ERVING — As the town works to mitigate a $557,690 deficit in the draft fiscal year 2027 budget, officials are looking to try something new by using interest from the Other Post-Employment Benefits (OPEB) trust fund to cover a $400,000 retiree benefits line item.
While this is not a finalized plan, Town Administrator Bryan Smith broached the idea with members of the Selectboard, Finance Committee and Capital Planning Committee, who gave their blessing to explore the proposal further.
Smith shared a memo explaining how Erving was looking at a $317,403 deficit at a previous meeting on March 16, but that figure was adjusted to reflect an additional $240,287 after revisiting department requests. Town expenses for FY27 are estimated to be $14.97 million, and Erving Elementary School is requesting a $3.87 million FY27 budget, representing a 1.58% increase from the current fiscal year.
Smith explained that the OPEB account has been routinely funded through Annual Town Meeting for more than a decade, and is used solely to pay for retiree benefits. The town is in a position where the account is generating a “significant amount of interest,” and as of November 2025, that amount stands at $425,000.
To help balance the budget, the recommendation is to use $400,000 of the interest to cover retiree benefits. Smith said he consulted the town’s financial advisor, who said the proposed use of the generated interest is appropriate.
“I spoke to both our financial adviser and to town counsel about this to make sure that I wasn’t completely in left field,” Smith said. “Your financial advisor is not taking a strong position one way or the other. It’s an appropriate use of the funds if you made the decision to do so.”
Smith recommended additional budget changes. The first is a decrease of $100,000 from the requested $200,000 for the Board of Assessors Overlay Account, and the other is to right-size a Veterans Benefits Account by contributing $10,000 to the fund, and not $20,000, reflecting a more accurate spending pattern.
Smith clarified that the use of OPEB interest now would not impact the ability for retirees to have their benefits funded, in response to a question from Finance Committee member Daniel Hammock.
“We still do have a problem with if this will be an ongoing issue — what do we do next year and the year after — but I think this is not unreasonable,” Hammock commented.
Selectboard member James Loynd noted that, based on the town’s need to use $400,000 of the total $425,000 in OPEB interest, it would leave roughly 8% interest that could still compound. He agreed with Hammock in that it may be worth it, noting that interest rates are expected to drop, and retirees will draw on these expenses for some time to come.