CAO URGES $400 MILLION TRUST FUND JANSSEN: RETIREES; HEALTH CARE BIGGEST COST.

Byline: TROY ANDERSON Staff Writer

With his retirement as L.A. County's ``quarterback'' set for next month, Chief Administrative Officer David Janssen said Thursday the biggest challenges ahead involve the $1.6 billion deficit expected in the health department by 2010 and soaring retiree health care costs.

Janssen, who guided the nation's most powerful Board of Supervisors out of near-bankruptcy a decade ago and is leaving its fiscal house in much better shape, said county government has made great strides, including ``incredible successes'' in the child protective system and a $100 million plan to help the homeless.

But Janssen, 61, of Pasadena, who plans to retire to his former home in San Diego County on Jan. 15 after 34 years in government, said he is especially concerned about the county's estimated $9 billion liability to provide health care to its retirees.

In response, he has recommended his successor and the supervisors place a $400 million pension fund surplus into a trust fund to pay for retiree health care costs in the years ahead.

``It will be part of the proposed budget, if I have anything to do with putting it together,'' Janssen said.

Throughout the state, agencies are calculating their retiree health care liabilities -- expected to total hundreds of billions of dollars -- and will soon be grappling with how to meet the obligations.

Annual health costs for state and local government retirees are expected to hit at least $4.5 billion this year and could soar to almost $31.5 billion by 2019, according to a recent study by government consultant Steve Frates on behalf of the California HealthCare Foundation.

Supervisor Zev Yaroslavsky, who offered the ``quarterback'' label, said he likes Janssen's idea to use the pension surplus.

``It won't come out of the hide of any other program and it will help ensure the benefits will be funded,'' he said. The surplus pension earnings are the result of payments the county has made over the years to pay off $2.5 billion in 1994 pension bonds.

In the late 1990s, the county did not make contributions to the Los Angeles County Employees Retirement Association pension fund. But realizing that policy would ultimately leave the county with a $300 million gap, Janssen recommended it resume making contributions, which have grown from $300 million several years ago to $835 million this year.

The fund now has a $400 million pension surplus. And thanks to stock market gains in recent years, the fund has gone from being 83 percent funded in 2004 to 91 percent funded this year. The total has grown from $30 billion to $35 billion in that time, while the unfunded liability has dropped from $5.1 billion to $3.4 billion.

``We're doing very well,'' LACERA Chief Executive Officer Gregg Rademacher said. ``We have a very healthy retirement plan, are very well-funded and are in a superior position to meet the obligations of the plan into the future.''

Janssen also said he is concerned about the deficit the health department is facing in the future, noting that about 70 percent of the people who use public hospitals don't have insurance or funds to pay for their care -- and the department's revenues are not growing.

``That's why the department is consistently in the throes of fiscal disaster,'' he said.

troy.anderson(at)dailynews.com

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