Our 35th Anniversary and County Insurance Unfunded Liabilities

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Friends,

Tracy and I were married 35 years ago on June 7, 1975. What an adventure for 35 years! Thank you, Tracy.

As I wrote to you before, the county has commitments of future payments to our retirees; commitments known as "unfunded liabilities" because we are not putting the funds aside to pay them when they come due. These are much like federal promises to pay Social Security. Unfunded liabilities are like plaque in your arteries; a little can be tolerated, but as the plaque accumulates, it causes a health crisis.

In December, 2006, the previous Commissioners Court changed the retiree insurance program from a fully employee-funded program to a program that is 85% paid by taxpayers.

Under the old program, the insurance unfunded liability was virtually nothing. Today, three and one half years later, our future insurance commitments are $43 Million and growing by $4 Million every year. The Court has made small steps, paying down an extra $4.2 Million toward this program over two years, but that is not enough to keep us from falling further behind.

One way to put our unfunded liabilities in perspective is to compare our current unfunded amount of $85 Million to our total yearly county salaries of $89 Million. Next year our unfunded liabilities will be equal to our total salaries if we don’t do something.

We currently have 303 retired employees, plus another 60 family beneficiaries, for a total of 363 people drawing retirement today. Over the next ten years, we have another 672 employees who will become retirement eligible. That most likely means almost 1200 retirees and beneficiaries. 87% of all county employees in 1990 are now either retired or still employed by the county and retirement eligible, so most employees retire from county employment. That will further expand our unfunded liabilities.

There are many elements of the insurance program that the Commissioners Court could consider this year, and there are many possible changes. One example is that insurance for 20+ year employees costs $10 per month after they retire.

I believe that the current insurance program is unsustainable. That decision could be made this year, or some year in the future, but at some point, the court will either make some changes to the program, or will have to raise huge sums to pay the accumulating costs. Those sums could eventually crowd out services to the public. I don’t want Collin County to become a pension provider that happens to provide public services on the side.

Most governments normally wait to act until a crisis is reached, like with Social Security. We don’t have the luxury to wait for a crisis because unlike the federal government, we can’t print money to cover our shortfall.

As John Adams, our Second President said, "Facts are stubborn things; and whatever may be our wishes, our inclinations, or the dictates of our passions, they cannot alter the state of facts."

I hope that the Commissioners Court can find a sustainable middle ground soon so that we control our future unfunded liabilities while providing insurance comparable to what our taxpayers receive when you retire. The long term health of the county budget depends on it.

Sincerely,
Keith

For more information please visit my website:   www.KeithSelf.com

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