Study examines local governments' responses to health-care costs, GASB 45.(News & Numbers)(Governmental Accounting Standards Boa

A new study looks at local governments' strategies for addressing health-care costs and their awareness of and response to Governmental Accounting Standards Board (GASB) Statement No. 45. The study, "Health and OPEB Funding Strategies: 2008 National Survey of Local Governments," from Cobalt Community Research, provides a snapshot of larger local governments balanced with the small local governments that make up more than 75 percent of local governments in the United States.

The research yields three main findings. First, few of the small local governments that responded to Cobalt's survey provide health care to their employees, and only a small percentage provide health care to retirees. This fact is not surprising because most governments with populations of fewer than 5,000 do not have many (or any) full-time employees. For larger local governments, about 90 percent of active employees have health-care coverage, and 50 percent of retirees are covered. Second, many local governments that provide health-care coverage have made changes to co-pays and deductibles, but additional cost-reduction strategies could help limit future expenses. Third, 74 percent of local governments that provide retiree health care are aware of the GASB 45 requirements, and 46 percent have already calculated their liabilities or are in the process of doing so. However, many governments have not made decisions about funding and effective tools for reducing and funding the future liability

The report explores specific strategies and expectations of future revenue, employment levels, and workforce structure. For example, the governments were asked about revenue levels next year, compared with this year. Of respondents, 47 percent said they expect revenues to stay the same. Only 16 percent expect revenues to decrease, and 22 percent expect revenues to increase. Key questions are broken down by population, type of local government, and region. The report is divided into seven sections: Characteristics of the Respondents; Annual Revenues and Expected Changes; Provision of Health Care to Active Employees; Provision of Health Care to Retirees; Addressing GASB; Health Care Strategies--Implemented and Planned; and Detailed Tables.

The survey was sent to a random sample of approximately 7,500 local governments in the United States. The study is based on the 1,534 responses received from counties, municipalities, townships, and special districts.

A summary report is available for free, and the detailed report is available for a fee from Cobalt's Web site at www.cobaltcommunityresearch.org. Cobalt Community Research is a nonprofit coalition that helps organizations with measuring and benchmarking.

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