Delaware is making significant progress in addressing its historically neglected state retiree healthcare benefits. The state has taken steps to increase funding for Other Post-Employment Benefits (OPEB), such as health care benefits, by passing legislation that gradually increases pre-funding from .36% of payroll to .5% with planned annual increases until it reaches 10%. Additionally, Gov. John Carney signed Senate Bill 175, which requires a minimum of 1% of the prior year’s General Fund operating budget appropriations to be allocated to the OPEB trust fund annually, starting in July 2023.
Beth Mercer from Cheiron, the company responsible for conducting actuarial valuations for the OPEB trust fund, notes that these legislative changes are already showing a positive impact on the market value of assets and the funding ratio. The OPEB trust fund currently stands at $11.1 billion, with 8.6% of that amount funded, a significant increase from the 7.2% funded ratio last year and the 4.9% ratio a decade ago. Mercer highlights that while Delaware is making progress in funding, rising prescription drug costs are driving short-term liability growth.
Overall, these changes demonstrate a commitment from Delaware lawmakers to address the unfunded liability of state retiree healthcare benefits and improve the financial security of retired state employees. The increase in funding and the planned incremental increases indicate a positive direction towards increasing the funded status of the plan and ensuring the long-term sustainability of retiree benefits.
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