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Town hears KMS Actuaries update on OPEB valuation; trust about 58% funded as of June 30, 2024
Summary
KMS Actuaries presented the town's GASB 74/75 actuarial valuation and funding analysis for other post-employment benefits (OPEB). The firm reported the OPEB trust held about $3.3 million against a liability of about $5.7 million on June 30, 2024, and recommended continuing prefunding to lower long‑term costs.
Linda Bornoval, owner and founder of KMS Actuaries, briefed the Board of Selectmen on the town’s other post-employment benefits (OPEB) valuation and what the results mean for budgeting and financial reporting.
Bornoval said the firm calculates future retiree health-care costs by modeling probabilities — when employees will retire, whether they will elect coverage and how long they will live — and then discounting those future costs to present value. She told the board the town’s last valuation snapshot, as of June 30, 2024, showed approximately $3.3 million in the OPEB trust and about $5.7 million in liabilities, a funded ratio near 58 percent.
The actuary explained that because the town prefunds benefits in an OPEB trust it may use a long-term investment return assumption — KMS has used 6.9 percent for several years — rather than the high-quality municipal bond rate that applies to purely pay-as-you-go arrangements. “One of the benefits of pre-funding to a trust is you get to use that long-term rate of return,” Bornoval said.
She told the board the trust’s investment return and the selection of assumptions such as health-care trend rates and longevity materially affect the liability estimate. Bornoval warned health insurance rate increases this year have been unusually high and would raise projected liabilities in the next valuation.
Town Administrator Lauren and board members asked about how Blackstone compares to other Massachusetts communities. Bornoval said PARAC-collected data show many municipalities have little or no OPEB funding and that Blackstone’s funded ratio is well above the statewide average.
The presentation included summary accounting impacts: a balance-sheet liability of about $2.4 million (net OPEB obligation) and a GASB expense of about $285,000 for the period cited. Bornoval described the three legal criteria that must be satisfied for a trust to be recognized (assets irrevocably set aside for postemployment benefits, legally protected from employer creditors, and used only to pay retiree benefits).
Board members thanked KMS for the briefing and noted the town’s multi-year prefunding approach contributes to what the actuary characterized as “generational equity” — spreading costs across current and future taxpayers rather than shifting them all to future budgets.
The selectmen had no action on the valuation that night but asked staff to circulate the KMS materials to finance and to include the report in the town’s financial‑statement process.
