There has been considerable discussion over the past year concerning the cost and funding of obligations to retired and future retired employees for other post-employment benefits (OPEB). The cost of health insurance for retired employees is a substantial future liability for the state and towns, given the rising cost of health care and the number of employees who will retire in the next 20 years as baby boomers reach normal retirement age.
In Wayland, citizens have questioned the aggressiveness of our funding efforts in relation to our liability, contrasting that effort to the actions of the vast majority of other Massachusetts communities. Wayland is among the top five communities in terms of funding this significant obligation, both in terms of the percentage of liability and in actual dollars set aside. Voters have questioned the process for funding the OPEB liability, which has occurred since FY2008 through a combination of planned appropriations within the health insurance line-item in the annual operating budget and allocations fo available unexpended funds within this line-item at fiscal year end in FY2010 and FY2011. At the October 2012 Special Town Meeting, citizens approved a bylaw that requires all future appropriations to OPEB to be made by a separate article outside the omnibus budget (similar to large capital building projects) to assure that citizens understand and approve all future funding plans.
The Finance Committee and the Board of Selectmen will hear a presentation by Daniel Rhodes, a consulting actuary from The Segal Company. Mr. Rhodes will make an informational presentation to help town officials and the public gain a better understanding of the issues surrounding OPEB. The discussion will be held as part of the regular meeting of the Board of Selectmen on Monday, December 3 at 7pm at Wayland Town Building.
Here are some of the topics that will be covered:
- What is OPEB? What is the GASB standard and our obligation to fund OPEB?
- Define the terms commonly used in discussions of OPEB such as unfunded accrued actuarial liability, normal cost and other components of that liability.
- Explain the basis of past liability and techniques for funding that liability. What is the status of Wayland's fund in relation to liability? What is the long-term plan for funding and then expending the OPEB fund?
- What role does the Commonwealth play in the requirements of municipal governments to fund OPEB?
- What are some of the potential changes under consideration by the special state commission studying OPEB that may be enacted and how could those changes impact our long-term liaibility?
- What is the anticipated impact of changes in the marketplace, adjustments to plan design, and funding requirements that will impact our liability?
As part of the discussion, State Rep. Tom Conroy, a leading advocate for OPEB funding and understanding, will share his perspective and insights. A link to the website for the special state commission studying OPEB and potential changes is here: http://www.mass.gov/perac/
For additional information on OPEB, visit the link organizing all OPEB-related documents and information on the Town website: http://www.wayland.ma.us/
Press Release submitted by: Fred Turkington, Town Administrator