Keep in mind the City of Worcester OPEB liability is over $600 million.


From the Massachusetts Municipal Association



Town forms OPEB committee

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September 5, 2014

Andover this summer formed a six-member committee to refine its strategies for combatting a vexing long-term problem shared by cities and towns throughout the state: the steady rise in retiree health insurance and related costs.

Andover has been among the more active communities in dealing with the challenge, which over time may threaten municipal bond ratings as unfunded liabilities mount. The town’s OPEB (“other post-employment benefit”) Committee consists of two members each from the Board of Selectmen, the Finance Committee and the School Committee.

In 2008, the Governmental Accounting Standards Board began requiring cities and towns to disclose their OPEB liabilities, which consist primarily of retiree health insurance costs.

In Andover, the town’s projected OPEB costs in 2009 were estimated at $245 million, according to Town Manager Reginald “Buzz” Stapczynski.

But in the years that followed, the town took several steps, including making Medicare mandatory for everyone 65 or older and shifting roughly 400 retired teachers out of the state’s Group Insurance Commission and back into private insurance. As a result, by 2011 the town’s OPEB liability was reduced to $215 million, Stapczynski said.

Long-term trends, however, are challenging, and Stapczynski has recommended several steps. They include urging the Legislature to raise the threshold for part-time employees being eligible for benefits up to 30 hours per week, up from the current 20 hours per week; and encouraging all departments to explore means of providing services with fewer personnel.

Other recommended steps include a 27-year funding schedule that would increase OPEB funding by $100,000 per year.

“There’s an over-arching concern, and rightfully so, that this is a mounting obligation that could eat up a tremendous amount of our budget and take away money from service delivery,” said Selectman Alex Vispoli.

Written by MMA Associate Editor Mitch Evich