OPEB Trust Fund
Other Post-Employment Benefits (or OPEB) are benefits (other than pensions) that U.S. state and local governments provide to their retired employees. These benefits, in the Town of Provincetown, include health care and life insurance.
It has become evident, with the rising costs of healthcare, that future expenses for other post-employment benefits will increase significantly as the years go on. For that reason: the Provincetown Finance Committee, in an effort to ensure financial stability of the town, recommended the following motion to Town Meeting on October 21, 2013:
"Beginning in Fiscal Year 2015, funding for the town’s OPEB Trust Fund will become a part of the operating budget and the long term goal will be to fully fund the outstanding OPEB liability over 25 years."
The motion passed, and the Town appropriated $440,752.00 to establish the course of fully-funding the town's OPEB liability. We have continued this funding schedule ever since, and included additional funding from "free cash" in fiscal year 2019:
- FY2014 Contribution: $440,752.00
- FY2015 Contribution: $500,000.00
- FY2016 Contribution: $512,500.00
- FY2017 Contribution: $525,313.00
- FY2018 Contribution: $538,446.00
- FY2019 Contribution: $777,532.00 ($225,625.00 Additional Contribution Made)
- FY2020 Contribution: $565,704.00
To date, the town has contributed $3,860,247.00 to the Other Post-Employment Benefits Trust Fund. We will contribute an additional $579,847.00 in fiscal year 2021. Retaining the OPEB contribution within the town budget ensures that taxpayers will not see extreme increases in their tax bill related to other post-employment benefits. A structured and gradually increasing contribution over a period of time, coupled with investment earnings, should provide a self-sustaining (or closely self-sustaining) funding source for these future expenses.
The total OPEB Liability of the Town as calculated for June 30, 2018 is $21,414,928.00.
The balance of the OPEB Trust Fund, as of September 30, 2019, is $4,789,603.03.
Provincetown's OPEB liability is continuously recalculated based on the most recently available data:
The Provincetown OPEB Trust Committee is a joint team of taxpayers, elected officials, and town staff. Its functions include but are not limited to keeping a watchful eye on the town's OPEB liability, ensuring consistent funding of the trust, and reviewing the fund's investments (which are currently managed by the Pension Reserves Investment Management Board, a division of the Commonwealth of Massachusetts).