Funding Post Employment Benefits

About the Program

Category: Financial Management (Best in Category)

Year: 2009

Gwinnett County’s new financial management strategy provides a comprehensive approach to manage “Other Post-Employment Benefits” (OPEB). A team of Financial Service managers developed a sustainable plan for funding retiree healthcare that meets new accounting requirements, minimizes cost increases for retirees, and does not degrade the county’s AAA credit rating. The county altered their retiree health insurance benefit from paying a percentage of the health care premium to paying a defined, fixed monthly contribution. The contribution almost covers the entire premium for the least expensive health care option so retirees who choose that option will have minimal increases in their healthcare costs. To reduce the unfunded OPEB liability slowly, the county had to fund the Annual Required Contribution through an irrevocable trust. Because Georgia law previously permitted only the State to establish an OPEB trust, the county crafted legislation to allow the trusts for counties and cities. This allowed them to fully fund their Annual Required Contribution, giving them better investment returns and reduced future ARC requirements.