Health benefits are provided to retired City employees under terms adopted by voters and contained in the City Charter. These benefits, often referred to as Other Post-Employment Benefits (OPEB), are administered by the City’s Health Service System. In recent years, the voters have adopted a series of proposals designed to shift for payment of these benefits from a pay-as-you-go approach (where benefits are paid for as they used) to a prefunded model (where money is set-aside for them as the benefits are earned). Over time, the prefunded approach will ultimately reduce and stabilize the City’s OPEB costs. As required by governmental accounting standards, the City conducts an actuarial valuation every two years to measure the future cost of these earned benefits versus funds set-aside to pay for them.
RETIREE HEALTH BENEFITS ARE EXPECTED TO BE FULLY FUNDED BY 2043