Actuary: East Hampton's net OPEB liability about $24.3 million; auditors will include GASB 75 figures

An actuarial valuation required for the village's financial statements showed a net other postemployment benefits (OPEB) liability of roughly $24.3 million, according to Joseph Duda of Duda Actuarial Consulting, who presented the GASB 75 report to the East Hampton Village Board on Jan. 24.

"The net OPEB liability comes out to about 24,300,000," Duda said, noting the valuation covered 87 active employees and 62 retirees (149 participants total) as of July 31, 2024. He said the figure rose from about $21.3 million in the prior valuation, primarily because medical premiums increased significantly for retirees.

Duda summarized key actuarial assumptions used in the valuation: a starting medical-inflation assumption of 6.5% in year one, tapering by 0.5 percentage points per year to an ultimate 5%; post-65 Medicare-related medical-inflation at 4.5%; and a discount rate of 3.93% tied to municipal bond indices. He also presented sensitivity: at a 2.93% discount rate the net liability increases to about $27.7 million, while at 4.93% it falls to roughly $21.5 million. Duda said a 1-percentage-point change in medical inflation could move liabilities by several million dollars.

As an illustrative funding exercise, Duda explained that if the village were to prefund the benefit (noting New York State law limits direct funding choices), the actuarially determined contribution and amortization of unfunded liability could produce an approximate annual funding cost of about $1.8 million (including normal cost and amortization).

Duda emphasized that GASB 75 calculations are required for the village's audit. Village auditors have the figures needed for financial statements, and Duda said the audit is nearly complete. The board did not take further fiscal action at the meeting; the presentation provides updated liabilities and assumptions for trustees and auditors to consider in budget planning.