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Committee recommends targeting income-tax revenue rules to reduce $11.2M OPEB liability
Summary
An actuary—s calculation placed the city—s Other Post-Employment Benefits (OPEB) liability at about $11.2 million; the committee recommends considering reallocating income-tax net revenue (currently 60% to pension) to reduce long-term liabilities and exploring one-time and recurring funding to fully fund OPEB.
Committee members reviewed an outside actuary—s summary stating the city—s OPEB (other post-employment benefits) unfunded liability at approximately $11.2 million in the most recent calculation cited. The committee discussed benefits of fully funding the trust: once fully funded, plan earnings could pay future retiree health costs and reduce annual budget pressure; presenters estimated potential annual savings on the order of several hundred thousand to about $1 million depending on assumptions.
The committee recommended revising the income-tax allocation language (currently requiring 60% of net revenue be used to reduce pension liability) to direct income-tax net revenue toward reducing long-term liabilities more broadly, which would permit using dedicated revenue to fund OPEB. Members also encouraged the city to identify annual or one-time funding opportunities to accelerate OPEB funding and to report back on the fiscal impact of such a change.
Next steps: staff to produce scenario analyses showing the budget impact of redirecting income-tax allocations to long-term-liability reduction, and to estimate annual savings if OPEB were fully funded.
