Changes to retiree health care ease Duluth's financial pain

Duluth's financial problems are easing due to recent changes to the city's retiree health care plans.

Duluth's crushing obligation for retiree health care costs was once projected to push the city to possible bankruptcy.

By 2005, Duluth was short $279 million needed to pay for dozens of generous health plans for retired city workers.

But Duluth Mayor Don Ness says the city took several steps including a controversial move to force all its retirees into a single less-generous plan in January. Ness says a new actuarial study places the unfunded liability at $208 million -- down by one quarter.

"It's a very clear indication of the importance of the work that we've done to reform this system, to create a benefit that is more sustainable and does not put undue burden on the taxpayers and rate payers in Duluth," Ness said.

Ness says the liability is projected to grow for another 13 years before peaking. Newly hired city workers get a less generous health plan than retirees.