WESTPORT, Conn. A plan to fund $8.2 million to the town's Other Post-Employment Benefits trust, known as OPEB, won't cost Westport taxpayers any additional money in taxes this year. But the same can't be said for next year, said Helen Garten, chairwoman of the Board of Finance.
Last Wednesday, the board backed a recommendation from First Selectman Gordon Joseloff to contribute $8.2 million to the trust. This amount is the annual required contribution, or the current year's share of the town's total unfunded OPEB liability of $75 million, which is to be paid over a 30-year period.
"There will be no impact on taxpayers this year in terms of additional taxes. They will continue to pay the bill they got in July," Garten said in a phone interview, explaining that about $6 million of the $8.2 million was factored into this year's budget.
"This [annual required contribution] includes current retiree costs, this year's, plus a slice of future costs. The current retiree costs are already in the budget. We also included $3 million as an unbudgeted contingent expenditure when we set the mill rate."
In order to fully fund the annual required contribution, the rest of the money $1.3 million will come out of the town's reserves. Next year, taxpayers will likely see higher bills, Garten said, in order to fund the annual required contribution.
The Other Post-Employment Benefits are health-care benefits outside of pensions that the town is obligated to pay employees upon retirement. The OPEB liability, calculated by actuaries, is based on a 7.5 percent discount rate, or return rate.
Hoping to reduce the town's liability, and thus, how much taxpayers have to pay in the future, the board discussed the possibility of funding beyond the $8.2 million this year, depending on how the reserves fair. Joseloff told the board he plans to seek $500,000 in savings in this year's budget to offset the money coming out of the reserves.
Joseloff said other short-term ways the town can shrink its OPEB liability is by imposing a hiring freeze on nonessential personnel and engaging consulting firms to find savings in the town's current medical plans.
In the long-term, Joseloff said the town may have to reduce benefits for new employees. "We can no longer afford to pay the promises we have made."
To contact Vanessa Inzitari, send an email to firstname.lastname@example.org .
Click here to sign up for Daily Voice's free daily emails and news alerts.