Monday, December 12, 2005

The city of Duluth, Minnesota made a "doleful discovery"

As you may know we have hundreds of people on our CRAFT email list sending us great information. The letter below came from our friend Herm. I know that District 50's teachers contract call for medical insurance payments for our retired employees. On top of their outrageous pensions (don't forget to check out for their new pension calculator) it is hard to see why taxpayers are willing to give more to such a mismanaged and corrupt form of government in any community. We must no longer listen to teachers and administrators whine about their low pay because those retiring today are more than likely to earn millions in retirement at the same time you will be paying for their health insurance. Teachers and school boards have no qualms about using your children as political pawns while refusing to take responsibility for actually educating our children just to get more money with no regard to the financial crisis they are creating. Again thanks Herm.

*** The city of Duluth, Minnesota made a "doleful discovery" recently,
reports the New York Times. Apparently, the town had been promising
lifetime health care to all of the town's retired workers, their spouses
and their children up to 26.

Unfortunately, no one ever stopped to figure out how much that would cost
- until a few years ago. After months of data collecting, an actuary
finally came up with an estimate of how much it would cost to provide free
lifetime health care to this group.

The total bill? About $178 million, more than double the city's operating

"Duluth's doleful discovery is about to be repeated across the country,
continues the Times article. "Thousands of government bodies, including
states, cities, towns, school districts and water authorities, are in for
the same kind of shock in the next year or so. For years, governments have
been promising generous medical benefits to millions of schoolteachers,
firefighters and other employees when they retire, yet experts say that
virtually none of these governments have kept track of the mounting price
tag. The usual practice is to budget for health care a year at a time, and
to leave the rest for the future.

"Off the government balance sheets - out of sight and out of mind - those
obligations have been ballooning as health care costs have spiraled and as
the baby-boom generation has approached retirement. And now the accounting
rulemaker for the public sector, the Governmental Accounting Standards
Board, says it is time for every government to do what Duluth has done: to
come to grips with the total value of its promises, and to report it to
their taxpayers and bondholders."

More tomorrow.

In the meantime, you can check out our special report that details what
will happen after the "Boomer Bomb" is dropped. Find out how here:

Duluth: Ground Zero of the Fiscal Firestorm Ahead?

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