The city of San Diego has a $1.09 billion deficit in retiree health care, according to the latest actuarial study of the city’s long-term cost.
The new figure — which is taken from a snapshot of the cost on June 30, 2006 — represents a mild improvement from the $1.4 billion estimate that was released a year ago.
The $1.09 billion figure is the amount the city owes as long as it maintains a pay-as-you-go system in which it only pays its annual costs and doesn’t account for future expenses. If the city establishes a trust fund to accumulate the money needed to pay future and current retirees’ benefits — and earns 8 percent each year on its investments — the bill is reduced to $668 million.
Mayor Jerry Sanders forecasts that the city can begin amortizing the debt within five years. In the meantime, Sanders has proposed paying $25 million into the fund in the next fiscal year, $50 million in 2009 and $75 million in 2010.