Thursday, September 15, 2011

Wilmington and the CFPUA Have Unfunded Liabilities That Are Going to Explode

This bit of research was spurred on by this article that says the CFPUA will now issue $52.2M for new projects.

Actually, the most surprising thing to me was that the rate increases mentioned in the article were lower than previously predicted. An earlier article put the real increases at 81% over the next 10 years.

So, that sent me digging to find out what was really going on.

Firstly, I found the CFPUA's employee benefits statement. 

They are probably even more generous than Wilmington's, which is hard to imagine.  They pay 92% for individuals' visits to primary care providers, specialists, and urgent care.  They also completely cover employee's life insurance and even partially cover an employee's spouse and children.  They also allow employees to up to 320 hours of paid vacation.

Another document reveals that in the last year the CFPUA's total expenditures increased about 25% from approximately $60M to $75M. (Pg. 5

There were a couple of other interesting things which I'll detail in another post, but the thing that reall struck me was the CFPUA's Other Post-Employment Benefits.

Other Post-Employment Benefits are basically subsidized health insurance for retired employees who aren't yet eligible for Medicare.  10 of the largest 17 NC cities don't do this.  It's something Wilmington and the CFPUA do completely voluntarily.

Wilmington has a very large problem with this.  Their annual required contribution for this program is about $3.4M and we're contributing about $2M.  This has led us to an unfunded liability of $37.7M (pg. 99 & 100.)

But that's not the end folks.

The brand new CFPUA, just a few years in existence already has a $7.1M unfunded liability from their OPEB program.


Well, their annual required contribution is over $1M, and how much are they contributing?  $586.  Oh, wait a second.  Employees contributed that.

The CFPUA contributed absolutely nothing.

Yes, folks, let me repeat that once again: the CFPUA contributed absolutely nothing to their OPEB program.  And they have not since they've been in existence.

To quote the CFPUA, "To date, the Authority has chosen to fund these benefits on a pay-as-you-go basis."

This means they are not planning for the future.  There are 266 people in this program.  The costs could very well soon become overwhelming.  We already have $45M in unfunded liabilities in these two programs.

The CFPUA and city cannot go on like this.

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