Yesterday, Los Angeles Mayor Eric Garcetti warned of employee furloughs to help meet an anticipated $600 million revenue shortfall. Before LA furloughs workers providing important services, the city should save up to $300 million per year by emulating the City of Glendale in reforming and means-testing a subsidy currently provided to retired employees.
LA provides an unnecessary health insurance subsidy to all retired employees even if they have access to Medicare, Medicaid, the Affordable Care Act or a new state health insurance subsidy enacted into law last year. Known as “OPEB,” the subsidy costs LA more than $300 million per year:
In 2015, the City of Glendale enacted a reform that dramatically cut that city’s OPEB spending while protecting vulnerable retirees by making full use of Medicare and other programs and means-testing support provided by the city.
Governments and school districts in California should reduce unnecessary costs before furloughing workers providing services to residents.