SNOW HILL – Worcester County needs nearly $257 million to fully fund post-employment benefits for the next 30 years, according to a recent study.
On Tuesday, Finance Officer Phil Thompson presented the Worcester County Commissioners with the latest Other Post-Employment Benefits (OPEB) study. The biennial study measures the benefits the county provides — primarily retiree healthcare costs — and how they’re funded.
“It’s important to point out the overall liability has more than doubled since the original study took place back in 2006,” Thompson said.
Thompson explained that the county began setting aside OPEB funding 10 years ago. For several years, the county put aside the appropriate Annual Required Contribution (ARC). During fiscal years 2010-2014, however, the county reduced its level of OPEB funding in order to balance its budget amid a recession.
According to the latest study, the county’s ARC should be $25.4 million. That would provide the $4.7 million ARC required for benefits of county employees and the $20.7 million ARC needed to cover benefits of Worcester County Board of Education employees.
“This represents the amount that if fully funded would result in a trust that could pay the estimated expenses associated with this benefit into perpetuity,” Thompson wrote in a memorandum to the commissioners.
In spite of the annual contributions laid out in the study, the amount the county actually set aside for OPEB funding for the current fiscal year is $4 million. The board of education is not currently contributing to the fund, Thompson said.
The study shows that the county’s total liability, the amount it would take to provide benefits to retirees for the next 30 years, is just under $257 million. That number includes $75.4 million to cover benefits of county retirees and $181.5 million to cover benefits of board of education retirees.
Thompson said that based on current data, he estimated that the county would incur OPEB funding shortfalls within six to eight years unless systematic increases were implemented. While Tuesday’s presentation was only for informational purposes, he advised the commissioners to set up a work session to discuss the issue prior to next year’s budget work sessions.
“We’ve got to start doing something,” Commissioner Jim Bunting agreed.