Next Steps on OPEB

Given the many discussions and considerable progress we’ve made in the past several years on OPEB, it seems to me that we have three major remaining issues to address:

1. How should we effectively “undo” the excess contributions that were made?

2. Other than that, what more do we need to do to “restore trust” and develop a majority-supported game plan for moving forward?

3. What steps should we be taking to make OPEB less expensive?

On the first issue, I think the vast majority of citizens agree that we need to restart taxpayer funding of OPEB at a significant level at some point, but a majority that were at Annual Town Meeting decided that we should not contribute this year in order to help undo the excess contributions of the past.  Fine.  Hopefully our new OPEB Temporary Advisory Study Committee (“OTASC”?) will propose an approach that a majority can agree undoes the excess and gets us back on an appropriate funding schedule.

On the second issue, we need more clarity on what the real concerns are.  Yes there are many uncertainties, but my sense is that retiree health care is actually relatively “settled territory” at this point from a methodology, assumptions to use, accounting, legal, and administrative standpoint.   Most importantly, I believe we should commit to an overall game plan that is based on the principle of taxpayer funding each year at the amount our actuaries recommend (absent the “undo the excess” point noted above).  Pay what we owe - it’s that simple.   Anything less would be just pushing our costs onto future taxpayers.  On communication, the information that was included in Article 4 of the 2013 Annual Town Meeting Warrant was plenty detailed but seemed understandable.  What more, if anything, is needed?

On the third issue, we need to determine what flexibility we have to negotiate with our employees to reduce our OPEB costs.  Few non-government employers provide retiree health coverage anymore.  Most that do still provide it have significantly tightened eligibility criteria (e.g., only employees who have 15 years of service after the age of 40 qualify for the benefit).  We should be actively considering that and other cost-reduction actions.   (Likely this issue should belong to the Personnel Board and other bodies rather than the OTASC.)

The Board of Selectmen has established the OTASC with strong representation (some might argue overrepresentation) from residents who have been critical of positions that our town officials have taken on OPEB in the past.  It will be interesting to see what path forward the OTASC recommends given the many considerations involved.

Gordon Cliff

Highfields Road

(While I am a member of the Audit Committee, the views expressed in this letter are my own.)