Harford County government wants to reserve another $8.3 million toward paying post-employment benefits, mainly health insurance, for future retirees.
County leaders hope such allocations will start dwindling, however, as employees who started working after July 1, 2010, do not receive the same level of other post-employment benefits, or OPEB, as those who retired before that date.
Legislation that would move $8,265,365 from unappropriated fund balances to the county's OPEB trust account is before the County Council. A public hearing was held on the bill held Feb. 10 and it can be voted on by the council at any time.
"It should be getting smaller," County Auditor Chrystal Brooks said about the amount being annually allocated to OPEB. "They do expect to see these numbers go down in the next couple of years."
Some retirees have a PEHP, or post-employment health plan, which county Treasurer Robert Sandlass said functions similar to a 401(k) pension account, in which money is put aside for the employee to buy health insurance post-retirement. That plan was set up after the county began restricting what it would pay for retirees with less than 20 years of service.
Union agreements set the current county contribution to the PEHP at 10 percent of the employee's annual salary, according to OPEB information in the county's most recent comprehensive annual financial report, which covers the 2014 fiscal year that ended June 30, 2014. The employee retiring under the PEHP becomes responsible for 100 percent of the premium of the county group policy.
Participating employees are also able to have the dollar amount of their use or lose annual leave placed in their PEHP accounts, according to the report.
Prior to the 2010-11 fiscal year, the county paid a subsidy for each retired employee for the same group medical, dental, vision and life insurance coverage they were entitled to receive, including family coverage, as active employees, according to the county's annual report.
That subsidy ranged from 75 percent for a 10-year employee to 90 percent for an employee with more than 25 years of service. Anyone who retired prior to 2010 remains in that pool. Anyone who retires since 2010 with 20 to 24 years of service is still eligible for the 85 percent subsidy or 90 percent for 25 years or more, according to the annual report.
The exception is Sheriff's Office personnel, who remain in the original retirement pool, regardless of years of service, according to the report, which also notes that those employees are eligible for a 90 percent subsidy for "in-line-of-duty retirements with a minimum of five years of service."
Funding for the latest OPEB allocation would come from the county's general, highways, parks and recreation, water and sewer and stormwater management funds for the current fiscal year.
The treasurer's office has already designated some funds for OPEB use, according to Brooks' fiscal impact note.
"Every year it is done as a supplemental appropriation," instead of through the budget process, the auditor explained.
The county's annual financial report states that in 2013-14, the OPEB trust reimbursed the county $4,609,256 for its share of retired employee benefits costs, with the retired employees contributing $823,000.
The net position of the trust fund at the end of the fiscal year was $79,663,641 according to the report, which indicates the county earned some $9.4 million from appreciation of the fund's investments. Using actuarial assumptions, however, the fund should hold about three times as much to account for accrued liabilities, according to the report.
There were approximately 1,786 employees, retired or active, eligible for some OPEB benefit, according to the annual report, including 1,154 active and 267 retired pre-Medicare age and 356 retired post-Medicare age.