OPEB (Other Post-Employment Benefits)
Generally speaking, OPEB refers to retiree healthcare but can also include other benefits for retirees like life insurance or legal coverage. Unlike pensions, which is also a “post-employment benefit,” retiree healthcare is generally not protected or guaranteed. There is also no requirement to pre-fund the benefits whereas pension benefits are paid out of an investment fund maintained by the government. These characteristics have two main consequences: 1) OPEB costs are (except in a very few jurisdictions) are “pay as you go” and governments budget only enough money each year to pay the immediate bill for the retirees. 2) Mounting OPEB liabilities generally don’t get the same attention pension liabilities do even after accounting rules were changed in 2007 to require that governments estimate their OPEB liabilities on their balance sheets.
As Joshua Franzel, vice president of research for the Center for State and Local Government Excellence, puts it: “For the most part it’s easier to change the benefits or eliminate benefits [as] governments can tweak around the edges or cut out a lot of the subsidies they provide. [So] when these costs continue up, states are shifting more costs over to the retiree.”
Join the Discussion
After you comment, click Post. You can enter an anonymous Display Name or connect to a social profile.
LATEST FINANCE HEADLINES
New York Joins Flow of States Making Tampons Tax-Free5 days ago
The Week in Public Finance: Hot Munis, Cooling Off Creditors and Warming Up to Facebook5 days ago
Washington Superintendent Sues 7 School Districts and the State1 week ago
Pennsylvania Hikes Cigarette Tax But Stays Last-Standing State With Tax-Free Cigars1 week ago
Is Kurt Summers the Future of Chicago Politics?1 week ago
Chicago's 2016 Olympics Bid Leaves Pricey Legacy 7 Years Later1 week ago