Friday, February 22, 2013
By James Lomuscio
Westport’s actuarial firm Milliman gave town officials tonight a detailed overview of what to expect and how to prepare for pension and healthcare changes in the wake of the Patient Protection and Affordable Care Act, commonly called Obamacare, and an upcoming Government Accounting Standards Board (GASB) rule that will rattle the town’s balance sheet.
For two-and-half hours, Milliman’s Rebecca Sielman and William Thompson took about a dozen members of the Board of Finance, the Representative Town Meeting (RTM), the Board of Education, and a few members of the public though a maze of key provisions of the law and standards change.
These included recent activities in pension and OPEB (Other Post Employment Benefits) bargaining, GASB 68, Norwalk-based GASB’s accounting change effective in 2015, balance sheet changes and accrued liabilities. Healthcare and wellness initiatives to keep employee costs down were also covered.
“You’ve opened a lot of areas for further discussion, and I’m sure there will be more specific questions,” said First Selectman Gordon Joseloff at the end of the presentation in the Town Hall auditorium. It was televised live and streamed on the town website.
OPEB liabilities, estimated at $130 million over 30 years—a 500-pound gorilla for town boards and commissions since the town’s previous actuarial firm had erred in failing to count certain Board of Education members—took up a lion’s share of Sielman’s presentation.
She explained that because of GASB 68, the town’s liability will now move to its balance sheet as opposed to being merely a footnote in the the town’s certified annual financial report.
“You’ll be putting the unfunded liability on your balance sheet,” Sielman said. “The new balance sheet will show your net pension liability.”
Even the town’s teachers’ pensions, paid for by the state, will be calculated into the town’s balance sheet, she said.
Sielman admitted that GASB 68 will result in “more work, more cost and more confusion, but it’s an accounting standard to which you must comply.”
On the upside, she said, Westport is minimizing future OPEB liabilities by slowly moving its employees away from defined benefit plans to defined contributions plans.
She also noted that as long as the town continues to make its annual recommended contributions, it will “guarantee that you’re never going to run out of money” to fund the OPEB liability.
Overall on pension funding, Sielman said Westport’s conservative approach had left it better off compared to some of its Connecticut municipal counterparts.
Regarding healthcare, Thompson said that wellness programs, despite initial startup costs, will keep costs down, imperative since he feels that the Affordable Care Act will place the ultimate cost onus on the employer, not the employee.
“It’s going to give you results down the road,” he said.
Joseloff said he wanted to see the actuarial studies reviewed and discussed by town boards so that taxpayers can have a greater understanding of how their dollars are being spent.
“The more the taxpayers know about the costs, the better off we are because in the end, we’re going to pay for it,” Joseloff said.
Posted 02/22/13 at 04:39 AM