Los Angeles Unified School District Chooses to Prefund Retiree Health Benefits Through CalPERS
May 16, 2014
External Affairs Branch
Robert Udall Glazier, Deputy Executive Officer
Brad Pacheco, Chief, Office of Public Affairs
Contact: Fred Sater, Information Officer
SACRAMENTO, CA – The Los Angeles Unified School District (LAUSD) Board of Education approved its selection committee’s decision to award the contract to prefund health care obligations to their retirees to the California Public Employees' Retirement System (CalPERS). The contracting process and initial contribution of an estimated $80 million to CalPERS is expected to be completed by June 30, 2014.
The California Employers' Retiree Benefit Trust (CERBT) Fund, an optional program administered by CalPERS, helps employers to prefund Other Post-Employment Benefits (OPEB) such as medical, dental and vision care insurance for retirees. With more than 400 participating employers and total assets of $3.5 billion, CERBT is currently the largest OPEB trust fund in California.
If employers don’t prefund retiree health care costs, premiums must be paid out of operating expenses. CERBT participants contribute funds on a voluntary schedule. These funds are invested by CalPERS so returns can be used to pay premiums in the future, lowering costs for employers.
"The Los Angeles Unified School District, with its more than 100,000 employees, is a major addition to our CERBT program and demonstrates the increasing confidence public employers have with our ability to help prefund health benefits," said Anne Stausboll, Chief Executive Officer for CalPERS. "We are pleased that the district has recognized the importance to prefund retiree health and Other Post-Employment Benefits on behalf of their public employees."
In Fiscal Year 2012-13, employers contributed $370 million to the CERBT program, and as of June 30, 2013, assets under management were $2.7 billion. The Fund also provided $13 million in reimbursements for OPEB costs.
Read more about the CalPERS CERBT program.
CalPERS is the largest public pension fund in the U.S., with $291 billion in assets. CalPERS administers health and retirement benefits on behalf of 3,089 public school, local agency and State employers. There are nearly 1.7 million members in the CalPERS retirement system and more than 1.3 million in its health plans. For more information about CalPERS, visit www.calpers.ca.gov.