How State and Local Governments Are Funding Retiree Health Obligations

New brief from the Center for State and Local Government Excellence

WASHINGTON, Sept. 10 /PRNewswire-USNewswire/ — A new issue brief from the Center for State and Local Government Excellence takes a hard look at the options state and local governments are pursuing to reduce their unfunded liabilities for retiree health care.

The brief, Prefunding Other Post Employment Benefits (OPEB) in State and Local Governments: Options and Early Evidence, cites examples of how governments are addressing their OPEB obligations:

• West Virginia, which has established a trust fund, also made changes in its health care benefit plan for retirees, and most recently, eliminated retiree health care subsidies for all employees hired after July 1, 2010.
• Montgomery County, Maryland, which developed a multi-year plan to arrive at full funding, including the establishment of a Section 115 trust and an independent board to manage the trust and its investment policies.
• Oakland County, Michigan, which began prefunding retiree health care liabilities in 1987 and more recently has issued OPEB bonds to help fund the County’s Section 501(c)(9) Voluntary Employees’ Beneficiary Association (VEBA).
• Gainesville, Florida, a city with a consistent history of paying in excess of its annual required contribution and that may be the first local government to complete its prefunding obligations through the sale of OPEB bonds in 2005.
  

Governments know that their retirement benefits have helped them attract and retain the talent they need. Most governments continue to fund their retiree health benefits on a “pay-as-you-go” basis even as they assess strategies to deal with escalating costs.

Read the full brief at http://tinyurl.com/prefundingOPEB.

About the Center for State and Local Government Excellence

The Center for State and Local Government Excellence helps state and local governments become knowledgeable and competitive employers so they can attract and retain a talented and committed workforce. The Center identifies best practices and conducts research on competitive employment practices, workforce development, pensions, retiree health security, and financial planning. The Center also brings state and local leaders together with respected researchers and features the latest demographic data on the aging workforce, research studies, and news on health care, recruitment, and succession planning on its Web site, www.slge.org.

SOURCE Center for State and Local Government Excellence