New trust fund may not whack taxpayers as much as feared

A required trust fund to pay for post-employment benefits for municipal workers may not be as costly as officials originally thought.
When experts initially analyzed the future costs for medical care and life insurance payments for retired city workers, they figured it take a trust fund totaling about $113 million to meet the annual operating costs.
This past year, the city created the mandated trust fund and put a starting payment of $1.1 million into the investment account.
But the most recent financial report, received at the end of December, calls for a trust fund 30 percent smaller than experts initially estimated.
That means the city needs to have $77 million squirreled away – far less than actuarial professionals guessed only two years ago.
City Comptroller Glenn Klocko said he doesn’t know why the number is so much lower now. He plans on meeting with the experts who figured it next week.
A new governmental accounting standard called GASB 45 requires that municipalities and states at least begin to show how short of money they are to pay for expected future costs rather than simply ignoring them until the day of reckoning.
There’s a 30-year horizon for coming up with enough money, officials said, so taxpayers won’t feel the crunch all at once. There’s lots of time to build up the money in manageable increments, they said.
Klocko said, though, that coming up with $77 million is a lot easier than reaching $113 million.
He said the $77 million figure “is attainable and manageable.”
City leaders said said they expect the city to address the issue in much the same way that it deals with pension costs, through a trust fund that invests money in the hope of bringing in enough profit to cover future costs without making taxpayers cringe.
Bristol has one of the best-funded municipal pension funds in the country because it started 30 years ago to shovel extra money in a trust fund whose value soared with the rising stock market to such a degree that city taxpayers no longer need to pay anything into it at all.


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Copyright 2008. All rights reserved.
Contact Steve Collins at scollins@bristolpress.com