September 30, 2006 - Health care fund expansion vetoed by Schwarzenegger

Health care fund expansion vetoed by Schwarzenegger

Bill letting agencies invest in CalPERS vehicle is rejected.

September 30, 2006

News Article/Sac Bee
By Gilbert Chan - Bee Staff Writer

Saying local governments could unexpectedly get stuck with new health-care obligations for their retired employees, Gov. Arnold Schwarzenegger rejected a bill Friday to allow public agencies statewide to pump millions into a new investment fund.

The measure, SB 1729 by Sen. Nell Soto, D-Pomona, would have broadened the authority of the giant California Public Employees' Retirement System to invest money from any government agency in a new retirement health fund.

The governor, though, said the bill was flawed and could have created "new health care benefit obligations into the future that do not exist today."

The veto came despite support by labor groups, the League of California Cities, and the California State Association of Counties. Supporters said the measure would have offered a lower cost option for local governments to start setting aside money to cover future health benefits for retirees.

Soto criticized Schwarzenegger for his action.

"The governor's veto will slam the door closed for hundreds of local government agencies and school districts that may have wanted to pursue pre-funding through CalPERS," she said in a statement.

Over the next two years, states and local governments must start complying with new accounting rules requiring officials to list the long-term cost of health benefits for retirees on the balance sheets and reveal how much is needed to fund the entire obligation.

Most governments, including the state, are paying the current year's health care cost and not setting aside money for the future. In California, some experts estimate the tab could near $100 billion.

"The issues addressed by this bill are very important and they require immediate attention," Schwarzenegger wrote in his veto message. He is ordering his administration to work on a new plan for next year.

In the meantime, CalPERS can still move ahead with establishing a fund. But participation would be limited to its 1,000 member agencies.

On another measure, Schwarzenegger signed a bill giving hospitals more breathing room to retrofit or replace hundreds of unsafe buildings to meet strict seismic safety standards by 2013.

SB 1661 by Sen. Dave Cox, R-Fair Oaks, will allow the state to grant a two-year extension under certain conditions, including unforeseen construction delays.

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Health care fund expansion vetoed by Schwarzenegger

Bill letting agencies invest in CalPERS vehicle is rejected.
September 30, 2006 News Article/Sac Bee By Gilbert Chan - Bee Staff Writer Saying local governments could unexpectedly get stuck with new health-care obligations for their retired employees, Gov. Arnold Schwarzenegger rejected a bill Friday to allow public agencies statewide to pump millions into a new investment fund. The measure, SB 1729 by Sen. Nell Soto, D-Pomona, would have broadened the authority of the giant California Public Employees' Retirement System to invest money from any government agency in a new retirement health fund. The governor, though, said the bill was flawed and could have created "new health care benefit obligations into the future that do not exist today." The veto came despite support by labor groups, the League of California Cities, and the California State Association of Counties. Supporters said the measure would have offered a lower cost option for local governments to start setting aside money to cover future health benefits for retirees. Soto criticized Schwarzenegger for his action. "The governor's veto will slam the door closed for hundreds of local government agencies and school districts that may have wanted to pursue pre-funding through CalPERS," she said in a statement. Over the next two years, states and local governments must start complying with new accounting rules requiring officials to list the long-term cost of health benefits for retirees on the balance sheets and reveal how much is needed to fund the entire obligation. Most governments, including the state, are paying the current year's health care cost and not setting aside money for the future. In California, some experts estimate the tab could near $100 billion. "The issues addressed by this bill are very important and they require immediate attention," Schwarzenegger wrote in his veto message. He is ordering his administration to work on a new plan for next year. In the meantime, CalPERS can still move ahead with establishing a fund. But participation would be limited to its 1,000 member agencies. On another measure, Schwarzenegger signed a bill giving hospitals more breathing room to retrofit or replace hundreds of unsafe buildings to meet strict seismic safety standards by 2013. SB 1661 by Sen. Dave Cox, R-Fair Oaks, will allow the state to grant a two-year extension under certain conditions, including unforeseen construction delays.
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