ITEM FILE PHOTO
Saugus Town Hall.
BY BRIDGET TURCOTTE
SAUGUS — Town Meeting members voted unanimously on Monday to adopt a post-employment benefits liability trust fund.
“These are other post employment benefits, other than pension,” said Town Manager Scott Crabtree. “This is what deals with any cost to health insurance for a retired employee. Many may not know this, but the liability has been adding up.”
Crabtree said that in 2014, officials determined that the town needed $104 million for the fund.
“It’s quite a bit of money,” he said. “It’s not something that’s uncommon to other communities, and, quite frankly, across the country.”
Most Bay State communities are facing the same problem, he said. Many do not fund the liability at all, while others have just started to discuss it. Crabtree said one reason to establish the trust is to educate officials and residents about the liability.
“These are benefits that are paid for within our operating budget,” Crabtree said. “Eventually, what will happen is we’ll continue to have increased costs on those benefits.”
Town Meeting also transferred $150,000 to the trust. The money will come from the town’s available free cash. This year, the Department of Revenue certified $2.1 million in free cash, the highest amount in the town’s history.
“It’s sort of like opening a bank account for a small child and saying ‘OK, we’re going to put a little bit of money in here,” Crabtree said. “This is how you start to save.”
James Powers, an auditor with Wakefield-based Powers & Sullivan LLC, which completed an independent town audit, said the unfunded liability is an accounting and a funding issue.
“The governmental accounting standards boards, which set the rules for all governments in the nation, basically is changing its standards,” Powers said. “Basically saying this is how you need to account for the benefits you’ve promised to your employees either through an internal promise or through legislation.”
Powers said the town is required to fund the liability.
“This problem wasn’t created overnight and it will not be solved overnight,” Powers said. “It’s a long-term solution to a long-term problem.”
Bridget Turcotte can be reached at [email protected]. Follow her on Twitter @BridgetTurcotte
