Town Transfers $6.5 Million Toward OPEB Liability
WETHERSFIELD - The Wethersfield Town Council has approved a motion to transfer $6.5 million--$3.8 million from the town’s self-insurance reserve fund and $2.75 million from the retiree reserve fund--into the Other Post-Employment Benefits (OPEB) Trust fund, the first step in what is anticipated to be a 30-year march toward meeting a $65.5 million liability.
The town is required by the Governmental Accounting Standards Board (GASB), a “private” and “independent” Financial Accounting Foundation-created regulating body that monitors private organization and state and local government adherence to financial standards, to assess the actual cost of retiree healthcare and other post-employment benefits and then meet that figure.
When Wethersfield did some digging to determine these costs back in 2009, the number it came to was $65.5 million. To make things more difficult, the OPEB did not have money coming in during the years before GASB 45, the law that requires the evaluation.
The initial goal was to reach the $65.5 million mark within a 10-year period, but the chances of that are looking doubtful, councilors said. So the deadline has been pushed back--the town is hoping to reach the objective over a 30-year stretch by budgeting a $200,000 addition to OPEB in 2014 and raising its increase by $200,000 in each of the following years.
For example, following 2014’s $200,000 allocation, $400,000 will be set aside for the following year, and then $600,000, etc.
The retiree reserve fund, where the aforementioned $2.75 million is coming from, runs on a yearly $2.6 million pay-as-you go allocation. The fund currently has $3,547,772, but will drop to $797,772 after the transfer. The Council expects that this will allow a period of three months, during which the fund has amounts in excess of annual operating costs.
The self-insurance fund, which currently has $5,836,875, will be reduced to $2,036,875 with the transfer of the $3.8 million into OPEB, leaving it with a three-month period in which the balance will exceed annual operating costs.