The Charts from the 2015 Fiscal Year Independent Auditors report by Powers and Sullivan document the $1 Billion in Unfunded Liabilities promised to Retired Employees from the City of Quincy.
The Quincy Taxpayers Association Projection for the year ending June 30, 2017 has the City of Quincy Total OPEB and Pension Liability rising to at least $1.2 Billion, about 10 percent of the Fiscal Year 2016 Total Valuation of $12,019,197,110.
The components of the net pension liability of the participating member units at June 30, 2015 were as follows:
OTHER POSTEMPLOYMENT BENEFITS (OPEB)
The City implemented the provisions of GASB Statement 43, Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans, during 2014 and established its “Other Postemployment Benefit Trust Fund”. The City voted to begin pre-funding its OPEB liabilities through the use of this irrevocable trust. During 2015, Quincy College joined the Plymouth County OPEB Trust by transferring $1 million to the irrevocable trust.
Plan Description – The City of Quincy administers a single-employer defined benefit healthcare plan (“the Retiree Health Plan”). The plan provides lifetime healthcare, dental and life insurance for eligible retirees and their spouses through the City’s health insurance plan, which covers both active and retired members, including teachers. Chapter 32b of the MGL assigns authority to establish and amend benefit provisions of the plan. Benefit provisions are negotiated between the City and the unions representing City employees and are renegotiated each bargaining period. The Retiree Health Plan does not issue a publicly available financial report.
Funding Policy – The contribution requirements of plan members and the City are established and may be amended through collective bargaining. The required contribution is based on projected pay-as-you-go financing requirements. The City contributes 90 percent of the cost of current-year premiums for eligible retired plan members and their spouses. Plan members receiving benefits contribute the remaining 10 percent of their premium costs.
The Commonwealth of Massachusetts passed special legislation that has allowed the City to establish the Postemployment Benefit Trust Fund and to enable the City to raise taxes necessary to begin pre-funding its OPEB liabilities. During 2015, the City pre-funded future OPEB liabilities in the amount of $1,232,612 and the College has pre-funded future OPEB liabilities in the amount of $1,000,003. Annual OPEB Cost and Net OPEB Obligation – The City’s annual other postemployment benefit (OPEB) cost (expense) is calculated based on the annual required contribution of the employer (ARC), an amount actuarially determined in accordance with the parameters of GASB Statement 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed thirty years. The components of the City’s annual OPEB cost for the year, the amount actually contributed to the plan, and changes in the City’s net OPEB obligation are summarized in the following table:
|Annual required contribution||$45,202,662|
|Interest on net OPEB obligation||$4,473,622|
|Adjustments to annual required contribution||($3,922,973)|
|Annual OPEB cost (expense)||$45,753,311|
|Increase/(decrease) in net OPEB obligation||$30,378,929|
|Net OPEB obligation – beginning of year||$124,468,098|
|Net OPEB obligation – end of year||$154,847,027|