Andover’s annual Town Meeting this year was described as “contentious,” “raucous,” “disrespectful” and “boisterous.” President James Buchanan once said, “I like the noise of democracy.” So do I and here’s why.
As cofounder of the fiscal watchdog website, TownofAndover.com, I made some noise at Town Meeting by proposing budget amendments related to the unfunded liability for retiree health insurance (OPEB) and health insurance costs for active employees. These amendments failed, but exposed some important fiscal issues.
Let’s take OPEB first: If someone works for the town for just 20 hours a week for just 10 years, that person (and any surviving spouse) receives highly subsidized health insurance benefits for the rest of their life beginning at age 55. That is outrageous by any reasonable standard.
Unlike pensions, town employees contribute nothing to fund this benefit while employed. The town hasn’t been funding it either for the decades the benefit has been offered. The result is a vastly understated $145 million unfunded liability. We currently pay around $5 million annually to provide health insurance to former full- and part-time employees, and Town Meeting just approved putting $1.7 million toward the unfunded liability. The truth is, this $6.7 million is only about half of what we should be funding.
If our town leaders were honest, they would tell us the real cost is $12.6 million next year to pay both current OPEB benefit costs and to amortize the unfunded liability in 30 years. In just 10 years, this cost will rise to $20 million per year.
OPEB is a runaway train. Still, no elected official, nor our town manager, will publicly state the obvious. Retiree health insurance is an antiquated benefit that we can no longer afford. Eighty percent of private-sector employers stopped this benefit, because it is unsustainable.
I also made noise on health insurance costs for active employees, which account for 10 percent of Andover’s entire budget. We spend more for health insurance than we do for the Police and Fire departments combined.