Local Governments Should Pay For Any Benefits Promised To Government Workers

MacIver News Service | September 21, 2015

[Madison, Wisc…] Republican lawmakers want local units of government to stop promising post retirement health insurance benefits to their employees unless they can budget for it in advance.

Senator Leah Vukmir (R-Wauwautosa) and Representative Jeremy Thiesfeldt (R-Fond du Lac) presented SB 213, the Responsible Retirement Budgeting bill, to the Committee on Elections and Local Government at a four-hour public hearing on Wednesday. They said the current system of funding “Other Post Employment Benefits,” or OPEB, involves making promises today and passing the problem of funding it to future public officials.

“In order to make the change so that the system is not bound to fail, it is important for us to allow for this transition to actuarial funding as opposed to the pay as you go funding that we have now,” Thiesfeldt stated.

Thiesfeldt explained locals could still offer the benefit, as long as they set money aside for it first.

“The money’s got to be there. If you’re going to invest it, it’s going to have to be the lowest risk investment out there,” he said.

According to Thiesfeldt, this is a growing problem for some local governments.

“My home community, the City of Fond du Lac, uses the pay-as-you-go method. The city’s Comprehensive Annual Financial Report for 2014 shows a growing unfunded net obligation for its “sick time conversion benefit” of nearly $2 million in liabilities.  This liability has doubled since 2009.”

Net OPEB Obligations 2014 Thiesfeldt.png (Homepage Featured Large)

Thiesfeldt said he’s introduced similar bills in previous sessions, and they always stall. He says the issue is important enough to keep trying.

“It’s simply good government,” he stated.

However, the bill faces hefty opposition. Ten out of the eleven lobbying organizations that have reported positions on the bill are against it.

Paul Fisk, Mayor of Lodi, argued it’s not an unlimited benefit. The biggest single liability his city has for an employee is $18,000.

“Once that amount’s gone, it’s gone,” he said.

Senator Fred Risser (D-Madison) said the decision of whether or not to offer post retirement health benefits should be made by the locals.

“You don’t the number of employees in the future. You don’t know the dollar value in the future. You don’t know the taxes you would have to levy,” Risser said. “I don’t even know why we’re talking about this. We’ve got a system that works in most communities in the state.”

If the bill becomes law, it would apply to employees of cities, villages, towns, counties, school districts, and technical college districts. Only those hired after January 1, 2016 would be affected.