City ranks in top 5 on retiree liabilities

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BELOIT - A recent report shows Beloit ranks in the top five among Wisconsin's largest communities in terms of unfunded health care liabilities for municipal retirees.

The report by the Wisconsin Policy Forum shows Beloit owes the fourth highest amount among the state's largest cities, with $102.5 million in unfunded health care liabilities as of 2016, ranking higher than Janesville, Madison and Kenosha.

The city's costs have decreased 25 percent since 2013, dropping $33.9 million, the largest decrease in obligations over the time period studied.

Beloit Finance Director Eric Miller said the majority of the other post-employment benefits are strictly for police and fire retirees with contracts that cannot be renegotiated. He said the cost listed is projected for the lifetime of all current and future retirees rather than for a specific time period.

"We are consciously making efforts to reduce these liabilities," Miller said. "One of the ways we've done that is through cost sharing of premiums and benefit eligibility to help mitigate costs."

In total, the top 25 Wisconsin cities face $2.25 billion in unfunded health care liabilities, a 5 percent increase from 2013 to 2016, the report said.

Cities took on the liabilities by pledging health care benefits to workers after retirement in exchange for lower pay raises. Costs rose quickly since workers including public safety staff can retire early with benefits akin to monthly premiums of active municipal employees, the report said.

According to the report, Beloit has budgeted $19.1 million this year for capital needs, but if the city took the funds and invested in paying for the retiree health care promises for current and former employees, Beloit would still have less than half of the estimated $39.7 million needed to cover these projected costs over the next 30 years.

Twenty-three cities cut costs by just over $120 million in the three year period studied, but that was outweighed by $228 million increases for expenses in Milwaukee and Racine, the report said.

Milwaukee owes the most out of any Wisconsin city ($1.02 billion), while Racine owes $503.24 million, West Allis $140.94 million and Eau Claire with $66.63 million outstanding, according to the report.

According to a July 10 Associated Press article, Racine's costs rose the most - 24 percent - for an increase of nearly $97 million over the three-year time frame. However, changes in the city's benefits reduced its liability by more than $117 million in 2017, the study said. The Wisconsin Policy Forum did not look at data for the other cities beyond 2016.

Appleton's costs rose at 20 percent between 2013 and 2016 followed by Sheboygan at 17 percent for the next two largest percentage gains. Milwaukee's went up 15 percent.

Manitowoc had the largest decrease at 80 percent, followed by Franklin at 78 percent and Fond du Lac at 71 percent.

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