New trust fund for retiree benefits in Waterford means modest tax increases over time
Waterford – The town is establishing a trust fund to better fund liability for retiree benefits, which town officials say will be associated with small tax increases over time. The new trust fund accounts for a net increase of a little over $1 million in the 2015-16 Retirement Commission budget.
Board of Finance member John "Bill" Sheehan, who is also chairman of the commission, said working to better fund liability now will help the town stave off potential balloon payments in future years as remaining eligible employees retire and take advantage of the benefits option, which is being phased out.
The town has been covering the cost of retiree health benefits on a pay-as-you-go basis, paying out only the costs of benefits due on an annual basis, according to Finance Director Maryanna Stevens.
Stevens does not anticipate the town will fully fund liability, which she defined as the total expected cost of benefits both currently due and anticipated to be due in the future.
The commission has budgeted $482,000 in the 2015-16 year for benefits to retirees currently receiving them, and an additional roughly $1.2 million as a contribution to the new trust fund. The budgets for the commission and all other town departments still require Representative Town Meeting approval.
Sheehan said the net increase to the commission budget would translate into a tax increase of 0.3 mills, which amounts to a total annual tax increase of about $4.70 for owners of an average value home in Waterford. The average value of a home in Waterford is $157,500, according to Sheehan.
The Board of Education also pays a portion of health benefits for some of its retirees, according to Director of Finance and Operations Bob Sirpenski.
Stevens said town and school officials will have to discuss whether the Board of Education should contribute to the new fund.
In an informal survey of 14 Connecticut municipalities, Stevens found that most of those municipalities have a trust fund for post-employment benefits. Of those municipalities that have a fund, in most cases the Board of Education contributes to the fund, Stevens found.
t.townsend@theday.com
Twitter: @ConnecticuTess
Comment threads are monitored for 48 hours after publication and then closed.