An outside audit firm recommended last week that the Great Neck Public Library consider establishing a fund for future employee health care costs, a $10 million unfunded liability.
Albert Coster of Baldessari & Coster LLP told board members at their May 19 meeting that public institutions in New York have no obligation to set aside money now for future health care costs, but he considered it good fiscal policy.
“The board has to take the pulse of the community,” Coster said. “If the board can build up a surplus to fund this expense, I think this would make financial sense.”
The current cost of health care for retired employees is limited at the moment, Coster said, but the total cost will continue to rise, unless retirees are not replaced. Library staff receive lifelong health care benefits.
Health care is projected increase 9 percent every year for 10 years, then decrease to 4.7 percent, according to the audit.
“You’re not required to put money away, but it’s a looming payment,” said Library Board President Janet Eshaghoff. “We take the situation very seriously, and we’re going to have to initiate a policy that puts aside a certain amount of money to be used at a future date.”
Norman Rutta, a CPA and former library treasurer, said if money is not put aside, the cost of library services could increase unpredictably.
“If we don’t put this money away, then the impact on future taxes is going to come in like a sledge hammer when we have to fund $10 million within a shorter time,” he said.
It is almost impossible to predict when employees will retire, said Library Director Jane Marino.
“There is no mandatory retirement age,” she said. “If they’re happy at their job and they don’t want to retire, they can keep [working].”
Until recently, public institutions did not have to recognize on their balance sheet the future cost of retiree benefits, Rutta said.
“It’s going to come due like a balloon,” he said. “If we don’t put it aside, then the taxes will have to be raised very dramatically in a short amount of time.”
Eshaghoff fears that the public will not understand why the library budget will show an increasing surplus.
“We’ll have to patiently explain to them that we’re putting money away for a future debt,” she said. “This is a challenging situation, but it is something that all organizations of this size will have to deal with.
