LA Should Reform Before Furloughing

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

Sunday, Los Angeles Mayor Eric Garcetti warned of employee furloughs to help meet an anticipated $600 million revenue shortfall. Before LA furloughs workers providing important services, the city should save up to $300 million per year by emulating the City of Glendale in reforming and means-testing a subsidy currently provided to retired employees. 

LA provides an unnecessary health insurance subsidy to all retired employees even if they have access to Medicare, Medicaid, the Affordable Care Act or a new state health insurance subsidy enacted into law last year. Known as “OPEB,” the subsidy costs LA more than $300 million per year:

In 2015, the City of Glendale enacted a reform that dramatically cut that city’s OPEB spending while protecting vulnerable retirees by making full use of Medicare and other programs and means-testing support provided by the city

Governments and school districts in California should reduce unnecessary costs before furloughing workers providing services to residents.

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