay-as-you-go 

costs—that is, the costs for benefits provided at the given time—is 

provided if and when sufficient resources exist, as determined through the 

government’s budgetary process. Although often dependent on 

appropriations, officials from some of the governments reported that their 

levels of prefunding were determined based on the ARC—an estimate of 

the amount that if paid in full each year would be expected to fund 

currently accruing costs as well as a portion of any unfunded liability. For 

example, officials from some of the governments we selected indicated 

that their governments have prefunded the full ARC, while officials from 

another government indicated that a specified portion of the ARC has been 

funded each year. Some of the selected governments do not base the level 

of prefunding on the ARC. For example, officials from South Carolina 

reported that the amount of prefunding is determined by a combination of 

factors, including a formula linked to the health insurance plan’s cash 

reserves and any annual appropriation the legislature chooses to make for 

retiree health benefits. 

Officials from the selected governments reported some challenges with 

prefunding their liability. Budgetary or fiscal constraints were the most 

commonly reported challenge. Officials from one government indicated 

that budgetary constraints led the government to stop prefunding its 

retiree health liability, while officials from another government reported 

 

37See Daley and Coggburn, Retiree Health Care in the American States. This report also 

indicates that few states reported being likely to finance their liability by borrowing funds 

from the state pension fund, raising revenue through higher taxes, or using funds generated 

through cuts to other state programs. 

38The limited number of governments financing their liabilities through the issuance of 

bonds or similar arrangements may be due, at least in part, to the risks associated with 

such a funding stream. According to the literature, such arrangements are only effective if 

the funds collected can be invested and earn a higher rate of return than the interest 

payments required for paying back the loan. 

Page 16 GAO-10-61 State and Local Retiree Health Benefits
 

scaling back prefunding efforts.39 Other government officials explained 

that declining revenue, resulting from both tax reforms and the poor 

economy, created challenges to prefunding. These same officials also 

commented that prefunding was challenging because of increasing health 

care costs and changes in the demographics of their workforces, namely 

changes to the ratio of retirees to active workers. Other challenges noted 

by officials from the governments we selected included the need to 

educate stakeholders about prefunding and the need to establish the legal 

authority to create irrevocable trusts. 

Some State and Local 

Governments Have 

Worked to Address Retiree 

Health Liabilities through 

Three Types of Benefit 

Changes 

Another action some state and local governments have taken to address 

their retiree health liabilities has been to change the structure of the health 

benefits they offer retirees. While governments also make relatively 

routine changes to the health benefits they offer retirees (such as changing 

co-payments, deductibles, or covered benefits) that could affect their 

liability, we identified three key types of changes our selected 

governments have made to the structure of retiree health benefits: 

changing the type of retiree health benefit plan, changing the level of the 

government’s contribution toward retirees’ health insurance premiums, 

and changing the eligibility requirements employees need to meet to 

qualify for retiree health benefits. 

• Type of health benefit plan: Officials from some of the governments we 

selected indicated that since 2004 their governments changed the type of 

health benefit plan for retirees as a way of reducing the liability associated 

with these benefits. Specifically, officials reported a shift from a defined 

benefit retiree health plan to a defined contribution plan. As the term 

implies, a defined benefit plan specifies the amount of benefits to be 

provided during retirement. The benefits may be specified in dollars, such 

as a flat dollar amount, or as a type or level of coverage, such as a 

percentage of health insurance premiums paid. In contrast, defined 

contribution plans stipulate only the amounts to be contributed by a 

government to an employee’s account each year of active employment. 

Defined contribution plans do not specify the amount of benefits 

employees will receive upon retirement; rather, the amount of benefits a 

retiree receives will depend on the value of that individual’s account. Since 

a government’s payment under a defined contribution plan is limited to the 

 

39The government had originally planed to phase in to fully funding its ARC over a 5-year 

period. However, because of the government’s fiscal situation it shifted to an 8-year phasein period. 

Page 17 GAO-10-61 State and Local Retiree Health Benefits
 

amount it contributes to an individual’s retiree health account, the 

government’s cost, and hence its liability, is no longer affected by 

increases in health care costs. 

• Level of government contribution: Some of the governments we 

selected have changed the level of the contribution they provide toward 

retiree health insurance premiums by reducing the amount or proportion 

of health insurance premiums paid for by the government or by changing 

how the level of contribution is calculated. For example, according to 

government officials, some of the selected governments changed the 

calculation of the contribution so that it was no longer affected by changes 

in premium costs, thereby shifting the risk of rising health care premiums 

onto the retiree. Changes to the level of government contribution were the 

most common benefit change reported by the governments we selected. 

Additionally, results from a survey of state officials published in December 

2008 indicate that many states increased retirees’ premium contributions 

in the past 5 years—an indication that the states may have changed the 

level of government contribution for those retirees.40

• Eligibility requirements: Officials from some of the governments we 

selected reported changing the requirements that determine eligibility for 

retiree health benefits, such as increasing the number of years an 

employee must work for the government before being eligible for health 

benefits upon retirement. Results from a survey of state officials published 

in December 2008 indicate that more states have changed their eligibility 

requirements by increasing the years of service required for eligibility for 

retiree health benefits than by increasing the age at which employees 

become eligible to receive these benefits.41

Table 2 provides examples of some of the retiree health benefit changes 

made since 2004 by the governments we selected. As seen in table 2, in 

some cases the selected governments made more than one change to their 

retiree health benefit structures. The changes were most often applied to 

newly hired employees or currently active employees. As a consequence, 

the selected governments may not realize cost saving associated with 

these changes for many years. However, they may see some effect on the 

amounts of their projected liability within a shorter period of time. 

 

40See Daley and Coggburn, Retiree Health Care in the American States. 

41See Daley and Coggburn, Retiree Health Care in the American States. 

Page 18 GAO-10-61 State and Local Retiree Health Benefits
 

Table 2: Examples of Retiree Health Benefits Changes Made by Selected Governments since 2004 

Government Type of benefit change Description of retiree health benefit change 

Gainesville, Florida • Government contribution In 2009, the city began determining the amount of government contribution 

as a fixed dollar amount based on the retiree’s years of service and age at 

the time of benefit commencement. Before the change, the contribution was 

a specified percentage of a retiree’s health insurance premium, which 

meant that the amount of contribution changed with changes in premium 

costs. 

Harris County, 

Texas 

• Government contribution 

• Eligibility 

In 2007, the county increased the number of years of service needed for an 

individual to receive a government contribution for the cost of his or her 

retiree health benefits and reduced the amount of that contribution. As a 

result of the changes, the county now has the following three-tiered system: 

• Individuals employed by the county as of March 1, 2007, and eligible to 

retire by February 2011 are eligible to receive retiree health benefits if 

the sum of their age and years of service equals 75 and they have a 

minimum of 10 years of service. The county provides a 100 percent 

contribution for these individuals. 

• Individuals employed by the county as of March 1, 2007, and eligible to 

retire after February 2011 are eligible to receive retiree health benefits 

if the sum of their age and years of service equals 80 and they have a 

minimum of 10 years of service, or if they are at least age 65 (or 

Medicare eligible) and have a minimum of 10 years of service. 

Individuals who retire before age 65 will have to pay a portion of their 

premium until reaching age 65. 

• Individuals hired by the county after March 1, 2007, are eligible to 

receive retiree health benefits if the sum of their age and years of 

service equals 80 and they have a minimum of 20 years of service, or if 

they are at least age 65 (or Medicare eligible) and have a minimum of 

15 years of service. However, according to a government official, the 

county may not provide any contribution for these individuals. 

