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Manager’s Message By Jeannine Fielding

Part III: Warminster Township Maintains Healthy OPEB Irrevocable Trust to Support its Financial Obligations

As the Board of Supervisors approaches the 2027 budget season, we encourage residents to follow this series that focuses on public safety, supporting the Police, Non-Uniform and Fire personnel to better understand the narrative behind the numbers.

Warminster, Pa – As part of this financial series, we have tackled the Minimum Municipal Obligation (MMO) and the Pension Fund here in Warminster Township. In addition, the township supports those who receive a pension with something called Other Post-Employment Benefits (OPEB). In layman’s terms, OPEB is the post-employment medical/health insurance that Warminster pays for retirees; mostly police officers and their spouses and families, according to Tom Scott, Township Manager.

This financial obligation by the township is a massive, multi-billion-dollar, long-term financial obligation to the employees and a financial liability to the township, which if left unchecked could strain a local municipality, according to the Auditor General’s Office. The annual cost of OPEB for Warminster Township in 2025 was $374,662 and is expected to be a similar amount in 2026, according to Finance Director, John Ramey.

Under Government Accounting Standards Board rules (GASB Statement No. 75), municipalities must report their net OPEB liabilities directly on their balance sheets and financial statements. In turn, credit rating agencies closely monitor local government’s long-term obligations. If the OPEB is left unmanaged or “high” then the municipality’s credit rating “could suffer” and increase the borrowing costs for public infrastructure projects such as roads, they further state.

Not wanting to jeopardize the township’s credit rating nor let the OPEB liability run unchecked, in 2022, the Board of Supervisors established an OPEB Irrevocable Trust Fund with a $1.5 million contribution to lower its OPEB liability. By adding this Fund, the township’s OPEB liability was lowered from $19 million to $9.8 million, a

reduction of $9.2 million or 48.42%, by the end of 2022, according to Ramey. And, by the end of 2024, the liability was at $7.7 million. The liability amount for 2025 has not yet been finalized, although the Trust Fund itself currently has more than $2 million, says Ramey.

“Clearly, by the township starting this Trust Fund to reduce its liability, this has benefitted the township’s overall financial health,” says Ramey. The reason the fund works so well is due to “excellent returns on our investments, the new contract contributions from recently hired police officers, and the assumed interest rate,” he adds.

Mary Owens, Treasurer of the Board of Supervisors, shares that other municipalities have looked at Warminster’s model to learn more about how they could benefit from creating a similar Trust Fund. “We are proud to be an example for other townships who might be concerned about how to manage their liability when it comes to their OPEB funds,” she says.

Currently, there are three recipients of the OPEB benefits in Warminster Township, says Ramey. However, as the years pass and more employees retire, this number will grow, he adds. The liability for the township ends when the pensioner reaches the age of 65.

CBIZ Investment Advisory Services, LLC manages the Trust Fund just as they do the Pension Fund. The Pension Investment Advisory Committee meets quarterly and provides feedback and suggestions to CBIZ about investment strategy for all its funds, says Ramey.

OPEB is strictly defined by the active collective bargaining agreements (CBAs) within a township. In Warminster, this includes the Warminster Township Police Benevolent Association, AFSCME Unit 1598 (Public Works employees) and AFSCME Unit 2289 (WETEO or the Warminster Free Library employees). Owens says she is “proud to know that Warminster Township values its employees in our unions to provide this benefit into their retirement years.”

We hope this helps you to understand the importance that the township places on its employees by investing in them and their futures. The final installment of this series will be employee health benefits.