How Big a Burden Are State and Local OPEB Benefits?

SLP#48

The brief’s key findings are:

  • State and local OPEB liabilities, largely retiree health, have received growing attention due to rising health costs and a change from cash to accrual accounting.
  • This analysis provides a comprehensive look at OPEBs in 2012-2013 at the state, county, city and school district levels.
  • The three key insights are:
    • aggregate unfunded OPEB liabilities are an estimated $862 billion – nearly two thirds of which is held at the local level;
    • these unfunded liabilities are equivalent to 28 percent of the unfunded liabilities of pensions (using the OPEB interest rate for pensions); and
    • while OPEB liabilities are large, several factors – such as  sponsors’ flexibility to scale back benefits – limit their potential drain on resources.