New Jersey • Government contribution In 2007, the state began requiring some retirees to contribute toward the 

cost of their health insurance premiums, thus reducing the amount of 

government contribution. Specifically, employees who reach 25 years of 

state government service, the length of service required to be eligible for 

retiree health benefits, on or after July 1, 2007, must contribute an amount 

equal to 1.5 percent of their pension benefit toward the cost of their health 

insurance premiums. The retiree’s contribution is waived for individuals who 

participate in a government-sponsored wellness program. 

Page 19 GAO-10-61 State and Local Retiree Health Benefits
 

Government Type of benefit change Description of retiree health benefit change 

Oakland County, 

Michigan 

• Benefit design 

• Government contribution 

In 2005, in response to a large increase in the county’s costs for retiree 

health benefits, the county adopted a new defined contribution retiree health 

benefit plan for eligible individuals hired on or after January 1, 2006. The 

defined contribution plan replaced the county’s defined benefit plan, under 

which the county paid for from 60 to 100 percent of the premium for eligible 

individuals hired before 2006. Under the defined contribution plan, the 

county contributes $1,300 per year to a retirement health savings plan for 

each eligible employee. Upon retirement, employees with 15 years of 

county service can access 60 percent of the funds the county contributed to 

their health savings plans for eligible medical expenses. With each 

additional year of service, the employee has access to another 4 percent of 

the contributed amount. As such, employees with 25 or more years of 

service have access to the full amount of funds in their health savings plans 

when they retire. 

South Carolina • Government contribution The state reduced the level of government contribution for employees hired 

after May 1, 2008, who become eligible for retiree health benefits. 

Employees hired before that date, who become eligible for retiree health 

benefits, qualified for the full amount of government contribution (which 

officials said was approximately 71 percent of the premium) if they retired 

with at least 10 years of service. Under the new requirements, in order to 

qualify for the full government contribution, such employees hired on or 

after May 1, 2008, must have 25 years of service. Individuals with from 15 

to 25 years of service qualify for half of the government contribution, while 

no contribution is provided to employees with less than 15 years of service. 

Source: Information obtained through communications with, and documents provided by, officials from selected governments. 

Some of the governments we selected assessed the effect of their health 

benefit changes on the amount of their retiree health liability. Specifically, 

according to government officials, Gainesville’s change to its government 

contribution reduced the city’s liability by $6 million, or 12 percent. 

According to state officials, South Carolina’s retiree health benefit changes 

are projected to save the state $3.5 billion over 50 years. Additionally, 

officials from Oakland County, Michigan, indicated that the county’s 

actuary estimated that the change from a defined benefit to a defined 

contribution plan would result in decreases to the county’s ARC beginning 

in 2017, as the number of retirees receiving benefits through the defined 

benefit health plan decreases.42

Officials from the governments we selected reported some challenges in 

determining and implementing changes to their retiree health benefits. The 

most commonly reported challenge was reaching agreement with the 

various parties involved in the decision-making process, most notably the 

 

42Officials explained that the closing of its defined benefit plan actually increased the 

county’s ARC in the short term, as it required some changes in actuarial assumptions. 

Page 20 GAO-10-61 State and Local Retiree Health Benefits
 

collective bargaining units representing affected personnel. For example, 

officials from one government indicated that the government was 

currently in arbitration with a collective bargaining unit over its health 

benefit changes, while officials from another government indicated that an 

unfair labor practice claim had been filed against the government as a 

result of its benefit changes. Officials from a third government noted that 

given the fiscal environment, it was difficult to make cuts to retiree health 

benefits since the government was already negotiating other compensation 

changes with collective bargaining units, such as eliminating pay raises for 

active employees. Finally, officials from one government noted that the 

state’s constitution would prohibit the state from reducing the retiree 

health benefits for existing employees or retirees, thereby limiting the 

state’s ability to change retiree health benefits for anyone except newly 

hired employees. 

Unfunded OPEB liabilities on their own are large enough to represent a 

fiscal pressure for state and local governments but are also likely to be 

considered part of the broader fiscal challenge of managing increasing 

health care costs. State and local governments faced increasing fiscal 

pressures in 2008, in part because of recession-induced revenue 

shortfalls. Since the start of the recession in the fourth quarter of 2007 to 

the same quarter in 2008, state and local government revenues declined by 

3 percent, after adjusting for inflation. During the same period, spending in 

the state and local government sector increased by about 1 percent, also 

adjusted for inflation.43

Health-Related 

Spending, Including 

OPEB Liabilities, Is 

Increasing State and 

Local Governments’ 

Fiscal Pressures 

Our model of state and local government revenues and spending projects 

that state and local governments’ fiscal pressures will increase in the 

future and will largely be driven by increases in health care spending.44 We 

 

43Our calculations are based on data from the National Income and Product Accounts 

(NIPA). The NIPA, published by the Department of Commerce’s Bureau of Economic 

Analysis, is a set of economic accounts that provides the framework for presenting detailed 

measures of U.S. output and income. Inflation adjustments are based on the expenditure 

deflator for state and local government expenditures. 

44Our model provides projections of the aggregate operating budget balance for all state 

and local governments combined. The operating budget balance is the excess of spending 

over revenues, where the spending is limited to paying for the routine functions of 

governments. It excludes capital expenditures for public investment, since such spending 

fluctuates from year to year and is often financed with borrowing and paid for in 

subsequent years. Also, a government can defer capital expenditures more easily than 

operating expenditures. 

Page 21 GAO-10-61 State and Local Retiree Health Benefits
 

constructed a model of aggregate spending and revenues for all state and 

local governments in the United States in order to provide a general 

picture of fiscal pressures facing many state and local governments in the 

future.45 Our model reflects the fiscal implications assuming current 

policies remain unchanged. The model’s results are not a prediction of 

future decisions on government policies; in the face of growing fiscal 

pressure, changes in policies are likely. According to this model, over an 

extended period of time the difference between the growth of spending 

and revenues could compound to a large overall operating budget 

imbalance. As our simulation suggests (see fig. 2), under current policies 

the operating budget balance for these governments as a whole could 

deteriorate steadily, from surpluses in 2006 to a deficit of 4.7 percent of 

gross domestic product (GDP) by 2050. 

rcent of 

Figure 2: State and Local Government Operating Budget Balance, as a Percentage of GDP 

Year

-5

-4

-3

-2

-1

0

1

1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050

Percentage of GDP

Source: Historical data from National Income and Product Accounts and GAO simulations updated January 2009.

 

45Our model projects growth in state and local revenues from the present level of 

$1.8 trillion to $11.3 trillion in 2050. Gross domestic product (GDP) in 2050 is projected at 

$77.2 trillion. State and local revenues tend to grow in step with GDP, which is a proxy for 

the country’s ability to finance spending. GDP is projected to grow at an annual rate of 

4.1 percent from 2008 to 2050, while revenues grow at 4.5 percent annually. Spending is 

projected to grow more rapidly than revenues, at 5.1 percent annually. 

Page 22 GAO-10-61 State and Local Retiree Health Benefits
 

Health-related spending represents the fastest growing component 

common in government budgets at all levels in the United States.46 For 

state and local governments, the largest spending item for this category is 

Medicaid. Although retiree health benefits require a much smaller share of 

total spending than Medicaid, health benefits for state and local 

government retirees also have projected rapid cost growth.47 In 2007, at 

$324 billion, Medicaid expenditures represented 17 percent of total state 

and local government spending. State and local government spending on 

health benefits for nearly 3 million retirees was $15.8 billion in 2008. As 

shown in figure 3, our model indicates that future spending for purposes 

other than health care will fall as a percentage of GDP, but health-related 

spending will more than make up for the decline.48

 

46Even an annual growth rate in health-related spending of a few percentage points in 

excess of projected growth in revenues contributes to large operating budget imbalances in 

the long run. 

