GOVERNMENT
RISING DEBT
Despite efforts to quell Fort Bend County’s mounting debt for retiree health care costs, the liability for other post employment benefits—or OPEB—continues to rise.
IMAGINED
Unfunded liability: The total annual contribution to fund retiree health care—paying doctor visits, emergency care and prescription costs—for all employees working toward retirement health care benefits as well as all current retirees and their spouses
$495.37M
$700M $600M $500M $400M $300M $200M $0
$207.2M
SOURCE: FORT BEND COUNTY AUDITOR/COMMUNITY IMPACT
$495M liability for retiree health care burdens Fort Bend County credit rating
BY ASIA ARMOUR
“We have to start getting aggressive with that,” Sturdivant said. Potential solutions The county has previously attempted to wrangle its financial obligation toward retiree health care, but none of these actions relieved the debt’s pressure, Meyers said. “The increase in health care costs, together with the increasing number of staff that we have to qualify for health care, have outrun our attempts to ... control the thing,” Meyers said. Sturdivant said the best way to curb the debt would be to contribute about $100 million-$200 million to the trust and let it grow in interest. But the county would need to dedicate dollars from its general fund, as the state does not authorize counties to issue bonds to fund OPEB liability. He said the Legislature was “not being very receptive” of the needed authorization. Sturdivant proposed taking every excess dollar in the budget and shift it to the trust. He said he believes there will be an excess by the end of the fiscal year in October. “We have to demonstrate to the public, to our retirees, our employees working toward retirement, our bond rating agencies [and] our under- writing team that we are not just ... waiting for this to go away,” he said.
Andy Meyers, Fort Bend County Pre- cinct 3 commissioner, has expressed concern for a looming $495 million debt, which threatens to negatively affect the county’s employees working toward retirement, taxpayers, and credit rating for bonds. The debt is from the county’s liabil- ity for its retirees’ health care benefits, known as “other post employee benefits,” or OPEB. As of March, there were 797 retirees, 322 retiree spouses, and 727 current and former employees eligible for retirement. “We have a gargantuan unfunded liability sitting out there that we are still not doing anything about,” Meyers said during a March 7 discussion on the potential for a 2023 mobility bond. County Auditor Ed Sturdivant said inaction toward the debt could impact the county’s bond rating. If the rating is downgraded because the liability isn’t addressed, Sturdivant said each downgrade could result in a 5%-10% increase in the cost of future debt, making existing debt less marketable for bondholders. ”The county will do all that is necessary to avoid this,” he said. Currently, there is $5.6 million in a trust established January 2023 for the county’s OPEB liability, but Sturdivant said this is insignificant compared to the OPEB debt.
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KATY EDITION • APRIL 2023
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