(April 5, 2019) Plans to fund non-pension retirement benefits for Worcester County government and education employees over roughly 30 years were discussed during a March work session with the county commissioners and members of the budget office.
“Certainly, we do need an aggressive approach, and this is it,” said Commissioner Joseph Mitrecic during the March 19 work session.
Mitrecic has expressed his concerns with the county being approximately $350 million behind in funding retirement health care. Unless something is done to correct the situation, he said it could eventually bankrupt the county.
These particular benefits cover public employee sectors: the county employees and the board of education workers.
There’s medical prescription drug coverage, which has been provided by CareFirst since 2007, according to officials. There are 499 active county employees, and 330 retired personnel. The board of education has 961 active employees and 712 retirees.
Budget Officer Phil Thompson agreed with Mitrecic that it’s better to be safe than sorry.
“[There’s] a lot can change … we have some huge variables here that are components of this analysis, however we’d rather be overfunded or in a good position than get caught behind … and come up short,” Thompson said in an interview last Tuesday.
Thompson added the biggest issue his department faces is keeping up with the cost.
“The cost of health care is rising and … and we’re all struggling trying to keep pace with the cost of health care inflation,” Thompson said last Tuesday. I think many changes have been made at the county level in order to mitigate that.”
Some of those changes include 80/20 cost sharing for employees hired after July 1, 2015, having generic medicine options and cutting county-paid coverage for dependents of employees hired after Oct. 1, 2017, according to officials.
The general government “other” retirement fund shows an aggressive approach at first with estimated contributions of more than $5 million in fiscal year 2019, $3 million in fiscal year 2020, more than $3.2 million in fiscal year 2021 and more than $1.8 million in fiscal 2022. After which, the contributions level off.
The road to becoming financially solvent may take a little longer for the Board of Education’s side of things, with estimated contributions going until at least the fiscal year 2026.
Thompson also noted additional that current bills the county pays to its medical provider are built into the budget as pay-as-you-go funding, or “PAYGO.”
“Our goal is to phase this in over three years so it’s … as soft an impact as we can make it,” Thompson said last Tuesday. “Obviously, it’s a lot of money, and we can’t absorb that in any given fiscal year, but our goal is to ramp it up, if you will, over the next three years and then stabilize it.”
Fiscal year 2020 shows a $3.5 million PAYGO, which is divided between the funds for the general government and board of education. Thompson said the county would get $1 million and the board of education would have $2.5 million “hence the[m] being a larger liability.”
Thompson added another liability is that board of education employees “tend to retire about 10 years sooner than a county employee.”
Data shows this pay-as-you-go budgeted medical expense for general government would be 97 percent funded in fiscal year 2026, and fully funded in fiscal year 2034. The board of education is expected to take longer, being 18 percent funded in fiscal year 2026 and 92 percent funded in fiscal year 2028.
However, Thompson said he hopes those initiatives will pay off in the long-term.
“A lot of those changes that were enacted in the last few years are going to impact us in that 2030-2032 time frame and that’s where we’re really seeing the Board of Ed[ucation] turn around,” Thompson said last Tuesday.
“Hopefully, if we can develop something that’s sustainable, I think it’s going to serve all of the employees and the county well in the future,” Thompson said last Tuesday.
“This is the really an aggressive way to look at this,” Mitrecic replied. “It was what I was I truly was looking for, and I think that the plan is perfect,” Mitrecic said during the March 19 session.