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| Prefunding Healthcare: Arlington Establishes Trust To Satisfy GASB |
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MAY 2006 - Wellesley Approves First Payment Toward Schedule - In a move that foreshadows similar action throughout the Commonwealth in the not-to-distant future, Arlington has established a trust fund to pay future retiree healthcare costs. Arlington's action follows on the heels of similar action by Wellesley (see July '05 Voice).
Arlington's authority to create such a trust, which is called the OPEB (Other Post Employment Benefits) Trust Fund, is contained within legislation enacted at the close of last year, Chapter 161 of the Acts of '05. This law sought to address certain accounting standards (Statements 43 and 45) promulgated by the Governmental Accounting Standards Board (GASB) - standards that states and municipalities nationwide adhere to and essentially forces them to prefund their future retiree healthcare costs. "I believe Arlington succeeded in getting this critical legislation passed because of the effort put forth by Town Treasurer John Bilafer and others who recognized that our town had to act now on this issue," states Association member Joe Rosselli. "Under the new law, the funds deposited in the trust fund will be managed by the town's retirement board, on which I'm an elected member and John (Bilafer) is the chairman." According to Association Legislative Chairman Bill Hill, "Our healthcare funding bill (H4655, formerly H361) can be viewed as an omnibus version of what Wellesley and Arlington are doing in this area. It requires the state, and allows communities, to establish retiree healthcare trust funds." Editor's Note: At press time, the Healthcare Financing Committee has reported out favorably H 4655. It's anticipated that the bill will be sent to House Ways and Means. Heathcare Issues Before Wellesley Town Meeting Last year (July '05 Voice), we reported that Wellesley became the first community to commit to a funding schedule to pay for future retiree healthcare costs. Town officials proposed $600,000 to be appropriated towards the schedule. At press time, this proposal was approved at town meeting. Since these funds are contained in the overall budget, the approval is final. Also before the town meeting is a proposal to accept Section 18 of Chapter 32B, or so-called mandatory Medicare (see related story). "Wellesley joins the growing list of communities that will force their Medicare eligible retirees to enroll in the federal health insurance program," continued Hill. "We're not surprised to see towns, like Wellesley, mandating Medicare, to reduce their costs, including those under GASB. But, such a move should be done with some benefit to the retirees such as refunding to them a portion of their (Medicare) Part B premium." |
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