47Medicaid is a joint federal-state program that finances health care for certain low-income 

individuals. 

48The fiscal pressure indicated by our model’s results could be even greater if our estimates 

for the growth of health-related spending prove to be understated. 

Page 23 GAO-10-61 State and Local Retiree Health Benefits
 

Figure 3: Health and Nonhealth Expenditures for the State and Local Government Sector, as a Percentage of GDP 

Percentage of GDP

Source: Historical data from National Income and Product Accounts and GAO simulations updated January 2009.

Year

0

2

4

6

8

10

12

2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050

Nonhealth expenditures

Health expenditures

The increased share of operating revenues consumed by state and local 

governments’ spending on retiree health benefits projected under current 

policies indicates the fiscal pressure associated with those benefits. 

According to our model, by 2050 the number of state and local government 

retirees is likely to grow by about 70 percent from the current level of 

3 million to 5.1 million retirees. This implies that the number of retirees 

grows at an average annual rate of about 1.3 percent. However, the cost of 

retiree health benefits is projected to grow more quickly, at an annual rate 

of 6.7 percent over that same period.49 According to our model, this means 

that current spending of $15.8 billion on retiree health benefits will grow 

to $237.3 billion by 2050, in current dollars. As a share of total state and 

 

49The calculations incorporate a long-run inflation rate of 1.9 percent as measured by the 

GDP price index. For more information on how the model projects the cost of retiree 

health benefits, see app. II. 

Page 24 GAO-10-61 State and Local Retiree Health Benefits
 

local government operating revenues, the projected spending for state and 

local government retirees’ health benefits might not be viewed with great 

concern. However, spending on state and local government retirees’ health 

benefits is projected to more than double as a share of total operating 

revenues by 2050, from 0.9 percent to 2.1 percent. State budget officials 

have told us that they face challenges financing future health benefits in 

general, including Medicaid benefits and health benefits for active 

government employees, not just for their retirees. The rapid increase 

projected for retiree health liabilities is just one effect of the escalating 

health care costs under ongoing debate by policymakers and others. 

Future possible changes in policies could cause actual budget outcomes to 

diverge from what our model projects. Such changes could include 

reductions in health care benefits, reductions in the number of retirees 

receiving benefits, increases in state and local taxes, or a combination of 

these. 

We provided a draft of this report to GASB and the National Association of 

State Auditors, Comptrollers and Treasurers, which provided technical 

comments that we incorporated as appropriate. 

External Comments 

As agreed with your office, unless you publicly announce the contents of 

this report earlier, we plan no further distribution until 30 days from the 

report date. At that time, we will send copies of this report to interested 

parties. In addition, the report also is available at no charge on the GAO 

Web site at http://www.gao.gov. 

If you or your staff have any questions about this report, please contact 

John E. Dicken at (202) 512-7114 or dickenj@gao.gov or Barbara D. 

Bovbjerg at (202) 512-7215 or bovbjergb@gao.gov. Contact points for our 

Page 25 GAO-10-61 State and Local Retiree Health Benefits
 

Offices of Congressional Relations and Public Affairs may be found on the 

last page of this report. GAO staff who made major contributions to this 

report are listed in appendix V. 

Sincerely yours, 

Director, Health Care 

John E. Dicken 

Barbara D. Bovbjerg 

Director, Education, Workforce, and Income Security 

Page 26 GAO-10-61 State and Local Retiree Health Benefits
Appendix I: Supplemental Scope and 

Methodology for State and Local Government Appendix I: Supplemental Scope and CAFR Review 

Methodology for State and Local Government 

CAFR Review 

To describe what is reported about state and local governments’ unfunded 

other postemployment benefits (OPEB) liabilities, we reviewed the most 

recent governmentwide comprehensive annual financial reports (CAFR), 

as of June 30, 2009, for the states and selected local governments.1

 We 

contacted representatives from individual state and local governments to 

discuss the reporting of OPEB data in the CAFRs, as necessary. 

Specifically, we reviewed the fiscal year 2008 CAFRs for 48 states and the 

fiscal year 2007 CAFRs for 2 states that had not released their fiscal year 

2008 CAFRs by June 30, 2009.2

 We also reviewed the most recent CAFRs 

for the 39 largest local governments (i.e., cities and counties with total 

revenue of $2 billion or more, according to U.S. Census Bureau data). Of 

those, we reviewed fiscal year 2008 CAFRs for 34 local governments and 

fiscal year 2007 CAFRs for the 5 that had not released their fiscal year 2008 

CAFRs by June 30, 2009.3

 We based our selection of local governments on 

the most recent U.S. Census Bureau data from the 2002 Census of 

Governments, “Finances of County Governments” and “Finances of 

Municipal and Township Governments,” which includes local governments 

with populations of at least 25,000.4

 The 39 local governments for which 

we reviewed CAFRs are listed in appendix III, table 4. 

We determined that the state and local government CAFR data were 

sufficiently reliable for our purposes, which were to describe the total 

unfunded OPEB liability reported; the total OPEB liability, assets, and 

unfunded liability for each of the individual governments for which we 

reviewed CAFRs; as well as the ranges of unfunded OPEB liabilities, 

assets, and funded ratios reported.5

 Although we reviewed the most recent 

CAFRs, typically fiscal year 2008 CAFRs, the body of OPEB data on which 

 

1

CAFRs are typically audited. 

2

We reviewed fiscal year 2007 CAFRs for Illinois and Ohio. 

3

We reviewed fiscal year 2007 CAFRs for Indianapolis, Indiana; Westchester County, New 

York; Chicago, Illinois; Cook County, Illinois; and Detroit, Michigan. 

4

U.S. Census Bureau, 2002 Census of Governments, vol. 4, no. 3, and U.S. Census Bureau, 

2002 Census of Governments, vol. 4, no. 4. 

5

As stated earlier, governmentwide CAFRs typically report OPEB data for separate plans. 

However, we report only aggregate state data, except for the funded ratio data for 

individual plans reported by two state CAFRs and two local government CAFRs, which we 

include in order to provide illustrative examples. Otherwise, we do not report OPEB data 

for individual plans. 

Page 27 GAO-10-61 State and Local Retiree Health Benefits 
Appendix I: Supplemental Scope and 

Methodology for State and Local Government 

CAFR Review 

we report reflects many different actuarial valuation dates.6 Because the 

universe of local governments is estimated at about 88,000 governments, 

we limited our review of local government CAFRs to those for the 39 

largest local governments, as described above, thus leaving out of our 

review the majority of local government CAFRs. We did not analyze the 

CAFR data governments reported or review the reasonableness of the 

actuarial assumptions used to estimate the OPEB and related unfunded 

liabilities. To complement our CAFR review, we contacted experts on 

state and local government retiree health benefits, such as national 

organizations, including the National Governors Association, the 

Association of Local Government Auditors, the National Conference of 

State Legislators, the National Association of Counties, and the 

Government Finance Officers Association. Other organizations we 

contacted include the State and Local Government Benefits Association, 

the National Conference of Public Employees Retirement Systems, and 

Standard and Poor’s. We also reviewed actuarial literature and different 

studies and data sets related to the unfunded OPEB liabilities across states 

and local governments. Those sources include Workplace Economics, 

State Government Retiree Health Benefits: Current Status and Potential 

Impact of New Accounting Standards, 2004; Cato Institute, Unfunded 

State and Local Health Costs: $1.4 Trillion, 2006; Standard and Poor’s, 

U.S. State and Quantifying OPEB Liabilities and Developing Funding 

Strategies as the GASB Deadline Nears, 2007; National Association of 

State Comptrollers, Annual OPEB Survey, 2006, 2007, and 2008; PEW 

Center on the States, Promises with a Price: Public Sector Retirement 

Benefits, 2007; Credit Suisse, You Dropped a Bomb on Me, GASB, 2007; 

the Center for State and Local Government Excellence, At a Crossroads: 

The Financing and Future of Health Benefits for State and Local 

Government Retirees, 2009; and Robert Clark and Melinda Sandler Morrill, 

Health Plans for Retired State Employees: Is There a Funding Crisis?

