$82 Million redux

OK, before we were so rudely interrupted (see the last post) I was explaining how Dare County finds itself with an $82 million unfunded liability for its "generous" (their words not mine) retiree health insurance benefit. The County budget proposes to establish, but not fund, a trust fund that would eventually be used to pay the expenses associated with this commitment. The plan also recommended that the County change its policy (isn't that brilliant) and only provide health insurance for retirees who have worked for the county for 20 years. This change would apply to new employees and anyone who has worked for the county for less than 5 years. Why 5 years? Because current legal thinking says they aren't required to fulfill their commitment to employees who have worked for the county for less than that length of time. Employees are vested in retirement benefits after 5 years. If the employee is not vested the employer can change the rules. This bit of legal wisdom is credited to the Local Government Commission and the Institute of Government (expect the courts to get involved on this point somewhere in the down the road)
This response sounds like the right thing to do. Start planning and immediately change the plan to reduce future costs as much as possible. It sounds right but I think its wrong on both counts, not entirely wrong but wrong none the less.
First, lets start funding the trust. A one cent increase in the county property tax raises about $1.6 million, if my math is correct. I suggest bumping the tax rate up 2 cents and putting that money in the fund. Every year the liability is unfunded it will grow. That's how these things work. If you start saving for college now you it will cost you less than if you wait until the expenses are due, same principal. Start reducing the long term cost by starting to pay for it now. It will save tax dollars in the long run.
Second, honor the county's commitment to its current employees. This will increase the liability slightly but it absolutely is the right thing to do. When these people were hired they were told what the rules were. They accepted the job based on that deal. It may be legal to change the rules after the fact not but its not fair.
I suggest adopting a policy for new employees that provides access to health insurance for anyone who retires from the County. Phase in a county contribution depending on how long the retiree has served. Have you tried to get private health insurance, its hard and VERY EXPENSIVE, By providing access to the County's group coverage they would play a small part in solving a major national crisis.
The County needs to treat its employees fairly. Fair treatment builds morale, increases productivity and increases worker longevity. It means that we get better service for the taxes we pay. It will pay off in the long run and its the right thing to do.