A Slippery Slope . . .

Last night at the first night of 2026 Annual Town Meeting, the budget article passed. There was a small footnote about the OPEB Trust Contribution. Very small note, with a very big implication.

Note 3 - Indicated that OPEB was going to be funded mostly from Free Cash, not by the operating budget.

What does that mean?

Let's back up. What is OPEB? Other Post-Employment Benefits. These are non-pension benefits (health insurance, disability, etc.) that are earned by town employees while they are working. It's very important that we make regular and consistent contributions to the OPEB Trust in order to (as best we can) guarantee that retirees will in fact get the benefits that they were promised.

Google "OPEB and municipalities" and you'll see that there are towns who have inadequately contributed to OPEB and their retirees are suffering.

So what's the big deal that we have taken the majority of OPEB contributions out of the operating budget and are using free cash instead? It comes down to this. Things that we need to be guaranteed (salaries for town employees, supplies like salt and sand for the snow, books and equipment for our students) are all part of the operating budget. We determine what we need and we collect taxes to pay for these essentials. Things that are not as essential might be paid for out of free cash - the basic reason being that there is no guarantee that we will have free cash every year. By moving OPEB out of the operating budget, we are adding risk to the payment of the contribution. This is a slippery slope and we are putting our commitment to our town employees' retirement at risk.

In the last 7-8 years that I've been paying attention to town finances, there was one time when OPEB was paid for out of free cash. It was during COVID. The finance committee was working with the town to be conservative with our spending when we were completely uncertain about tax revenues. We agreed to pay for OPEB that year out of free cash with the strong commitment that we would put it back into the operating budget as soon as we could. Financially, Sudbury did very well during COVID (we didn't have any tax revenue loss and even got more revenue through all the government grants), so we were able to put the OPEB right back into the operating budget.

Out situation today is nothing like the COVID times, so there is absolutely no reason to take the OPEB out of the operating budget. And, if someone makes the argument that the operating budget is too tight? Well, think about this - free cash is essentially the amount that we over-budget. And in the past few years we have had well in excess of $5 Million in free cash. So, next year, if we have more than $325,000 in free cash (the amount of OPEB that we took out of the operating budget), then we could have put the OPEB contribution into the operating budget.

Let's commit to securely funding our town employees' retirement health benefits. Fulfilling our promise of this benefit is very important and we shouldn't be risking it. Let's get it back into the operating budget next year.