2009. 

 

6

For an actuarial valuation, an actuary estimates the amount (in current dollars) as of the 

valuation date that will be needed to pay for future benefits. 

Page 28 GAO-10-61 State and Local Retiree Health Benefits
Appendix II: Supplemental Scope and 

Methodology for Description of State and Appendix II: Supplemental Scope and Local Governments’ Fiscal Pressures 

Methodology for Description of State and 

Local Governments’ Fiscal Pressures 

To describe the fiscal pressures facing state and local governments, we 

used our model that simulates fiscal outcomes of the state and local sector 

in the aggregate for several decades into the future. The model is not 

designed to project the fiscal position of individual states; rather, it 

simulates the potential level of aggregate receipts and expenditures of the 

state and local sector in future years based on current and historical 

spending and revenue patterns. A January 2008 report provided a detailed 

description of how we constructed the model, and sections of that 

methodology directly relevant to data in this report are provided below.1

As an organizing framework and basic data source, our state and local 

government model relies on the National Income and Product Accounts 

(NIPA), prepared by the Department of Commerce’s Bureau of Economic 

Analysis. We project the growth in each category of receipts and 

expenditures using the Congressional Budget Office’s economic 

assumptions whenever possible. In several cases, we were not able to 

obtain existing projections and needed to develop our own assumptions 

about the likely future growth path of certain receipts or expenditures. We 

also developed detailed models to project items such as necessary pension 

fund contributions, the costs of health insurance for employees and 

retirees, and several tax receipt categories. Our base-case model assumes 

current policies remain in place. Below, we describe how that basic 

assumption is realized. Once all receipts and expenditures of the sector 

are simulated forward through 2050, we develop summary indicators of 

the state and local government sector’s fiscal status. Because the model 

covers the state and local government sector in the aggregate, the fiscal 

outcome of individual states and localities cannot be captured. Also, the 

model does not identify whether it is the states or the local governments 

that face greater fiscal challenges. The following describes (1) the receipts 

and expenditures for the state and local government sector; (2) the 

measure of fiscal imbalance; (3) how we developed factors for 

employment, retirement, and benefits; and (4) how we projected the costs 

of health care. 

 

1

GAO-08-317. 

Page 29 GAO-10-61 State and Local Retiree Health Benefits 
Appendix II: Supplemental Scope and 

Methodology for Description of State and 

Local Governments’ Fiscal Pressures 

Projection of Receipts and 

Expenditures of the State 

and Local Government 

Sector 

The model provides projections for each type of receipt of state and local 

governments. The Bureau of Economic Analysis assembles the NIPA 

based on data from the quinquennial Census of Governments, annual 

surveys of government finances, and other sources. In the NIPA, receipts 

are divided into five major categories: tax receipts, contributions for 

government social insurance, income receipts on assets, transfer receipts, 

and the current surplus of government enterprises. Figure 4 shows these 

categories as well as the breakdown of receipts within each of these 

classifications. 

Figure 4: Receipt Classifications of State and Local Governments 

1. Taxes:

 · Personal income tax (state personal income tax and local personal income 

 tax)

 · Sales tax (general sales tax and selective [excise] sales tax)

 · Corporate income tax

 · Property tax

 · Other taxes on production

 · Estate tax

2. Contributions to government insurance 

3. Income on financial assets owned by state and local governments

4. Transfer receipts:

 · Federal Medicaid grants

 · Non-Medicaid federal grants

 · Federal investment grants (for long-term investments, such as roads, bridges, 

 and other infrastructure)

 · Transfers from businesses and persons (e.g., fines, tobacco settlements)

5. Surplus or deficit on government enterprises (e.g., liquor stores, public power, 

 public transit, public housing)

Source: GAO organization of NIPA classifications.

Note: Unlike the NIPA, we do not distinguish between current and noncurrent receipts. 

In the NIPA, expenditures are divided into five categories, some much 

larger than others. Figure 5 shows the five categories. Consumption 

expenditures, the largest category, include such items as the 

compensation of state and local government employees. Transfer 

payments include Medicaid payments. Smaller classifications are interest 

paid on the outstanding debt of these governments, subsidies, and 

expenditures for investments in fixed capital and nonproduced assets. 

Page 30 GAO-10-61 State and Local Retiree Health Benefits
Appendix II: Supplemental Scope and 

Methodology for Description of State and 

Local Governments’ Fiscal Pressures 

Figure 5: Expenditure Classifications of State and Local Governments 

1. Consumption expenditures

 · Compensation of employees

 · Wages and salaries

 · Pension fund contributions

 · Heath care payments

 · Other employee benefits (e.g., life insurance)

 · Consumption of fixed capital (i.e., depreciation)

· Miscellaneous consumption expenditures

 · Purchases of intermediate goods

 · Offsets related to tuition, hospitals, and certain other services not 

 considered enterprises

 · Own account investments–offsets related to expenditures classified as 

 consumption expenditures in the given year but really related to 

 longer-term investments

2. Transfer payments to citizens

 · Medicaid and other health payments

 · Non-Medicaid transfers

3. Interest paid on outstanding state and local debt

4. Subsidies

5. Purchases of fixed assets and purchases of nonproduced assets (mostly land)

Source: GAO organization of NIPA classifications.

Measures of Fiscal Balance In this report, we use the operating budget balance (operating balance) as 

a measure of fiscal balance. Operating balance is a GAO-developed 

measure that we call the operating balance excluding funds for capital 

expenditures. This measure is designed to be roughly akin to the operating 

budgets of subnational governments—budgets that these governments are 

generally required to balance or nearly balance. We develop a measure of 

receipts not available to finance current spending as the difference 

between investment spending and the change in medium- and long-term 

debt. Subtracting this amount from total receipts leaves the estimated 

receipts that are available to finance current expenditures. The 

expenditure component of the balance measure excludes both investment 

spending and depreciation. Our operating balance measure includes two 

further adjustments to NIPA-based totals. First, we exclude the current 

surplus/deficit of government enterprises from receipts because state and 

local government operating budgets exclude government enterprises. This 

adjustment has no effect on our base-case simulations because we assume 

Page 31 GAO-10-61 State and Local Retiree Health Benefits
Appendix II: Supplemental Scope and 

Methodology for Description of State and 

Local Governments’ Fiscal Pressures 

the balance is equal to zero, but its incorporation accommodates p

alternative assumptions about the current balance of government 

enterprises. We also exclude a category of funds that we call the ne

balance of social insurance funds. As noted earlier, state and local 

employees as well as employers make contributions to social insu

funds to pay for such items as temporary disability and workers’ 

compensation insurance. Payments from these funds are embedded

transfer payments that governments pay to workers when they are 

disabled or otherwise entitled to payments from these insurance funds. In 

our simulations, the balance is assumed to grow with total wage and salary 

disbursements. While governments hold b

otential 

t 

rance 

 in 

alances in these funds, the funds 

are not available for operating expenses. 

as 

 in 

surance 

 the next 

ciaries, 

 

Key underlying information for the health care expenditure simulations 

relate to future levels of employment, retirees, and wages. In particular, to

estimate the expenditure for the postretirement promises the sector h

and will continue to make as well as expenditures for health care for

active employees, we need to project the number of employees and 

retirees in each future year. The cost of health care is discussed later

this appendix. We project the number of state and local government 

employees and the number of beneficiaries for each year during the 

simulation time frame. To project the level of employment in each future 

year, we assume that state and local employment grows at the same rate

as total population under the intermediate assumptions of the Board of 

Trustees of the Old-Age and Survivors Insurance and Disability In

Trust Funds2

—that is, we assume that the ratio of state and local 

employment to total population remains constant.3

 The Trustees assume 

that population growth gradually declines from 0.8 percent during

decade to a steady rate of 0.3 percent per year beginning in 2044. 

