Brookline select board adopts policy to steer pension runoff toward retiree health costs

The Brookline Select Board voted Tuesday to adopt a revised unfunded liabilities policy that directs money freed when the town’s pension unfunded liability is fully paid toward reducing the town’s unfunded other post-employment benefits obligation and strengthening reserves. The board approved the measure unanimously. The policy clarifies that when the pension system’s outstanding unfunded liability is satisfied, the town will prioritize applying the resulting savings to OPEB — principally retiree health benefits — while preserving flexibility to place some funds in reserves. Lincoln Heinemann, the town’s finance director, told the board the current actuarial forecast shows a temporary spike in pension payments through fiscal 2030, then a steep drop that creates approximately $42 million in available funds across two fiscal years. Why it matters: Brookline’s OPEB liability — the town’s current estimate places the unfunded portion at roughly $200 million — is a multiyear obligation that competitors and credit agencies watch when assessing municipal fiscal health. Board members said they wanted a transparent marker now so future select boards would not redirect that runoff without conscious review. “If the vast majority of this runoff money from pension goes to OPEB, over time the OPEB outstanding unfunded liability would also be fully funded,” Heinemann said. Discussion and caveats: Select Board members and staff emphasized that the policy is not a legally binding commitment that future boards cannot change. Melissa Goff, deputy town administrator, said the policy language preserves the Select Board’s discretion and that final funding decisions will continue to be made as part of the annual budget and town-meeting process. Members also flagged the need for scenarios showing how different allocations (for example, more to reserves versus more to OPEB) would affect the town’s operating budget and capital plans. What happened next: Select Board member Michael Rubinstein moved adoption of the amended policy; the board voted aye, with no recorded dissent. Staff said the policy will be incorporated into the town’s multi-year financial forecast and highlighted that modeling and public explanation of alternatives will follow as the town approaches the projected pension payoff date. Looking ahead: Board members asked staff to prepare scenario analyses that show the fiscal tradeoffs (interest cost, operating flexibility, reserve levels) for different allocations of the pension runoff toward OPEB and reserves, and to include comparisons to peer communities’ approaches.