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Funding policy aims to decrease Sutton’s OPEB liability
Funding policy aims to decrease Sutton’s OPEB liability

By Robert Fucci

In an attempt to try and lower the town’s liability for Other Post Employment Benefits (OPEB), Town Administrator Jim Smith presented the Board of Selectmen with a draft funding policy that includes using profits from the cell tower on Town Farm Road.

According to Smith, Sutton currently funds $100,000 in the budget for OPEB. The draft policy suggests a few other funding sources to help bring down the liability, which is over $13 million.

“We would commit 100 percent of revenue that we receive from the cell town on Town Farm Road,” Smith said. “We would also appropriate any overlay surplus exceeding $50,000 as determined by the town accountant and a vote of the Board of Assessors.”

Once the town pays off its unfunded liability for the pension system with Worcester Regional Retirement System, it will then look to appropriate these funds to OPEB liability.

“We will continue to monitor the OPEB liability and try to lower the liability through healthcare plan design changes, as well as continuing to put money in the trust fund,” Smith said. “We can try to fund it completely, but we’re facing an uphill battle. We have talked about adding $5 per employee per pay period from union employees to fund OPEB. Anything we can do to reduce liability is a good thing.”

On Jan. 3, 2012, the Town of Sutton, acting through the Board of Selectmen, created the Town of Sutton OPEB Trust. This irrevocable trust began appropriating money into this trust.

The current balance in the trust fund is $750,000, Smith said.

“This policy being proposed is really just a minimal uptick from what we’re doing today to try and work on the funding,” Selectman David Hall said. “It’s not binding to this Board. I think these are reasonable things to do.”

The OPEB funding policy also includes:

Sutton will annually appropriate a minimum of $100,000 and appropriate an amount deemed appropriate for the sewer enterprise fund and the transfer station enterprise fund.

Sutton will annually appropriate at Fall Annual Town Meeting overlay surplus exceeding $50,000 as of the end of the previous fiscal year, as determined by the town accountant and released by a vote of the Board of Assessors.

Sutton will appropriate an amount equal to the past service cost (unfunded liability) associated with the Worcester Regional Retirement System (WRRS), beginning in the year that the town’s past service cost portion of its annual assessment is satisfied.

As of 2015, the WRRS should be fully funded by 2033.

A motion to approve the OPEB funding policy passed by a 5-0 vote.

Town of Sutton  4 Uxbridge Rd., Sutton, MA 01590
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