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  • The Budget Crisis Associated with State and Local Employee Health Care Costs

    State and local governments are facing an upcoming budgeting crisis associated with the health care costs they are required to provide for current and retired workers. As this paper illustrates, the State of New York and many of the larger localities in New York State have a large unfunded liability for health care costs for employees and retirees. The latest financial statements for the state of New York, as provided by the Office of the New York State Comptroller, illustrate that New York State has an unfunded health care liability of $56.9 billion.1 The liability includes $46.3 billion for New York State governmental activities and approximately $10.6 billion for university-related employees. New York State has no funding in place for this liability. This paper illustrates that many local governments in New York State also have a significant health care liability that they must pay in the future. The situation is extremely complicated since the governmental budgeting process under which the local governments operate has no provision to allow them to collect funds to pay for the future health care liability.

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