The measure, written by Sen. Mimi Walters, R-Irvine, would have applied only to state workers hired on or after Jan. 1, 2015.
Those future employees would have had to work 15 years to qualify for 50 percent of their retiree health-benefit costs and 25 years for 100 percent coverage. Currently the threshold is 10 years for half coverage and 20 years for full coverage.
Employees hired after the measure would have taken effect also would have had to share equally in prefunding the normal cost of their retiree health benefits. And the states would have been prohibited from providing their retiree health benefits unless they were fully funded.
Unlike its pension obligations, California doesn't save ahead for future retiree health costs. The pay-as-you go method will cost the state an estimated $1.81 billion this year. The state controller figures the debt on future benefits for current employees and retirees stands at $63.9 billion in current dollars.