May 14, 2007

$82 Million

What would you say if I told you that Dare County ran up an $82 million dollar debt, due over the next 30 years and no one did anything about it? Don't believe it? Believe it!
Hidden at the very end of Mary Helen Goodlow-Murphy's excellent Coastland Times article about the proposed County budget was a paragraph noting that the proposed county budget included a change to a long standing policy on retiree health care benefits. It stopped me in my tracks and sent me running to look at the budget document. For years, Dare County has offered paid health care to anyone employee who qualified for paid retirement. That meant that if you worked for the county for 5 years and were 65 you could retire with a small pension and the county would provide your health insurance for free - forever. The budget message describes this policy as "generous", something of an understatement. The policy has made the county a very attractive place for older employees looking for access to health insurance after a very short tenure and it carried a big price tag.
New accounting rules (GASB 43 & 45) require local governments to project the long term cost of these benefits and to include them as liabilities on their balance sheets. Its a great idea, these expenses can mount up rapidly. How rapidly? The county's budget message pegs the county's liability at (you guessed it) $82 million. Thats a lot of money.
The county's solution is two fold. First it will establish a trust fund to meet its long term obligations. It will also institute a new policy that will provide retiree health benefits after 20 years of service, a pretty dramatic shift. These two strategies will reduce the liabililty by about half when they are fully implemented (the budget message povides for "future partial funding" of the trust fund).
This is an issue the county could have addressed some time ago but chose not to. Frankly it looks like the policy is changing only because of the changes in the accounting rules, not because its was the wrong policy, that's unfortunate. Lets hope the county goes ahead and addresses the issue.
Now you know about the problem. Next I'll tell why the county's solution is the wrong one as well as some other thoughts on the county budget.


At 7:52 AM, Blogger Overwash said...

Careful, Bob
Hell hath no fury like the slings & arrows of the Dare County 700+ Club.


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