Multi-City Look at OPEB Funding
As touched upon by our Brief this week the Pew Center for the States looked at the funding of retiree health care in 61 cities. The data, which reflects fiscal year 2009, shows how much money the city is required to put in (ARC), how much they actually put in, the total liability, and the percentage at which the other post-employment benefits (OPEB) are funded.
Let’s start with the last point first. It was only a few years ago that cities were required by accounting standards to begin showing an actuarial statement on OPEB, and there is no requirement to pre-fund or set aside assets for OPEB the way things are done for pensions. That’s why only 23 cities of the 61 showed a greater than zero balance in terms of percent funded. Los Angeles was the highest at 55% and Denver was close behind at 51%.
Total liability ranged from a high of $73 billion in New York City to $3 million in Cheyenne. Eighteen other cities besides New York had OPEB liabilities of $1 billion or more.
Several cities-including Charlotte, Little Rock, Phoenix, and Virginia Beach-paid in more than 100% of what was required under the terms of the annual required contribution.
One city that was not included in the measurement? Our very own Pittsburgh, PA. It takes OPEB measurements every other even year (2008, 2010, 2012); in 2008 its total (unfunded, as there are no assets set aside) liability was $359 million and by 2010 it had climbed to $488 million. In 2009 it was required to pay in $29 million but put in 70% of that ($20 million).