OCEAN CITY — The town of Ocean City pension plans are thriving and one sector is even funded at over 100%, resort officials learned this month.
During last Tuesday’s work session, Finance Director Chuck Bireley and Budget Director Jennie Knapp presented independent actuarial recommendations for contributions to the town’s two pension plans for fiscal year 2022. The town has two pension plans, one for general employees and a separate plan for public safety employees.
The Mayor and Council learned after the Pension Committee met in August, it was determined the annual contribution to the general employee pension plan should be $2.6 million, while the contribution to the public safety employee pension plan should be around $4.4 million. The combined $7 million contribution recommended is around $431,000 under what was budgeted.
More importantly, the Other Post-Employment Benefits (OPEB) plan will likely be funded at over 100% by the end of the fiscal year because the town is taking advantage of adopting the Medicare Advantage plan for retirees age 65 and over this year. The OPEB plan was funded at over 87% at the end of the last fiscal year and should be funded at over 100% by the end of the current fiscal year next June.
The result is no need for a contribution to the OPEB plan for the town this year. The OPEB contribution is actually $1.2 million under what was budgeted, according to Knapp.
“There is going to be a very significant savings in the OPEB plan,” she said. “There will be no contribution required. The plan will be over 100% funded. That plan was established in 2009 as a 30-year plan and it has reached 100% in 13 years.”
Councilman John Gehrig applauded the good news on the pension plan recommendations.
“That’s great news,” he said. “We’re at 87% in our pension plans. Next year, we’ll be at 100%.”
Knapp said the good news on the pension plans means the town’s fund balance, or rainy day fund, continues to grow.
“We’ll have over $28 million in fund balance,” she said. “I think you’re going to be extremely happy. We’re at 36% and what is required is 15%. This is by far the best year I’ve ever seen.”
Gehrig said the question remained should the town leave the $431,000 under what was budgeted or put it to some other use.
“When our fund balance continues to grow, that means we’re making money,” he said. “We have a 36% fund balance. Do we need to push for 38%? It doesn’t hurt to take that $431,000 out of fund balance. Do we take it out, or leave it in there?”
