Fremont Considers Paying Retiree Benefits in Advance
Fremont Finance Director Harriet Commons in a presentation to City Council last week recommended that the city begin setting aside funds to pay for retiree health benefits to fully fund the future costs of the benefits, the Oakland Tribune reports.
Commons said retiree health benefit costs since 2003 have risen by more than 25% to $46.7 million. The city currently reimburses retirees' medical premiums at an annual cost of $1.5 million. However, analysts say the city must set aside $3.6 million to fully fund the benefits.
Commons recommended that the city adopt a pre-funding strategy to fully fund retiree health care benefits. Although pre-funding the benefits would be more expensive up front, the city would earn interest on those funds and could generate revenue that could be used to pay for benefits' future costs.
City staff members said they will recommend their preferred funding option to the City Council on Feb. 20 as part of the city's mid-year budget review (De Benedetti, Oakland Tribune, 2/7).