Hi 14° | Lo -10°

Council to vote on new member Wednesday

Will also consider retiree benefits

GREENFIELD — Town Council will most likely welcome a new member on Wednesday night, and then later that same night set up a trust in which the town will attempt to accumulate enough money over the next two or three decades to cover the cost of its growing liability for future retiree benefits.

The council will meet at Wednesday at 7 p.m. in the studio in Greenfield Community Television at 393 Main St.

The council’s first order of business will be to approve or reject President Mark Wisnewski’s choice of former At-large Councilor Alfred Siano to the Precinct 2 seat left vacant late last year by Keith Zaltzberg, who said he resigned for personal reasons.

If Siano is approved, one of the first votes he will take as a returning councilor will be whether to set up a trust with an initial deposit of $150,000 to eventually cover the cost of retiree benefits outside the annual operating budget.

The town has been discussing for several months how it will accumulate $74 million over the next 20 to 30 years to pay its former employees non-pension benefits.

According to a recent analysis, the town will need that amount by 2038 to cover those costs, the largest of which being health insurance for retirees and their spouses each year.

Marjorie Lane Kelly, the town’s finance director, said the town currently spends about $6 million a year covering benefits for both its active and retired employees and their spouse as per contracts with the town.

Kelly said Greenfield, like all government entities, has had the liability for many years, but since 2009, it has been required to report the liability on the town’s balance sheet. She said all cities and towns are being advised by the state to develop some sort of funding mechanism to anticipate the growing liability.

The proposal from Mayor William Martin is to establish a trust, which is what some other Massachusetts cities and towns are now doing.

The state suggests its municipalities look at future costs and establish an Other Post-Employment Benefits (OPEB) liability trust.

Kelly said the town has saved about $150,000 so far.

She explains that the liability has always existed and auditors and bond rating agencies knew that it did, but since 2007, municipalities have been required to contract for an annual actuarial study and since 2009 have been required to show the liability on their balance sheets.

To come up with a figure of $74 million, an actuary looked at every town employee in Greenfield, their ages, their current benefits, their life expectancy and when each might retire to determine how much it will cost the town from the time each employee retires through the remainder of their lives. The study looked ahead 30 years.

Kelly said not that long ago, the ratio of active to retired employees was 3 to 1, but now it is almost 1 to 1 and over the next five to 10 years could end up 1 to 3.

She said the town had about 600 employees, including part-time, and about 250 retirees not so long ago, but that is changing quickly due to consolidations and positions not being filled after retirements.

Kelly said that once the trust reaches the target figure, money would come out of it each year to fund retiree benefits, rather than the town including that amount in its operating budget each year.

You can reach Anita Fritz at: afritz@recorder.com or 413-772-0261, ext. 280.

There are no comments yet. Be the first!
Post a Comment

You must be registered to comment on stories. Click here to register.