Some Answers

On August 2nd we wrote a blog post on OPEBs and asked the question, “Just how awful is the funding issue?” Well, we have some additional anecdotal evidence and it isn’t looking too good. The Houston Chronicle has recently published information pertaining to the city’s OPEB liability, which is smaller than their pension debt, but not enough so to get excited. It seems that Houston’s OPEB liability has grown by $160 million per year in recent times, which equates to more than $400,000 per day. The total liability is now $2.4 billion, and with an aging workforce and healthcare inflation outpacing revenue growth, action to remedy the situation must occur now.

In addition, the Government Finance Officers Association estimates that the total OPEB liability for states and municipalities is roughly $2 trillion. Again, a pittance when compared to the total pension liability, but in many cases the OPEB liability has become a pay-as-you-go system.  According to the Chronicle’s article, U.S. states took on another $63 billion in OPEB liability in 2017 to just under $700 billion.

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