Council Agrees To Cut $90 Million From Retirement Health Benefit Fund

Council Agrees To Cut $90 Million From Retirement Health Benefit Fund

Friedson questions if county has ‘fallen into a spiral’ of mid-fiscal year budget adjustments

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Dan Schere

A plan that shifts $89.5 million away from the county’s retiree health benefits trust fund was approved Tuesday in an 8-1 Montgomery County Council vote.

The cut to the fund, known as the Other Post-Employment Benefits, or OPEB, was proposed by County Executive Marc Elrich to account for a projected $80 million shortfall in state tax revenue and preserve a reserve fund.

Council member Andrew Friedson, the lone opponent, said he worries that the county has “fallen into a spiral” of making mid-fiscal year cuts and that the trust fund is often a target.

“Unfortunately the OPEB trust fund has been used in recent years, not just by this administration, but by previous administrations as well as basically a reserve account to solve serious budget shortfalls, and that spiral has been a huge challenge, and isn’t something we’ll get out of unless we implement some serious structural changes,” he said.

Friedson, a former employee in the comptroller’s office, warned that “the longer we wait to fund it [OPEB], the more expensive it gets.”

Cuts to the trust fund had led to a rebuke from some in the county because the $90 million represents a large chunk of the cost of labor contracts with three county unions that are part of Elrich’s proposed fiscal 2020 budget.

The proposed contract with the county’s main government union, Local 1994 MCGEO, included raises of up to 9.4% for some county workers. However, the council voted Tuesday to return to the negotiating table, with the goal of bringing down the raises to a level closer to 6%.

At Tuesday’s hearing council member Hans Riemer asked the council’s Executive Director Marlene Michaelson if there was a way to eventually restore funding to the OPEB contribution. She said that because another fund, the county’s retirement pension fund, is almost 100% funded, any excess contributions could be redirected toward OPEB.

“As soon as that happens, instead of transferring those [pension] funds into services, they could be moved into OPEB,” she said.

Michaelson said the details of such as plan would likely come as part of a broader review of fiscal issues this summer.

Dan Schere can be reached at Daniel.schere@bethesdamagazine.com

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