Page 11 of the Roadmap outlines the panel’s conception of where the state will get the money to pay off that $180 billion in pension and health benefit liabilities:
…because local health benefits costs are so high, even moderate reforms would result in huge local savings. If aggregated, these savings could permit a higher overall level of post-reform benefits and more equitable State/local allocation of benefit obligations at no additional cost to local taxpayers. In contrast, as illustrated in Table IX in the Implementation Issues section of this Report, a State-level-only reform would generate a need for over $1.5 billion in new revenue at the State level. Given the dire need, the extent to which State funds already play a significant role in funding local benefits, and the fact that local savings would not exist but for statutory and constitutional reforms intended to address the State-level crisis, the Commission believes that it is appropriate to dedicate these local savings to help close the State and local pension funding gaps. At the same time, the Commission is sensitive to the existing burdens on municipalities and believes that the local impact of this approach should be limited to aggregating local savings for use in funding the pension deficit. As a result, this reform would be cost-neutral to local governments.
So how much was the state thinking of offloading?
Page 22 estimates the number:
Funding of education retirement benefits has ballooned into a $2.5 billion annual obligation for local education pensions (if paid in full in 2016) and, absent reform, a projected $1.4 billion burden in 2016 for local education retiree health benefits. In addition, the $750 million annual obligation for local education employers’ contributions to Social Security is also paid by the State. The condition of local benefits is merely the flip side of the State subsidizing what otherwise would be a $4.6 billion annual local obligation.
Participant data from the latest pension actuarial reports shows a breakdown of public employees and retirees as of July 1, 2013:
The state wants to transfer that $4.6 billion it is supposed to be paying to cover the health benefits, pensions, and the employer portion of Social Security for about 243 thousand teachers with total active payroll of around $10 billion to local governments who are now paying for 363 thousand people with annual payroll of around $11 billion all with the expectation that it will only take “moderate reforms” to local health benefits to make it unnoticeable to property-tax payers.