City's Multi-Billion Unfunded Health Care Liability To Be Revealed

Billions o' Benjamins...

​Every once in a while, the government will do something that scares the bejeezus out of you. We're not talking about touching your junk or stealing your Happy Meal. We're talking about calmly and professionally adding up the numbers and candidly announcing that billions of dollars in payments will come due -- and no one has any idea where the money will come from.

That, essentially, is what's about to happen regarding the city's unfunded retiree health care liability. Periodically, the city assesses how much it's on the hook for its workers' future health care costs and how much money it figures to have when those bills come due. The most current shortfall exceeds $4 billion. Within 10 days, the city controller's office tells us, we'll have new figures. No one is willing to bet how the numbers will look now -- but here's a guess things have gotten worse. Much worse.

Explaining how the city got itself into this fine mess is relatively straightforward. Here's how we summarized it in a recent cover story:

But health care is where things are really ugly. San Francisco's overall costs jumped by 147 percent over the past decade, and are expected to continue skyrocketing. That's about how it went in many cities. But not every city had the obscenely generous policy of awarding lifetime health coverage to any worker with a scant five years on the job. That munificence bit San Francisco on the bottom line -- and led to the looming $4 billion shortfall no one has figured out how to address. The city's $993 million spent on benefits this year does not include a single dollar toward that $4 billion gap between the projected costs of health care for future retirees and their families, and the money on hand to pay for it.

Calculating our shortfall, meanwhile, isn't so simple. The project, headed by Mercer Management, has been under way for months. According to the controller's office, it involves, in part, "tons of data sets that are reviewed and go back or forth and we may or may not challenge some of the assumptions. It's an iterative process."

The city has done away with its five-year fully vested health plan and taken steps to mandate recent and future hires contribute their future retiree health care costs. But tens of thousands of current and former employees are still on the city's books.

Within 10 days, we'll learn what that bill is.

Follow us on Twitter at @TheSnitchSF and @SFWeekly