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Quorum Report Daily Buzz

July 11, 2014      6:04 PM

Another crisis looms for budget writers

Health care for teacher retirees about to take a billion dollar hit

Lawmakers can expect to face an additional $875 million shortfall in the upcoming budget, the outcome of rising health care costs for retired teachers. And, to put a twist on a movie title, budget drafters will most certainly be looking at a Billion Dollar Baby in the state’s baseline budget. Much of that is due to the exodus of baby boomers from the teaching ranks who don’t yet qualify for Medicare. Add to that the $3 billion in estimated Medicaid costs lawmakers shunted to the supplemental budget, and a school finance trial with no clear resolution, and the baseline budget for next session looks far less flush.

Some may confuse last session’s actions to shore up the solvency of the Teacher Retirement System with the impending problems with TRS-Care, the 30-year-old ancillary program that provides tiered insurance coverage for retired teachers. Each has its own pot of money, along with TRS-Active Care for current teachers.

During a joint hearing of the House committees behind pensions and appropriations this week, TRS Executive Director Brian Guthrie and Legislative Budget Board analyst Pattie Featherstone explained how the health care fund was about to hit the equivalent of a financial wall, a problem the TRS board has staved off for a decade by adding funding stream after funding stream to the mix.

By Kimberly Reeves