16
Retiree Health Coverage
Stories about the future costs of public retiree health plans have recently become a media staple. The costs are often portrayed as astronomical�hundreds of millions and in some cases, billions of dollars. The root of these stories is a change in accounting rules, not congressional action. For several years, the AFT has been working to assure the new accounting rules developed by the Government Accounting Standards Board, the most influential accounting trade association, would not threaten existing plans. Unfortunately, the efforts of our coalition of other unions and retirement plans were not successful. The problem is most public retirement health plans had reported retirement healthcare costs annually. The new accounting rules require these costs be projected and reported for 30 years in the future. The change significantly increases the reported cost of the benefits and will increase pressure to reduce or eliminate these essential benefits; even though health and insurance experts agree that 30-year projections of healthcare costs are meaningless, since no one can foresee major medical breakthroughs or new pandemics that might arise over such a time span. The AFT will continue to fight such cuts in the political arena and at the bargaining table.
Public Pensions
As with retire health coverage, there are now stories about the perilous state of defined- benefit public pension plans. Opponents of state and local government are striving to kill defined benefit pension pans to make public service less desirable. They are being aided indirectly as more employers in the private sector abolish their defined benefit plans. The AFT worked in California to stave off Gov. Schwarzenegger�s drive to convert all public employee plans from defined-benefit to defined-contribution plans. A similar effort in Alaska was, unfortunately, successful. As of this year, all new public employees hired in that state can only participate in a defined-contribution plan. More than 20 states now report some activity attacking the traditional defined-benefit pension system.
The AFT has developed background data, analyses and other means to help fight off these threats, and will continue to lobby vigorously to prevent such conversions.