Accordingly, state and local government employment growth displays the 

same pattern in our projections. To project the number of benefi

we assumed that future growth in the number of state and local 

government retirees—many of whom will be entitled to pension and 

te and Local Retiree Health Benefits

rs 

d 

Beneficiary Levels 

Development of Facto

for Employment an

2

See The 2007 Annual Report of the Board of Trustees of the Federal Old-Age and 

Survivors Insurance and Disability Insurance Trust Funds (Washington, D.C., May 1, 

2007), table A2. 

3

This assumption implies that if there were no growth in the productivity of state and local 

workers, the output of services per person served would remain the same. As such, any 

increased growth in services provided per citizen depends on the degree to which 

productivity in public sector services advances. 

Page 32 GAO-10-61 Sta
Appendix II: Supplemental Scope and 

Methodology for Description of State and 

Local Governments’ Fiscal Pressures 

health care benefits—is largely driven by the size of the workforce in 

earlier years. While actuaries use detailed information and assumptions 

regarding the age, earnings, service records, and mortality rate applicable 

to the entities they evaluate, information in such detail is not available f

the state and local government sector as a whole. This lack of detailed 

data necessitated the development of a method of projecting aggregate 

state and local beneficia

or 

ry growth that is much simpler than the methods 

that actuaries employ. 

h in the 

ension 

e 

ed the restrictions 

that the weights must be nonnegative and sum to one. 

a 

nt 

 the work, while 

many other state and local workers have longer careers. 

 

The method we developed reflects the logic that each year’s growt

number of beneficiaries is linked to past growth in the number of 

employees. Total state and local government employment from 1929 

through 2005 was obtained from NIPA tables 6.4a, b, c, and d. The U.S. 

Census Bureau provided data on the number of state and local p

beneficiaries from 1992 through 2005, during which continuous 

observations were available. Cyclical swings in the employment series 

were removed using a Hodrick-Prescott filter.4

 Then both the employment 

and beneficiary series were logged and first-differenced, transforming th

data from levels to proportionate changes. We developed a routine that 

searched across 45 years of lagged employment growth to select a set of 

weights for the years in which past employment growth best explained a 

given year’s growth in beneficiaries.5

 The routine includ

The method produced a relationship that reflected the contribution of 

particular past year’s employment change in explaining a given year’s 

change in retirees. In particular, the estimated relationship suggests that 

beneficiary growth in a given year is largely determined by employme

growth 21, 22, 23, and 34 years before the given period. This pattern 

appears consistent with the categories of workers that the sector employs. 

Many fire and police positions, for example, offer faster pension accrual or

early retirement due to the physical demands and risks of

4

The Hodrick-Prescott filter is an algorithm for choosing smoothed values for a time series. 

5

The Excel Solver function was used to find the weights that minimized the sum of the 

squared residuals between actual and fitted beneficiaries. 

Page 33 GAO-10-61 State and Local Retiree Health Benefits
Appendix II: Supplemental Scope and 

Methodology for Description of State and 

Local Governments’ Fiscal Pressures 

Most state and local governments pay for employee and retiree health 

insurance on a pay-as-you-go basis—that is, these benefits are generally 

not prefunded. We made projections of the pay-as-you-go expenditures for 

health care for the sector, as a percentage of wages, in each year until 

2050.6

 To estimate expenditures for employee and retiree health insurance 

in future years, we used the methods described above to develop 

projections of employment in the sector and the number of retirees. An 

additional assumption for the health care analysis is that in future years, 

the same percentage of employees and retirees of state and local 

governments will be enrolled in health insurance through their previous 

employers as we observe were enrolled in 2004—the most recent year for 

which data were available. For retirees, we developed this measure from 

two data sources. The U.S. Census Bureau’s State and Local Government 

Employee-Retirement System survey provided data on the total number of 

state and local retirees, and the Department of Health and Human 

Services’ Medical Expenditure Panel Survey provided data on state and 

local government retirees who are covered by employer-provided health 

insurance. Through these data sources we found that the share of retirees 

with health insurance is 44 percent, and we hold this constant through the 

simulations. From the latter data source we also obtained the most recent 

year state and local government spending data on health care for retirees. 

For active employees we also used the Medical Expenditure Panel Survey 

data on employees covered by health insurance and compared them to the 

Bureau of Economic Analysis data on the total employment in the sector. 

This provided us with a finding that 71 percent of active employees are 

receiving health benefits. Again, we hold this value constant during the 

simulation time frame. 

Projections of Health Care 

Costs for State and Local 

Employees and Retirees 

One of the most central assumptions we must make to estimate the pay-asyou-go health care expenditures for employees and retirees in future years 

is the cost growth of health care itself. The cost of health care has been 

increasing faster than gross domestic product (GDP) for many years. As 

such, we developed assumptions about how much faster health care costs 

would grow, relative to the economy, in future years. We developed these 

assumptions based on our own research and discussions with experts. In 

particular, we assume that the excess cost factor averages 1.4 percentage 

points per year through 2035, and then begins to decline, reaching 

0.6 percentage points by 2050. 

 

6

Implicitly, we assume that the medical coverage continues to pay about the same 

percentage of medical costs for employees and retirees that it currently does. 

Page 34 GAO-10-61 State and Local Retiree Health Benefits
Appendix II: Supplemental Scope and 

Methodology for Description of State and 

Local Governments’ Fiscal Pressures 

Using these assumptions, we developed projections for the expenditures 

on health care for employees and retirees each year through 2050. We 

found that the projected expenditures for retiree health insurance, while 

not a large component of state budgets, will more than double as a 

percentage of wages over the next several decades. In 2006, these 

expenditures amounted to approximately 2.1 percent of wages, and by 

2050 we project that they will grow to nearly 5.1 percent of wages—a 

150 percent increase. Our estimates of these expenditures are highly 

sensitive to certain of our assumptions. In particular, the assumptions 

regarding health care cost growth are critical. For example, if health costs 

were to only rise at the rate of GDP per capita, expenditures for retiree 

health care would only grow, as a percentage of wages, from 2.1 percent 

today to 3.0 percent by 2050. Conversely, if health costs were to grow by 

twice the rate we assume in the base case, these costs would constitute 

8.7 percent of wages by 2050.7

The percentage of an active employee’s wage expended on health care 

amounted to 12.8 percent of wages in 2006 and by the end of the 

simulations in 2050 is expected to be 22.2 percent of wages. In the case of 

the optimistic scenario—with lower escalation in the cost of health care—

we found that expenditures on employee health care will only rise slightly 

to 13 percent of wages by 2050. However, under the pessimistic scenario 

characterized by more rapidly growing health costs, expenditures on 

health care for active employees rise to 37.7 percent of wages in 2050. 

 

7

Because our state and local government retiree health care cost estimates are based on 

data that did not incorporate possible savings attributable to the Medicare Part D drug 

subsidy that began in 2006, the estimates may overstate retiree health care costs slightly. 

