Like Many Towns, Retirement Debt Looms Large for Weymouth
An auditors report to the Town Council this week highlighted how much the town will be on the hook for in future years.
In Illinois – the state with the largest pension shortfall in the country at $96 billion – taxpayers' liability increases by $17 million every day.
Governments nationwide are facing the prospect of crushing debt associated with their retirement systems, caused both by underfunding benefits and the bitter blow struck to investments by the recent economic downturn.
Here in Weymouth, officials must reckon with two distinct areas of liability: the contributory retirement system and post-retirement health care, which together add up to potentially hundreds of millions of dollars in unfunded benefits.
"This is not uncommon," Frank Biron, president of accounting firm Melanson Heath & Company, told the Town Council Tuesday night.
Unlike communities that are part of a county system, Weymouth right now can see clearly what it will owe in the future, Biron said, and certain steps like putting $1 million into a trust fund are good indicators for bond rating agencies.
Still, by 2015, Weymouth will have to add $87 million to its debt ledger, effectively doubling the amount of liability the town shows to those agencies, Biron said. The number comes from the amount that has yet to be funded in the contributory retirement system.
"It's going to go in one fell swoop," Biron said.
Following a terrible year for retirement investments in 2008, Weymouth saw the amount in its system increase in 2009 and 2010 as the stock market rebounded. In 2011, the most recently audited year, Weymouth saw a 1.2 percent or $1.6 million loss.
Biron pegged that loss to another tough year for stocks, but said that 2012 was much improved.
The other area of liability – post-employment health care benefits – is unfunded by about $40 million. That number will increase by $10 million every year unless town officials make a plan to inject money into the system. Ultimately, the 30-year liability could hit $236 million.
Councilor Thomas Lacey said the town faces a "pretty insurmountable path."
"You listen to these dollars and you'd think it was a state issue," Lacey said. "I wonder and worry about the future of all municipalities."