Finance committee says OPEB trust is more than fully funded; accepts report

The Town of Indian River Shores finance committee accepted a staff report showing the town's Other Post Employment Benefits (OPEB) trust is more than fully funded and able to cover retiree health obligations, a staff member told the committee.

Heather, a finance staff member, presented the annual OPEB analysis and said, "As of 09/30/2025, the total OPEB liability is $1,200,000 and the net position is 2.7 ... which means we are 217% funded." She said that produces a net asset of about $1,400,000.

The report identified four main drivers behind the improvement: a retiree buyout that closed a roughly $180,000-$200,000 liability (the buyout cost about $65,000, producing an approximate $125,000 savings); investment performance that returned roughly 9% compared with a 6% projection (about $87,000 in additional earnings); downward healthcare-cost trends from federal actuarial sources; and several employees delaying retirement.

Under the town's funding policy (identified in the presentation as Resolution 24), staff said the town contributes additional funds only if the funded ratio falls below 90% and stops adding funds above 110%. "Since we're 217% funded, we are not going to be adding any money to the pension trust fund," Heather said, adding that the trust will pay retiree implicit and explicit costs and buyouts.

Heather listed the assumptions used in the actuarial work: a discount/investment return rate of roughly 6.04%, inflation near 2.5%, salary growth around 5% (based on historical trends), and healthcare-cost trends taken from the Centers for Medicare and Medicaid Services' actuarial reports (initially about 5.2% declining toward about 4.1 over 10 years). She said the assumptions and supporting data are auditable and that a second staff reviewer verified ages, membership and formulas.

On sensitivity testing, Heather said the trust remains solid under moderate shocks: "Even if interest rates go down by 1%, we still have a $1,300,000 asset," and similarly if healthcare costs rise 1% the trust still shows roughly $1.3 million in net assets, the presentation said.

Committee members asked about investment management and oversight. Heather said the assets are invested through the Florida League of Cities Municipal Investment Trust on a roughly 70/30 equity-to-fixed-income allocation; the League manages investments and provides quarterly reporting and oversight via its investment board. A committee member asked who monitors the managers; Heather said the League and an external advisor/monitor perform that role and that she can supply the monitor's name later.

After questions, the committee moved to accept the OPEB report. The motion was seconded and members voiced "Aye," and the committee approved acceptance of the report.

Heather asked members to provide availability in February and early March so staff can schedule presentation of the town's financial statements with Christine; she also said the audit committee selection process will begin with council ratification in April and that the budget presentation typically happens in late May. With no further business, the chair called for public comment (none) and adjourned the meeting.

What the committee did not do: no additional town funds were authorized for the OPEB trust, and no policy change was proposed; staff said they will continue to monitor assumptions, demographics and performance and return with audited financial statements and recommended audit-committee appointments.