Tuesday, July 23, 2013

Update from the Select Board Chair, 7/22/13

The Longmeadow Select Board has begun its activities for the 2013-2014 year. I am honored to serve as Chair, and to work with Mark Gold, Paul Santaniello, Richard Foster, and Alex Grant.

I plan to regularly communicate with the readers in order to keep everyone abreast of the issues with which the Board is grappling. My hope is to keep our town well informed about the local issues we confront, and in turn I hope this leads to improved dialogue among all town residents.

During the Select Board meeting on July 15 the Audit Committee presented the independent auditor’s report for FY2012, and also presented an Other Post-employment Benefit (OPEB) Liability Study. Every year the Audit Committee tasks an outside auditor to review the books and systems employed by the Town of Longmeadow. The committee works with the auditor and town staff to complete the audit, present the report, and make recommended changes. Not every town has an Audit Committee and the Longmeadow Audit Committee is a valuable asset to the town.

The Audit Report praised not only the methods employed by the town, but also the Town Balance Sheet.  Our bond rating is the highest available to a municipality of our make- up. The report did note the town was running on the high end for unrestricted fund balance (free cash and stabilization funds).  However, the fund balances remain in an acceptable range. I would like to think these results demonstrate the hard work of our staff in keeping projects under budget and to successfully increase revenue. The Town Manager is tasked with monitoring the project estimates in the future.

The Auditor ended the report with a cautionary note on our unfunded OPEB liability. This is our obligation to pay for retiree health insurance costs.  Unlike other towns in our region, we still have a positive balance in our unrestricted net assets in regards to this obligation.  However, we will be in the red next year. The auditor praised our willingness to address the problem with establishment of a line item for OPEB obligations in the budget. We are ahead of most towns in Massachusetts in addressing the problem.  He stated it is unlikely that funding in the budget alone will cover the unfunded liability accumulated each year.

The auditor’s report was followed by an actuary’s report on our OPEB obligation. This study is a compliance requirement of the Governmental Accounting Standards Board.  The actuary indicated that the town will fall behind next year in funding the problem. He calculated our current obligation to be 38 million dollars. This report only accounts for current employees and assumes no increase in hiring.

The presenter stated this problem is shared by all towns and municipalities in Massachusetts and throughout the country. In his view we need to look not just at funding, but also at benefit and plan changes.  If changes do not occur we will not be able to pay for retiree health costs in the future without drastic reductions in other expenditures.  He did not project when we would not be able to fulfill our obligations. We are “paying as we go”, but the increase in numbers of retirees and increases in health insurance costs will keep mounting.

Obviously, our problem with OPEB liability is an issue the Select Board will be addressing repeatedly in the future. This is a complex issue that will require commitment and work on the local level as well as on Beacon Hill. Both the audit study and the OPEB study are available for your viewing on longmeadow.org.  Your comments and views on this matter are invaluable in helping to guide us.

Marie Angelides
Chair of Longmeadow Select Board