State and local governments have promised employees $205 billion in retiree health benefits that they haven’t set aside money to pay for, according to a report released today by the fiscally conservative Empire Center for Public Policy.

While pensions are funded through investment pools, public-sector employers in New York cover post-employment health-care benefits on a pay-as-you-go basis, the report said. A new accounting standard requires governments to calculate and disclose the long-term costs of keeping their promises of health care for all retirees.

For New York state, New York City, the largest local governments and school districts outside New York City and the largest public authorities, the unfunded liabilities total $165.3 billion, the Empire Center found. For all other local governments and school districts, the liabilities amount to an estimated $39.7 billion, the group estimated, for a total of $205 billion.

E.J. McMahon, director of the Empire Center, said he gets the sense that most governments aren’t thinking about or doing any long-term planning for these costs. The purpose of the report is to make them take the long view, he said…

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