Duluth officials say they've reduced the projected shortfall in the city's health care plan by more than $30 million, but the funding gap over the long term is still an estimated $270 million. That is what the city will need to cover health benefits for its current and retired employees.
Duluth Finance Director Genie Stark says the city is carrying its weight for now, but won't be able to indefinitely.
"We are paying for the retiree claims every year, as they're incurred, and there will be a time some time in the future when it will become unaffordable for us to do that," says Stark. "There's going to be a lot more retirements in the next probably five to ten years, so sometime in there, I think it's going to become unmanageable. I just don't know when."
Officials say they reduced the deficit through new contracts with workers, and new prescription drug plans.
The legislature gave Duluth more investment options for a reserve fund to help the portfolio grow. The nearly $14 million fund is intended to pay health benefits when the city can't.