Cheshire Selectmen Planning for Post-Employment Costs
CHESHIRE, Mass. — Every year during budget season, municipalities across the commonwealth discuss ways to increase funding of their other post-employment benefits.
OPEB refers to anything retirees are entitled to other than a pension. Mainly this account handles retiree health-care costs.
The Board of Selectmen took a look at the town's situation Tuesday night with help from Treasurer/Tax Collector Rebecca Herzog and the news, like many other Massachusetts towns, was not encouraging.
The selectmen are well aware of the situation but the solution is not an easy one. Cheshire has historically maintained a low property tax rate thus making it an attractive place to live for families as well as seniors looking to stay in their homes post retirement. The prospect of having to dump hundreds of thousands of dollars into a fund that has been neglected for so long is a daunting one.
When asked by Chairwoman Michelle Francesconi what the current balance was, Herzog was blunt.
"We have a pathetic $4,000. We started it in 2019 and we put in $2,000 a year. The beginning of the calendar year 2020, it was $4,234 and it's now down to $4,094.It has bounced back in the last couple months but as of 6/30 it was just over $4,000," she told the board. "We have to do something, we have to start looking at this seriously. It's an unfunded liability, it has a negative impact on our balance sheet ... we're not going to get anywhere with $2,000 a year with this."
Herzog said a big issue she sees is the town hasn't done a liability assessment as to what its future needs will be. Assessments are mostly done by outside firms that take several factors into account (current eligible employees, future eligible employees, actuarial tables, etc.) and provide towns with a figure to work toward. She said the cost for the assessment is in the $5,000 to $10,000 range.
Selectman Robert Ciskowski asked Herzog exactly what they may be looking at.
"We have roughly $4,000 put away," he said. "And we're not going to hold you to this, are we talking that we need $40,000?"
"You could put another zero to that at leastv...vplus. There are towns that have a million dollars. It has to be done," Herzog answered.
Cheshire has taken steps to reduce the amount of employees who would qualify for post-employment benefits by eliminating some elected and part-time positions but Herzog would like to see more measurable action.
"I'm concerned that your approach to cutting back on town employees ... I would rather see you take a different approach and just say, 'OK this is something that we have to do.' Let's figure out a way to fund it rather than figure out a way to cut people back. If we could come up with $20,000 [to fund it] and another $10,000 for the study that would be a good start."
The town of Cheshire is not unique. On average cities and towns' OPEB plans in Massachusetts are funded at around 6.5 percent. Meaning they have set aside just over 6 cents for each dollar needed to pay potential post-employment benefits for its retired employees. Massachusetts has always treated OPEB on a pay-as-you-go basis. Benefits are only paid when retirees become eligible to receive them.
What this means is that an employee who is set to retire in 2035 technically has no guarantee their benefits will be there. It will be up to the future taxpayer to fund that yearly expense. The taxpayer will therefore receive no services or benefits from the town for these taxes that go to pay these OPEB expenses.
Herzog estimates that the town currently has 10-12 employees who would qualify for these benefits. She concluded by explaining why these expenses are growing in both dollars and importance.
"You're looking at people thankfully living long, healthy lives now. People are retiring and living 20-30 years now. That's a long time. We really have to take that into consideration for future generations," she said.
Town Administrator Edmund St. John IV said he did add $15,000 into the line item for OPEB funding from free cash bringing the total to $20,000. The budget will be finalized within the next two weeks and the decision will ultimately rest with town meeting.
In other business, seniors and veterans may soon have a way to work off some of their property tax bills through a program being considered by the board. The idea was brought forward by residents Peter Traub and John Bianchi. Many Massachusetts towns give community members a way to lessen their tax burden by volunteering for the town while being compensated at the current minimum wage rate ($13.50).
Eligible candidates would have to fall below certain income requirements and would see their wages subtracted from their tax bills. The board discussed limiting the program to 10 people while capping earnings at $1,080. At the $13.50 wage, that would be a total of 80 hours.
Ultimately the program would have to be adopted at town meeting since it affects the budget but Selectman Jason Levesque liked what he heard in the early stages.
"It would be an opportunity to help people who need it the most," he said.
• Town Clerk Christine Emerson told the board she is ready for early in-person voting for the state primary being held on Tuesday, Sept. 1.
Hours will be:
- Saturday, Aug. 22, from 2-4 p.m.
- Sunday, Aug. 23, from 1-3 p.m.
- Tuesday, Aug. 25, through Thursday, Aug. 27, from 9 to 5.
Voting will take place in the town clerk's office and a mask is required for entry into the building.
• The Board of Selectmen will be holding a joint meeting with the Finance Committee Thursday at 6:30 p.m. to further discuss the fiscal 2021 budget. The next regular meeting of the Selectmen will be Tuesday, Aug. 25, at 6:30 p.m. and will be held virtually. Visit the town website for login details.
Tags: fiscal 2021, OPEB,
