State's tab for retirees' health care is $58B Thursday, July 26, 2007 • BY DUNSTAN McNICHOL • Star-Ledger Staff The tab for the health insurance benefits New Jersey taxpayers have promised retired schoolteachers and government workers is about $58 billion, a seven-month analysis scheduled to be released today has concluded. Gov. Jon Corzine, speaking with reporters after a ceremony honoring Supreme Court Chief Justice Stuart Rabner in the Statehouse yesterday, confirmed the estimate, which was first reported in the New York Times yesterday. The new estimate is a refinement of an earlier rough calculation that put the tab at $78 billion, although Corzine took little comfort in the $20 billion drop. "It was a pretty serious poison at $80 (billion); it's still a pretty heavy body blow at $58 billion," he said. The state is required to calculate the long-term insurance cost and list it as an outstanding debt under new rules developed by the Governmental Accounting Standards Board. The health insurance tab is in addition to the $110 billion cost of pension benefits the state has promised to working and retired public employees and teachers. But unlike the pension debt, which is partially covered by an investment fund currently worth about $82 billion, the state has no money set aside to cover the health insurance costs. State officials had been making deposits into an account to cover health costs until 1994, but then-Gov. Christie Whitman discontinued that practice and used the $400 million that had been set aside to help balance her state budget. Since then, the state has paid for retirees' health insurance costs through the annual state budget. This year, the budget includes $1.5 billion for the post-retirement medical expenses, and the tab is expected to pass $2 billion by 2010. "It was a mistake in 1993 or '94 to do away with building up a fund and now we're under serious financial challenge in how we deal with unfunded pensions, unfunded health care and the mandates we are under," said Corzine. "It's not the only mistake we've made. We've made a number of financial errors over the years that have ended up putting the state really in an extraordinarily compromised financial position." Staff writer Josh Margolin contributed to this report. © 2007 The Star-Ledger. Used by NJ.com with permission.