***Updated 12/21, via asterisk, to clarify what’s going on with the fiscal 2016.5 numbers in the narrative, and why these numbers are not in the chart. FYI, the post is probably also easier to read if you distinguish between plan retirees (who are participants and beneficiaries), beneficiaries (who may be retirees or spouses/dependents of retirees), and participants (who may be active employees, retirees, or beneficiaries who are neither).***
I don’t generally gush over DeKalb’s choices of consultants, but I believe EPI was worth every penny – both times – because of their plain talk about our financial situation and the state of city operations.
Too bad DeKalb didn’t take some important advice.
One of the harsh realities was and is the OPEB, which stands for Other Post-Employment Benefits. OPEB is a defined-benefit, comprehensive health insurance plan for City of DeKalb retirees who participate in a pension plan (i.e., full-timers who meet years-of-service requirements). Compared with the pension plans, OPEB is not very highly regulated. There’s no trust fund established, and since the city doesn’t have to pay more than a required annual contribution, it doesn’t. There are no reserves for the future.
This was the picture when EPI came on the scene in 2009:
• Depending on the retirement age of the labor contract/pay plan that applied, some city workers qualified for benefits as early as age 50.
• Employees did not contribute to the OPEB until retirement.
• OPEB covered the retiree for life.
• Some plans had spousal and/or dependent benefits.
• The city at that time was paying approximately 87% of the premium for each retiree.
• DeKalb’s contribution as sole employer of the plan came to about $1 million per year.
• The unfunded liability reported for fiscal 2008 was $29.4 million, which was more than the liability for any city pension fund at the time. Continue reading OPEB: DeKalb’s unfunded liability you’ve probably never heard of