OPEB stands for Other Post-Employment Benefits, not retirement. This mainly means health insurance. Let me explain how this works:
- Union negotiates with the City/Town to provide certain benefits in retirement.
- Actuaries then try to calculate how much this will cost the City/Town.
- City/Town puts money aside to fund this benefit.
- If they do not put enough money aside then it under-funded. Another way to look at it is to call it an “unfunded liability”.
So far so good…If not check out this video
As we have reported here previously GASB (Government Accounting Standards Board) is requiring state and local governments to recognize their net OPEB liabilities on the the face of their financial statements.
Now bond rating companies will have a better understanding of these OPEB costs and whether or not these are being funded adequately or not. These accounting changes will prevent OPEB liabilities from being hidden, which are estimated to be over $4 Trillion dollars by SEC Commissioner Dan Gallagher.
I am bringing this up today because of a column I saw written by the Telegram’s Susan Spencer:
“@telegramdotcom: Uxbridge schools, town move closer to budget solution http://t.co/bmfaeaagTx” ok, here’s the scoop after all.
— Susan Spencer (@SusanSpencerTG) July 29, 2014