California Isn’t Colorado

David Crane
Lecturer and Research Scholar at Stanford University and President of Govern for California

Recently California joined with Colorado in asking the federal government for more COVID-related financial support for states but the two states have very different needs for the money.

California spends $120 per resident — nearly $5 billion per year — on insurance subsidies for retired state employees (known as “OPEB”) while Colorado spends only $5 per resident. Worse, California borrows about half its cost. Just the half that’s paid for in cash consumes 10 percent of discretionary General Fund spending.

California’s subsidy is extravagant. California covers the entire cost for retirees while Colorado caps support at $115 per month for Medicare-eligible retirees and $230 per month for retirees not eligible for Medicare.

Public colleges and universities and many cities and school districts practice the same extravagance. The City of San Francisco and San Francisco Unified School District spend $230 per resident and $650 per student on OPEB subsidies. SFUSD alone spends more on OPEB than does the entire State of Colorado.

There’s no reason California and its subsidiaries should be spending many times more than Colorado on OPEB subsidies. The state should address that spending immediately — and especially before proposing cuts in services, furloughs, layoffs or borrowings in response to COVID-related revenue declines.

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