Andover Townsman, Andover, MA

News

July 3, 2014

Retiree benefits under scrutiny; New committee looks to save on long-term health, pension costs

Committee aims to save on health, pension costs

A committee made up of six local officials has been given the unenviable and almost insurmountable task of identifying the reasons for and the solutions to Andover’s ballooning health insurance obligations to retired municipal workers.

In a problem estimated to cost current and future taxpayers hundreds of millions of dollars over the next 30 years, the committee will first identify what it wants to achieve, then come up with a list of options on how to get there.

“The essence is to gather information about health insurance and the options that might be considered to help control benefit costs,” Finance Committee Chairman Jon Stumpf said. “It will be very informational. They will be looking for what levers can be pulled to make certain options a reality. For example, is there something that needs to be done through collective bargaining? Or is there something that can be done by the Board of Selectmen or the state Legislature?”

During a presentation in early June, a representative of Segal Consulting presented a report on the town’s long-term liability — and it wasn’t pretty. If wages and benefits continue to be paid out at the current rate, in 30 years taxpayers will owe its retirees about $500 million to cover health insurance. The cost to taxpayers, meanwhile, could rise from around $4 million to $25 million a year.

It was an issue raised at Town Meeting as some felt that the town wasn’t doing enough to solve the problem — either now or in the long run.

During a June 3 joint meeting of the School Committee, Finance Committee and Board of Selectmen, town officials tried sounding the alarm about the problem, placing the solution squarely in the laps of municipal unions.

“There are two ways to reduce this liability,” School Committee member David Birnbach said. “Fundamentally change employee contracts or outsource jobs.”

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