Page 35 GAO-10-61 State and Local Retiree Health Benefits
Appendix III: Aggregate Other 

Postemployment Benefits Liability Data for Appendix III: Aggregate Other States and Local Governments We Reviewed 

Postemployment Benefits Liability Data for 

States and Local Governments We Reviewed 

The data for OPEB (which are primarily retiree health benefits) presented 

in tables 3 and 4 are those reported in the most recently issued 

governmentwide CAFRs, as of June 30, 2009, for the 50 states and the 39 

largest local governments. As described more fully in appendix I, in most 

cases the most recently issued CAFR was for fiscal year 2008.1

 We 

reviewed only the governmentwide CAFRs and did not review separate 

financial reports for component entities or cost-sharing multiple-employer 

plans that do not report their OPEB data in the CAFR. Also, data below 

reflect the data reported by the governments in their CAFRs and not GAO 

analysis of financial reports.2

Table 3: Aggregate OPEB Liability Data for 50 States, Based on the Most Recent 

Governmentwide CAFRs 

Dollars in thousands 

State Liability Value of assets Unfunded liability

Alabamaa $2,984,796 $0 $2,984,796

Alaskaa 3,758,699 1,651,729 2,106,970

Arizonaa 71,180 0 71,180

Arkansas 1,748,182 0 1,748,182

California 62,000,000 0 62,000,000

Coloradob 276,332 0 1,326,332

Connecticutc 2,318,800 0 2,318,800

Delawared 5,565,100 79,400 5,486,100

Florida 2,404,323 0 2,404,323

Georgiae 19,100,171 778,048 18,457,641

Hawaii 8,788,892 0 8,788,892

Idaho 493,746 4,325 489,421

Illinoisa 24,200,000 0 24,200,000

 

1

Of the 89 CAFRs reviewed, 7 were fiscal year 2007 CAFRs, and the rest were fiscal year 

2008 CAFRs. 

2

There was one exception. In the few cases where a CAFR reported an entity with a funded 

ratio of more than 100 percent, we did not include the “overfunded” unfunded liability in 

the government’s aggregate unfunded liability because to do so could understate the 

aggregate unfunded liability of the remaining entities. We did not adjust the aggregate 

liabilities or assets in those cases. In those cases, the unfunded liability is more than the 

liability minus assets, as noted in each case. Also, for some governments, the aggregate 

unfunded OPEB liability does not equal the aggregate of the liabilities minus assets, 

because of the data that were reported in the CAFR. 

Page 36 GAO-10-61 State and Local Retiree Health Benefits 
Appendix III: Aggregate Other 

Postemployment Benefits Liability Data for 

States and Local Governments We Reviewed 

Dollars in thousands 

State Liability Value of assets Unfunded liability

Indiana 442,268 0 442,268

Iowa 404,362 0 404,362

Kansas 316,640 0 316,640

Kentuckyf13,008,572 1,348,326 11,661,694

Louisiana 12,542,953 0 12,542,953

Maine 2,422,806 139,000 2,283,806

Maryland 14,852,304 118,884 14,733,420

Massachusetts 11,649,000 329,000 11,320,000

Michigana14,929,200 14,300 14,914,900

Minnesota 1,011,444 0 1,011,444

Mississippi 570,248 0 570,248

Missouri 2,867,472 15,646 2,851,826

Montanaa 631,918 0 631,918

Nebraska The CAFR reports that the implementation of Governmental 

Accounting Standards Board (GASB) Statement 45 had no material 

effect on the financial statements. According to the CAFR, after a 

retired employee reaches age 65, the state has no further obligation 

for OPEB, except for a very small number of employees. 

NevadaaThe CAFR reports that the state’s OPEB data are accounted for by 

a multiple employer cost-sharing defined postemployment benefit 

plan and the related OPEB data are reported in a separate standalone financial report and not in the governmentwide CAFR. 

New Hampshirea2,559,500 0 2,559,500

New Jerseya50,649,500 0 50,649,500

New Mexicog 3,116,916 170,626 2,946,289

New York 50,819,000 0 50,819,000

North Carolina 29,364,734 623,174 28,741,560

North Dakota 124,046 42,500 81,546

Ohioa31,594,079 11,204,857 20,389,222

Oklahomaa 359,800 0 359,800,000

Oregon 868,393 258,600 609,793

Pennsylvaniah 11,794,150 108,240 11,685,919

Rhode Islanda788,189 0 788,189

South Carolina 8,609,121 0 8,609,121 

South Dakota 76,406 0 76,406

Tennessee 2,398,673 0 2,398,673

Texasa7,007,453 0 7,007,453

Page 37 GAO-10-61 State and Local Retiree Health Benefits
Appendix III: Aggregate Other 

Postemployment Benefits Liability Data for 

States and Local Governments We Reviewed 

Dollars in thousands 

State Liability Value of assets Unfunded liability

Utah 669,617 0 669,617

Vermonti 1,618,245 3,664 1,614,582

Virginiaa4,984,000 1,345,000 3,639,000

Washington 3,799,530 0 3,799,530

West VirginiaaThe CAFR reports that the state provides OPEB, which are 

provided under a multiemployer cost-sharing plan. According to the 

CAFR, complete financial statements and additional disclosures for 

the plan are available from the plan’s administrative offices. 

Wisconsina 1,472,774 0 1,472,774

Wyoming 174,161 0 174,161

Totalj $422,207,695 $18,235,319 $405,159,751

Source: GAO calculations based on data reported in states’ CAFRs. 

a

Our review of the government’s CAFR indicated that there is or may be OPEB information for at least 

one plan reported outside the CAFR. 

b

For one entity, Colorado’s CAFR reports the unfunded liability but not the liability or assets, which is 

why the state’s unfunded liability shown above is about $1.05 billion more than liability minus assets. 

c

Connecticut’s fiscal year 2008 CAFR also reports an additional “estimated accrued liability” of 

$23.7 billion as of June 30, 2008, according to an interim actuarial valuation. The CAFR states that 

because the valuation was “limited in scope,” the associated funded status and funding progress data 

are not disclosed. The liability and unfunded liability are shown here as they were reported in the 

CAFR. 

d

Delaware’s CAFR reports an unfunded liability for one entity that is $400,000 higher than the liability 

minus assets. The unfunded liability is shown here as it was reported in the CAFR. 

e

Georgia’s CAFR reported one entity with a funded ratio of 121 percent. The unfunded liability shown 

above does not include the “overfunded” unfunded liability because doing so could understate the 

unfunded liability of the remaining two entities, which is why the total unfunded liability is $135 million 

more than liability minus assets. 

f

Kentucky’s CAFR reported one entity with a funded ratio of 106 percent. The unfunded liability shown 

above does not include the “overfunded” unfunded liability because doing so could understate the 

unfunded liability of the remaining entities, which is why the total unfunded liability is $1.4 million more 

than liability minus assets. 

g

New Mexico’s CAFR reports an unfunded liability for one entity that is slightly less than the liability 

minus assets disclosed for that entity. The unfunded liability is shown here as it was reported in the 

CAFR. 

h

Pennsylvania’s CAFR reports unfunded liabilities for two entities that are slightly more than the 

liability minus assets for each of those entities, and an unfunded liability for one entity that is slightly 

less than the liability minus assets, resulting in an aggregate unfunded liability that is slightly higher 

than the total liabilities minus total assets. The unfunded liability is shown here as it was reported in 

the CAFR. 

i

Vermont’s CAFR reports an unfunded liability for one entity that is slightly less than the liability minus 

assets disclosed for that entity. The unfunded liability is shown here as it was reported in the CAFR. 

j

The total unfunded liability reported here does not equal the total liability minus total assets, for the 

reasons discussed in the previous table notes and also because of rounding. 

