Underfunded future obligation


Finance (Photo credit: Tax Credits)

Article on underfunded municipal pensions from the Lincoln Institute – see the link below.  The article says that the first principle of municipal finance, that you pay now for what you incur now.  Medfield’s pensions are actually pretty well funded, but our obligation for employees’ future health care costs for our retirees is not, to the tune of about $40m.   Mike and I have suggested that the Board of Advisors (former selectmen) explore how to deal with that issue, once the state commission looking at the issue reports back this fall.  This from the article –

Pension Legacy Costs and Local Government Finances

Richard F. Dye and Tracy M. Gordon
Local government pensions are significantly underfunded because many governments have not set aside enough funds each year to cover the liabilities incurred. In effect, they are borrowing to pay for current labor services and shifting the burden to future taxpayers.

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