EBT investment negates potential tax increase for post-retirement benefits

Eric Scicchitano, The Daily Item, Sunbury, Pa.
·2 min read

Apr. 15—Careful planning allowed East Buffalo Township to grow an investment portfolio dedicated to cover employees' post-retirement benefits without necessitating a tax hike, according to township officials.

East Buffalo's investment with American Funds, a large-blend stock fund, reached $1.6 million and is growing, township manager Stacey Kifolo said during Monday's Board of Supervisors meeting. The township's estimated total liability for post-retirement benefits is more than $2 million, leaving a net liability of about $500,000.

"There won't be any tax increases to residents to pay for these post-retirement benefits," Supervisor Char Gray said during the meeting.

Non-uniform employees are eligible at age 65 or older to receive supplemental medical and prescription coverage on top of Medicare benefits. They're also eligible for full vision and dental coverage. These benefits are available until they die.

Police officers are eligible to receive full coverage for all four benefits as early as age 55. The post-retirement benefits transition to the same coverage as non-uniform employees once the officers reach age 65. Uniform retirees are eligible for 15 years after retirement.

The township's liability was $3.3 million in 2016 when in September of that year, supervisors moved to invest $900,000 in the market.

The board began in 2013 to build a reserve account to support post-retirement payouts. The account reached $400,000 in 2016. The funds were coupled with a $500,000 loan to invest. That loan was paid off in 2019 at an added cost of $24,500, well below the dividends made on the market play.

Also, in 2016 former supervisor Mike Daniloff and current supervisor Matt Schumacher approached the Buffalo Valley Regional Police Department to shop its medical benefits plan. It was discovered the department could save about $180,000 annually for comparable coverage, Kifolo said, and greatly reduced the post-retirement benefits liability for uniform employees.

The township can now draw from its reserves and offset post-retirement benefits costs rather than pulling from the general fund and raising taxes, Kifolo said.

"I'm very confident that the township has the funding available now without raising taxes," Kifolo said.