Acton town manager recommends mix of reserves and appropriations for OPEB funding; committee seeks safeguards

Town Manager John Andrade outlined a proposed approach to funding Acton’s Other Post‑Employment Benefits (OPEB) trust, saying the town has built approximately $13 million in the OPEB trust and is considering using a mix of reserves and annual appropriations to address long‑term liabilities.

Andrade said the town has already experimented with a partial approach — "put in 600 and take 300 out with a net contribution being 300" — and is proposing a simplified policy that would set a minimum contribution of $300,000 annually while targeting a higher contribution (he mentioned "over $400,000") for the upcoming town meeting using a combination of reserves and an appropriation. "We've been able to successfully set aside $13,000,000 in our OPEB trust," Andrade said, and argued using an appropriate amount of reserves can help fund the long‑term liability.

Finance Committee members raised concerns about the draft policy language. Several members said the document as written appears to permit paying retiree health insurance directly from the OPEB trust without clear limits. One committee member warned that using free cash as a recurring source would risk creating a budgeting mindset that relies on one‑time reserves for ongoing obligations.

A committee member asked whether returned health insurance funds were truly available; Andrade responded that prior years’ lower than budgeted health insurance spending and a near‑$300,000 refund from a joint health insurance trust could be appropriate one‑time sources to augment OPEB. He emphasized that any use of reserves or refunds would require Select Board recommendation and Town Meeting approval.

Several members urged adding an explicit spending cap or guardrails to the draft policy so that OPEB would not become a routine operating revenue source. Andrade agreed that a cap is reasonable and said the policy could be adjusted to reflect a limit and preserve the intent of building long‑term trust assets. No vote was taken; the committee will provide feedback before the Select Board considers the policy on Dec. 15.

Next steps include committee members submitting comments ahead of the Dec. 15 Select Board discussion and staff producing clearer draft language that adds limits on withdrawals and clarifies the mix of appropriations and reserves proposed.