Page 38 GAO-10-61 State and Local Retiree Health Benefits
Appendix III: Aggregate Other 

Postemployment Benefits Liability Data for 

States and Local Governments We Reviewed 

Table 4: Aggregate OPEB Liability Data for the 39 Largest Local Governments, 

Based on the Most Recent Governmentwide CAFRs 

Dollars in thousands 

Local governments Liability Value of assets Unfunded liability

Alameda County, Calif. $639,800 $614,800 $25,000 

Baltimore, Md. 2,149,800 76,000 2,073,800 

Baltimore County, Md. 1,765,553 0 1,765,553 

Boston, Mass. 5,490,836 0 5,490,836

Chicago, Ill. 1,786,833 0 1,786,833

Clark County, Nev. 799,864 4,639 795,225 

Cook County, Ill. The most recent CAFR available for our review was the 

county’s fiscal year 2007 CAFR, which did not reflect 

implementation of GASB Statement 45 and therefore did 

not report OPEB liability data. The CAFR indicates that 

the fiscal year 2008 CAFR will reflect implementation of 

GASB Statement 45. 

Denver, Colo. 128,607 96,457 32,150 

Detroit, Mich.a6,000,000 0 6,000,000 

Harris County, Tex. 852,351 0 852,351

Houston, Tex. 326,500 54,500 272,000

Indianapolis, Ind. 137,738 0 137,738 

Jacksonville, Fla. 175,117 0 175,117 

Fairfax County, Va. 679,524 0 679,524 

Los Angeles, Calif. 5,160,558 2,830,204 2,330,354

Los Angeles County, Calif. 21,231,100 0 21,231,100

Maricopa County, Ariz.b,c 15,915 0 15,915 

Memphis, Tenn. 1,600,546 0 1,600,546

Miami-Dade County, Fla. 284,024 0 284,024

Montgomery County, Md. 1,176,000 0 1,176,000 

Nashville-Davidson County, 

Tenn. 2,649,279 0 2,640,248

Nassau County, N.Y. 3,316,121 0 3,316,121

New York City, N.Y. 62,135,453 2,594,452 59,541,001

Orange County, Calif. 423,025 79,717 343,308 

Philadelphia, Pa.b1,158,100 0 1,158,100

Phoenix, Ariz.d405,923 74,072 345,579 

Prince George’s County, Md.b762,335 0 762,335

Riverside County, Calif. 47,828 10,411 37,417

Sacramento County, Calif. 245,592 0 245,592

Page 39 GAO-10-61 State and Local Retiree Health Benefits
Appendix III: Aggregate Other 

Postemployment Benefits Liability Data for 

States and Local Governments We Reviewed 

Dollars in thousands 

Local governments Liability Value of assets Unfunded liability

San Antonio, Tex.e

1,118,131 464,476 670,245

San Bernardino County, Calif. The CAFR does not report any OPEB information. An 

official from the county’s Office of the Auditor/ControllerRecorder said that the county does not offer OPEB to 

retirees and thus has no OPEB liabilities to disclose. 

San Diego, Calif. 1,235,707 29,637 1,206,070 

San Diego County, Calif.bThe CAFR reports that the county provides retiree health 

benefits and participates in a cost-sharing multipleemployer defined benefit health plan. According to the 

CAFR, a separate entity issues financial reports that 

include financial statements for the retiree health plan. 

San Francisco, Calif.f

(city and county) 4,000,000 0 4,014,000 

Santa Clara County, Calif. 1,432,241 0 1,432,241

Suffolk County, N.Y. 4,292,950 0 4,292,950

Washington, D.C. 745,200 219,700 525,500

Wayne County, Mich. 885,057 0 885,057

Westchester County, N.Y. 1,334,800 0 1,334,800

Totalg$136,588,409 $7,149,065 $129,474,631

Source: GAO calculations based on data reported in local governments’ CAFRs. 

a

Detroit’s fiscal year 2007 CAFR indicates that the city will implement GASB Statement 45 in its fiscal 

year 2008 CAFR, which was not yet available as of June 30, 2009. 

b

Our review of the government’s CAFR indicated that there is or may be OPEB information for at least 

one plan reported outside the CAFR. 

c

Maricopa County’s CAFR indicates that the OPEB data reported for one plan represent data for the 

entire plan group and includes all participating jurisdictions because only one actuarial report is 

completed for the plan group. The liability, assets, and unfunded liability data are shown here as they 

were reported in the CAFR. 

d

Phoenix’s CAFR reported one entity with a funded ratio of 123 percent. The unfunded liability shown 

above does not include the “overfunded” unfunded liability for that entity because doing so could 

understate the unfunded liability of the remaining entities, which is why the total unfunded liability is 

about $13.7 million more than liability minus assets. 

e

San Antonio’s CAFR reported one entity with a funded ratio of 153 percent. The unfunded liability 

shown above does not include the “overfunded” unfunded liability for that entity because doing so 

could understate the unfunded liability of the remaining entities, which is why the total unfunded 

liability is about $16.6 million more than liability minus assets. 

f

San Francisco’s CAFR reports unfunded liability for three entities but liability and assets for one, so 

the unfunded liability shown above is about $14 million more than the liability minus assets. 

g

The total unfunded liability reported here does not equal the liability minus assets, for the reasons 

discussed in the previous table notes and also because of rounding. 

Page 40 GAO-10-61 State and Local Retiree Health Benefits
Appendix IV: State and Local Governments’ 

CAFR Internet Addresses 

In conducting our review of the most recent CAFRs for the states and 39 

local governments, we obtained the reports from the government’s public 

Web sites, as shown, with hyperlinks in table 5. As of August 2009 the 

Internet addresses were current. However, as Internet sites change the 

Internet addresses may also change. 

Table 5: State and Local Governments’ CAFR Internet Addresses and Hyperlinks 

State governments 

Alabama http://comptroller.alabama.gov/pages/cafr.aspx 

Alaska http://fin.admin.state.ak.us/dof/financial_reports/cafr_toc.jsp 

Arizona http://www.gao.az.gov/financials/default.asp 

Arkansas http://www.arkansas.gov/dfa/accounting/documents/cafr2008.pdf 

California http://www.sco.ca.gov/ard_state_cafr.html 

Colorado http://www.colorado.gov/dpa/dfp/sco/cafr/cafr.htm 

Connecticut http://www.osc.state.ct.us/reports/ 

Delaware http://accounting.delaware.gov/cafrdefault.shtml 

Florida http://www.myfloridacfo.com/aadir/statewide_financial_reporting/cafr.htm

Georgia https://www.audits.state.ga.us/sgd/cafr_main.html 

Hawaii http://hawaii.gov/dags/accounting-division/Annual%20Financial%20Report 

Idaho http://www.sco.idaho.gov/web/DSADoc.nsf/financial_reports 

Illinois http://www.ioc.state.il.us/library/cr.cfm 

Indiana http://www.in.gov/auditor/2370.htm 

Iowa http://das.sae.iowa.gov/financial_reports/index.html 

Kansas http://www.da.ks.gov/ar/finrept/ 

Kentucky http://finance.ky.gov/ourcabinet/caboff/ooc/ofm/debt/cafr.htm 

Louisiana http://doa.louisiana.gov/OSRAP/CAFR-2.htm 

Maine http://www.maine.gov/osc/finanrept/cafr.htm 

Maryland http://www.marylandtaxes.com/finances/revenue/cafr.asp 

Massachusetts http://www.mass.gov/?pageID=oscterminal&L=3&L0=Home&L1=Publications+and+Reports&L2=Fi

nancial+Reports&sid=Aosc&b=terminalcontent&f=reports_audits_rpt_cafr&csid=Aosc 

Michigan http://www.michigan.gov/budget/0,1607,7-157-13406_13419—-,00.html 

Minnesota http://www.finance.state.mn.us/fin/acct 

Mississippi http://www.dfa.state.ms.us/offices/ofm/bfr.htm 

Missouri http://oa.mo.gov/acct/cafr.htm 

Montana http://accounting.mt.gov/cafr/default.mcpx 

Nebraska http://www.das.state.ne.us/accounting/cafr/cafrcon.htm 

Nevada http://controller.nv.gov/CAFR_Download_Page.htm 

New Hampshire http://admin.state.nh.us/accounting/reports.asp#PAFR 

Appendix IV: State and Local Governments’ 

