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Keyword: other post employment benefits

County SealKevin Kamenetz
County Executive

Responsible governing requires difficult decision-making in the face of scarce resources. One such challenge is the need for County government to pay for promised benefits to our employees without breaking the taxpayer's bank. Meaning, how much can we afford to spend now to fix a problem, so that we aren't just kicking the can — and the financial burden — down the road?

The County Council will soon vote on a budget request to allocate $9 million in surplus funds to continue to pay down the County’s future liability for Other Post Employment Benefits (OPEB) — that is, the cost for retiree health care and life insurance. The OPEB Trust Fund is the revenue source for healthcare and life insurance for all County employees as well as Board of Education, Community College of Baltimore County, and County Board of Library Trustees employees.

A decisive 2008 ruling by the Government Accounting Standards Board (GASB) changed the rules for all governmental bodies by requiring that all state and local governments account for the cost of these benefits on an annual pay-as-you-go basis as opposed to funding them once an employee retires and begins to draw the benefits. The County was one of a few in the nation that actually began to pre-fund this obligation in 2007. Our FY 13 budget already included $20 million for the General Government’s portion of OPEB and if approved by the Council that will be increased to $29 million. In addition, I will direct the Office of Budget and Finance to reallocate $25 million from the Health Care Reserve Account to the OPEB Trust Fund.

When added to the $20 million already budgeted for this retirement fund, the additional $9 million on-going contribution along with the reallocated $25 million will reduce the County’s projected OPEB actuarial liability by almost $600 million over 30 years and reduce our annual required contribution by $35 million.

Our dedicated employees have a right to know that their promised benefits will be there when they retire. Our taxpayers have a right to know that these benefits are affordable, and that they won’t be stuck with a huge bill down the road. Every decision that we make will continue to be based upon those beliefs. In Baltimore County, we call it strong fiscal management.


Revised April 6, 2016