Tennessee is preparing for a new accounting rule that could mean an additional 200-million dollars added on to the state budget. The Governmental Accounting Standards Board issued a new rule that requires state and local governments to disclose the health care cost of future state retirees.
With many baby boomers preparing to retire, State Finance Commissioner Dave Goetz says Tennessee is facing what he calls a retirement bulge.
An actuarial study showed that the total health care cost of future retirees in Tennessee is three-billion dollars. Annually, it adds 200-million dollars on to the state’s budget. Goetz says that figure is large, but manageable.
“Right now, we’ve just taken this overall snapshot view. We’re looking at what our options are. We want to assure our retirees we are mindful of their needs and that we are coming up with a reasonable plan to address it. It’s not ready yet, we’re not required to have it ready, except that the bond rating agencies have said they want to know where we are.”
State officials, including Governor Phil Bredesen, just last week returned from meeting with the nation’s three credit rating agencies. They were anxious to hear about Tennessee’s plans because the retirement liability could affect the state’s ability to repay its debt.
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