April 9, 2018

Contact: Todd Ford,, 413-584-1300 x121

HCG’s Western Massachusetts OPEB Trust makes progress funding retiree healthcare liabilities                    

Municipalities and regional school districts throughout Western Massachusetts are now addressing rising retiree healthcare liabilities. Almost all public entities in the region are now quantifying and realizing their Other Post Employment Benefits (OPEB) liabilities, which is primarily retiree healthcare and not pension benefits.

“Like other parts of the state and country, Western Massachusetts is playing catch-up with prefunding liabilities,” says Todd Ford, executive director, HCG. “HCG now offers a regional trust solution to make it easier and more economical to fund retiree healthcare obligations without the hurdles of incurring set up costs associated with an individual trust.”

On February 26, 2018, HCG launched a unique OPEB trust program designed exclusively for public entities in Berkshire, Franklin, Hampden, Hampshire, and Worcester counties to cost-effectively fund their retiree healthcare obligations. The Western Massachusetts OPEB Trust brings collective investment, compliance, and administrative economies of scale to participating members.

The trust program was carefully crafted to meet strict federal tax and government accounting standards, as well as Massachusetts law, and has a favorable Private Letter Ruling from the Internal Revenue Service, covering all employers that join. HCG is partnering on the program with Public Agency Retirement Services (PARS), which serves as Trust Administrator and Vanguard Institutional Advisory Services, which manages investment pools specially designed for program members. Due to the multiple-employer trust structure, investment management fees are very low and decrease as the assets of all participating agencies grow.

“Addressing our District’s retiree healthcare liabilities is a key part of sound fiscal management. When the School Committee made the decision to establish an OPEB Trust we knew we wanted to ensure that our assets were well invested and properly managed,” says John LaFleche, superintendent, Southern Worcester County Regional Vocational District. “With the PARS OPEB Trust program not only did we achieve our goal of strong investment returns but we benefit from the full administrative program including fully managed trust, compliance monitoring and reporting.”

HCG is hosting a webinar on Tuesday, April 24th to educate public entities about their OPEB liabilities, and introduce the Western Massachusetts OPEB Trust. Representatives from PARS and Vanguard will be presenting, and all are welcome to join the discussion at 10am.

In response to the Federal government’s accounting rules implemented in 2006-2009 which require public entities to quantify and disclose OPEB obligations on their financial statements, the most recent data from the State’s Public Employee Retirement Administration Commission (PERAC) shows that the total unfunded retiree healthcare liabilities is estimated at $900 million for regional schools and $4 billion for towns in the counties of Berkshire, Franklin, Hampden, Hampshire, and Worcester counties. (See attached informational sheet).

Prefunding retiree healthcare obligations into a proper trust has increased in Massachusetts during the last few years due to Massachusetts General Law Chapter 32b Section 20 (enacted in 2011), which authorizes OPEB trusts. In addition, Governmental Accounting Standards Board Statement 75 (GASB 75) recently mandated that public agencies move OPEB liabilities from the footnotes to the balance sheet of their financial statements for heightened public exposure.  GASB allows funds set aside in a compliant irrevocable trust to be considered assets to lower unfunded OPEB liabilities on financial statements, and permitted long term diversified investing also helps to reduce the liability on an actuarial valuation.

Up front legal and administrative costs, investment fees, and minimum contribution requirements can make it difficult for smaller municipalities and districts to properly establish an irrevocable trust. However, HCG’s goal with Western Massachusetts OPEB Trust is to eliminate the barriers to entry.

To learn more, or register for the upcoming webinar, go to

About us

HCG supports communities by empowering local, sustainable and efficient economies. The organization helps cities, towns, schools, nonprofits, and businesses get the most value by pooling their buying power. HCG’s Hampshire Power provides electricity services, including green and locally produced electricity. The HCG Purchasing Co-op makes it easy for towns, cities and nonprofits to save money, time, and effort on major and everyday purchases. And HCG supports communities with uniquely effective service organizations: RSVP of the Pioneer Valley and the Hampshire-Franklin Tobacco-Free Community Partnership. Every cent HCG earns goes back to supporting the communities of Western Massachusetts. HCG is funded by its own revenue and grants.