In my last column I discussed the two retirement plans that impact the general government of Waterford. Today I will discuss one other retirement benefit that impacts the town: Other Post Employment Benefits (OPEB).

For Waterford, OPEB is the funding of health care for eligible retired employees and their dependents. These health care benefits arose through early retirement incentives that were used to reduce the number of town employees in the 1990s and negotiated union contracts with teachers over the years.

As of July 1, 2014, there were 211 retires and beneficiaries actually receiving benefits and an additional 593 active plan members for a total of 804 with the potential of receiving healthcare through OPEB.

At a recent meeting of the Waterford Retirement Commission, the Actuarial Valuation Report for July 1, 2016, was reviewed. According to that report there are a total of 117 retirees and 411 active participants for a total of 528 with a potential of receiving healthcare through OPEB.

The Government Accounting Standards Board (GASB) issued a statement adopted by Waterford during the year that ended June 30, 2008. Following this statement, Waterford recognizes the OPEB cost in the year when the employee services are received, reports the accumulated liability from prior years, and provides information useful in assessing potential demands on the town’s future cash flow. Recognition of the liability accumulated from prior years will be phased in over 30 years commencing with the 2008 liability.

Although the liability was reported in the annual audit, the town took no further action until FY2015 when an OPEB trust fund was established by the Representative Town Meeting at the request of the Board of Finance and the Board of Selectmen on Dec. 1, 2014. At that time the Unfunded Accrued Liability was $27,244,800 based on the July 1, 2014 Actuarial Valuation.

The total obligation was $11,660,300 on June 30, 2014. By June 30, 2016, it had increased to $15,274,000 and the annual OPEB cost was $2,497,200.

According to the July 2016 report just received, the unfunded liability is $22,529,955 and the employer contribution should be $2,482,243. The projected benefit payment for FY2019, according to the OPEB report is $1,470,581. This means that the recommended contribution to the OPEB fund for FY2019 is $1,011,662.

During FY2016 budget deliberations, the Retirement Commission recommended an initial contribution of $2,000,000. By the end of the budget process, this contribution was reduced to $1,160,000.

While the town does not have to fund the liability, not doing so would increase the liability and possibly have an adverse effect on the town’s bond rating.

The initial contribution to the OPEB fund on Feb. 1, 2017, was $1,160,000 (FY2016). A second contribution of $1,154,844 (FY2017) was made on June 22, 2017 and third contribution of $1,155,809 (FY2018) was made on Nov. 1, 2017.

At its most recent meeting, the Waterford Retirement Commission requested the FY2019 contribution remain at the $1,160,000 level.

John W. “Bill” Sheehan is a former Democratic Town Committee chair in Waterford.