CAFR Internet Addresses 

Page 41 GAO-10-61 State and Local Retiree Health Benefits 
Appendix IV: State and Local Governments’ 

CAFR Internet Addresses 

State governments 

New Jersey http://www.state.nj.us/treasury/omb/publications/08budget/index.shtml#cafr 

New Mexico http://www.dfafcd.state.nm.us/html/indexcafr.html 

New York http://www.osc.state.ny.us/finance/ 

North Carolina http://www.osc.nc.gov/financial/ 

North Dakota http://www.nd.gov/fiscal/cafr/ 

Ohio http://obm.ohio.gov/SectionPages/FinancialReporting/ 

Oklahoma http://www.ok.gov/OSF/Comptroller/Financial_Reporting.html 

Oregon http://www.oregon.gov/DAS/SCD/SARS/publications.shtml 

Pennsylvania http://www.budget.state.pa.us/portal/server.pt/community/financial_reports/4574 

Rhode Island http://controller.admin.ri.gov/Financial%20Reports/index.php 

South Carolina http://cg.sc.gov/publications/currentcafr.htm 

South Dakota http://www.state.sd.us/BFM/cafr.htm 

Tennessee http://tennessee.gov/finance/act/cafr.html 

Texas https://fmx.cpa.state.tx.us/fm/pubs/cafr/index.php 

Utah http://finance.utah.gov/reporting/cafr.html 

Vermont http://finance.vermont.gov/reports_and_publications/cafr 

Virginia http://www.doa.virginia.gov/Financial_Reporting/CAFR/CAFR_Main.cfm 

Washington http://www.ofm.wa.gov/cafr/ 

West Virginia http://www.wvfinance.state.wv.us/cafrgap.htm 

Wisconsin http://www.doa.state.wi.us/subcategory.asp?linksubcatid=374&linkcatid=225&linkid=69&locid=3 

Wyoming http://sao.state.wy.us/saopubs.htm 

Local governments 

Alameda County, Calif. http://www.acgov.org/auditor/cafr.htm 

Baltimore, Md. (City) http://www.baltimorecity.gov/government/finance/docs.php 

Baltimore County, Md. http://www.baltimorecountymd.gov/Agencies/budfin/finance/accounting/index.html 

Boston, Mass. http://www.cityofboston.gov/auditing/cafr.asp 

Chicago, Ill. http://egov.cityofchicago.org/webportal/COCWebPortal/COC_EDITORIAL/CAFR2007.pdf 

Clark County, Nev. http://www.accessclarkcounty.com/depts/comptroller/pages/cafr.aspx 

Cook County, Ill. http://www.cookcountygov.com/ccgovinternet/Portlets/ExistingWebApp/Frameset_Page.html?http:/

/www.cookcountygov.com/bof4 

Denver, Colo. http://www.denvergov.org/controller/comprehensiveannualfinancialreportcard/tabid/430463/default.

aspx 

Detroit, Mich. http://www.ci.detroit.mi.us/departments/finance/tabid/86/default.aspx 

Harris County, Tex. http://www.co.harris.tx.us/auditor/statements_reports.aspx 

Houston, Tex. http://www.houstontx.gov/controller/cafr.html 

Indianapolis, Ind. http://www.indy.gov/egov/city/controller/pages/home.aspx 

Jacksonville, Fla. http://www.coj.net/departments/finance/accounting/cafr.htm 

Fairfax County, Va. http://www.fairfaxcounty.gov/finance/cafr.htm 

Page 42 GAO-10-61 State and Local Retiree Health Benefits
Appendix IV: State and Local Governments’ 

CAFR Internet Addresses 

Local governments 

Los Angeles, Calif. http://www.lacity.org/ctr/financial_reports.htm 

Los Angeles County, Calif. http://file.lacounty.gov/lac/cms1_115472.pdf 

Maricopa County, Ariz. http://www.maricopa.gov/finance/cafr.aspx 

Memphis, Tenn. http://www.cityofmemphis.org/framework.aspx?page=20 

Miami-Dade County, Fla. http://www.miamidade.gov/finance/annual_reports.asp 

Montgomery County, Md. http://www.montgomerycountymd.gov/mcgtmpl.asp?url=/content/finance/financial.asp#2008 

Nashville-Davidson County, Tenn. http://www.nashville.gov/finance/operations/cafr2008.asp 

Nassau County, N.Y. http://www.nassaucountyny.gov/agencies/comptroller/specialreports.html 

New York City, N.Y. http://www.comptroller.nyc.gov/bureaus/acc/cafr2007_ins.shtm 

Orange County, Calif. http://www.ac.ocgov.com/finrpt.asp 

Philadelphia, Pa. http://www.phila.gov/finance/cafr.html 

Phoenix, Ariz. http://phoenix.gov/menu/cityfinfinance.html 

Prince George’s County, Md. http://www.princegeorgescountymd.gov/Government/AgencyIndex/Finance/accounting.asp 

Riverside County, Calif. http://www.auditorcontroller.org/opencms/topics_interest/CAFR.html 

Sacramento County, Calif. http://www.budget.saccounty.net/cafr/default.htm 

San Antonio, Tex. http://www.sanantonio.gov/ir/cafr%20stmts.htm 

San Bernardino County, Calif. http://www.sbcounty.gov/acr/pdf_download.htm#CAFR 

San Diego, Calif. http://www.sandiego.gov/comptroller/reports/index.shtml 

San Diego County, Calif. http://www.sdcounty.ca.gov/auditor/cafr.html 

San Francisco, Calif. 

(city and county) 

http://www.sfgov.org/site/controller_page.asp?id=1824 

Santa Clara County, Calif. http://www.scctax.org/portal/site/fin/agencychp?path=%2Fv7%2FFinance%20Agency%20%28AG

Y%29%2FController-Treasurer%20Department%2FCAFR%20Report 

Suffolk County, N.Y. http://www.co.suffolk.ny.us/home/departments/comptroller/financial%20reports.aspx 

Washington, D.C. http://cfo.dc.gov/cfo/cwp/view,a,1322,q,590082,cfoNav,%7C33210%7C.asp 

Wayne County, Mich. http://www.waynecounty.com/mygovt/mb/financial_statements.aspx 

Westchester County, N.Y. http://westchestergov.com/finance/ 

Source: GAO review of public Web sites. 

Page 43 GAO-10-61 State and Local Retiree Health Benefits
A

A

ppendix V: GAO Contacts and Staff

cknowledgments 

Page 44 GAO-10-61 

Appendix V: GAO Contacts and Staff 

Acknowledgments 

John E. Dicken, (202) 512-7114 or dickenj@gao.gov

Barbara D. Bovbjerg, (202) 512-7215 or bovbjergb@gao.gov 

In addition to the contacts named above, Tamara Cross, Assistant 

Director; Kristi Peterson, Assistant Director; Joseph Applebaum; George 

Bogart; Robert Dacey; Krister Friday; Kenrick Isaac; Angela Jacobs; Sarah 

Prendergast; Michelle Rosenberg; Max Sawicky; and Jacqueline Stewart 

made key contributions to this report. 

 State and Local Retiree Health Benefits 

GAO Contacts 

Staff 

Acknowledgments 

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