OPEB – we owe almost $43m


The Town of Medfield just got a new actuarial report on its Other Post-Employment Benefits (OPEB) liabilities (copy attached).  OPEB is mainly for future health insurance costs for current and retired town employees, but also includes unfunded pensions for those same individuals.

GASB recently required that municipalities include actuarial numbers for their future OPEB obligations as part of their financial reporting, and municipalities have mainly all shared huge unfunded debts for these future OPEB costs.  Wellesley is one exception, which has fully funded its OPEB.

The whole actuarial report, which shows a ca. $43m. liability for the Town of Medfield, is available here:

20131007-Stone Consulting-OPEB Actuarial Valuation-Final Report

These are a few of the pages that summarize the report:

Pages from 20131007-Stone Consulting-OPEB Actuarial Valuation-Final Report-2_Page_1Pages from 20131007-Stone Consulting-OPEB Actuarial Valuation-Final Report-2_Page_2Pages from 20131007-Stone Consulting-OPEB Actuarial Valuation-Final Report-2_Page_3

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4 responses to “OPEB – we owe almost $43m

  1. Stephen D Callahan

    Hi Pete, Thank you for sharing this information and the report. There is one recommendation included in report regarding adopting and implementing a funding policy. (see below). Can you share any past practices the town has adopted regarding the issue of only partially funding the liability? Is there a formal policy that has been implemented? What has been the warrant committees perspective on this issue?

    “Funding Policy: As previously discussed, the funding policy is critical to the valuation not only because it impacts the funds backing the liability but also because it impacts the discount rate that is used to calculate all of the relevant figures. Medfield needs to bear in mind that it is the formulation of a funding policy that is essential, not simply the contribution of funds. Of
    course, if a funding policy is developed, it needs to be implemented, not just formulated. Thus, we recommend that the Town maintain a written funding policy that it reviews each year. This is especially the case now that Medfield is partially funding its liability.”

    Best,

    Steve Callahan

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    • Selectman Osler "Pete" Peterson

      Steve,
      To my knowledge the town has not in the past adopted a funding policy, which leads me to believe that adopting a funding policy is a new recommendation. I will follow up to make sure.

      The Warrant Committee and the Board of Selectmen have supported the town making both annual and annually larger contributions to the OPEB trust. From memory, the town started maybe four years ago funding OPEB around the ca. $300,000 level and increased from there.
      Pete

      Like

    • Selectman Osler "Pete" Peterson

      Steve,
      I did follow up on this issue, and the answer from Mike Sullivan is that creating such a policy is in the works (a copy of the email appears below) –

      Pete, I believe Gus has it scheduled for discussion at the next meeting of the OPEB Trustees. Mike

      On Sat, Oct 14, 2017 at 3:51 PM, Osler L. Peterson wrote:

      Mike,

      Has the town adopted an OPEB funding policy?

      Like

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