California Cities Strained by Retiree Health: Muni Credit
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The Los Angeles Unified School District, the nation’s largest outside New York City, owes so much for retiree health care that paying off its debt would cost $17,500 for each student -- and there are 640,000 of them.
Local governments typically haven’t been punished by investors for underfunding retiree health care and insurance, unlike pensions. Investors believe that, in a pinch, the governments can walk away from the obligations, said Michael Ginestro, head of fixed-income research for Bel Air Investment Advisors LLC, which manages $2.8 billion in Los Angeles.