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California cities strained by retiree health

Feb. 19 (Bloomberg) -- The Los Angeles Unified School District, the nation’s largest outside New York City, owes so much for retiree health care…

By James Nash and Edvard Pettersson | Updated on February 19, 2014

Feb. 19 (Bloomberg) — 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.

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