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Health Benefits Committee meets with selectmen to discuss unfunded liability

Date: 3/8/2010

March 8, 2010

By Courtney Llewellyn

Reminder Assistant Editor



WILBRAHAM - The Retiree Health Benefits Liability Committee (RHBLC) presented some information regarding the town's unfunded liability for current and future retirees to the Board of Selectmen at their March 2 meeting and also looked to the selectmen for what the committee's next steps should be.

The RHBLC, made up of Robert Boilard, John Broderick, Daniel Fitzgerald, Allan Johnson, Joseph Lawler and Charles Muse, started meeting in October 2009 following a Town Meeting in which voters declined to accept Massachusetts General Law Chapter 32B Section 18, which covers "Medicare extension plans; mandatory transfer of retirees."

The committee's mission is to investigate a reduction of the liability; investigate the management of the liability; and communicate their findings to the community.

As of Dec. 31, 2007, the unfunded liability for Wilbraham was estimated at $25.4 million. A new estimate will be available this May.

"We don't need the $25 million all at once," Muse explained. "Ideally, that money would be in a pot for future use."

There are no current requirements to fund the liability, but Muse said the committee strongly feels that the town needs to start putting some money aside for it in the future.

The RHBLC came up with a list of five steps to address the unfunded liability, the first of which - raising the retiree premium contributions - has already been done. The other steps are:

• Implement Section 18A of MGL Chapter 32B (which makes enrollment in Medicare optional rather than mandatory for current retirees but mandatory for future retirees)

• Consider premium increases and plan charges

• Establish a trust to hold monies, and

• Fund the trust from health plan related sources.

Adopting MGL Chapter 32B Section 18A would result in a $6 million to $7 million reduction in the unfunded liability.

Since the Hampden-Wilbraham Regional School Department has already adopted Section 18, if voters approve the adoption of Section 18A it would only affect town employees.

The trust, Muse explained, could be funded by an enterprise fund, by the Jan. 1 increase in retiree premiums (which already totals $70,000), by the Scantic Valley Regional Health Trust premium holidays and surplus returns and other opportunities.

"I see a clear direction with the steps to take," Selectman James Thompson said at the meeting.

The RHBLC want to see an article on the warrant for the Annual Town Meeting this spring that would ask voters to approve the adoption of MGL Chapter 32B Section 18A as well as the establishment of the trust.

Board of Selectmen Chair David Barry said the selectmen should have a decision about whether or not to support the motion and place the article on the warrant by their March 8 meeting.