Considering using OPEB money to fix budget goofs. Is that a good idea?

The following comes from the Massachusetts Municipal Association web page.

From The Beacon, Summer 2016

Several years ago, momentum was gathering on the issue of OPEB reform. A special commission had calculated that communities and state government are facing a combined unfunded liability of $46 billion to pay health insurance benefits for their retired employees, a staggering burden that is certainly unaffordable for taxpayers.
 
In 2014, general awareness of the issue was growing across the country, as taxpayers and elected officials began to recognize the heavy burden that “other post-employment benefits” (the non-pension benefits provided to retirees, consisting mainly of health insurance, commonly known as OPEB) will place on their budgets.
 
Unlike defined benefit pensions, which are funded using a tightly regulated model adopted by the state in 1988, retiree health benefits are funded on a pay-as-you-go basis. But because the cost of medical care is rising much faster than inflation or local revenues, pay-as-you-go is not sustainable. Unabated, the cost of retiree health insurance will consume a larger and larger share of municipal budgets and will push out spending on vital public services, including education, police and fire protection, road repairs and much more.
 
Unfortunately, efforts to address the looming crisis through legislation were derailed, as interest groups were able to insert measures that would have maintained the status quo for the next 15 years, deferring any meaningful savings until 2030 and beyond. In addition, the legislative draft would have stripped cities and towns of the only power they hold to control OPEB costs today, by preventing local officials from changing the employer-retiree premium contribution percentages. 

The MMA and local officials strongly support providing excellent health benefits for employees and retirees. This benefit offers essential security for public workers and their families, and is an important strategy in recruiting, retaining and rewarding a high-caliber workforce. But without reform, it is very likely that taxpayers will take aim at these benefits and eliminate them, as has happened in many states.


I believe it is time to let selectmen know that when they talk about using OPEB funds to cover their goofs, they would be once again telling a lie to residents/voters. Voters were told at the annual town meeting to they needed to transfer this money from selectmen office expense account to the OPEB fund so the Town could begin saving for these future health care costs.



posted by Jeff Bennett