~10 min read
The town makes two retirement promises to the people who work for it. One is a pension, paid out after they retire. The other is help with health insurance once they leave the payroll. One of those promises is on track to be paid for. The other is not.
TL;DR
Marblehead runs its own pension system for town and municipal employees, the Marblehead Contributory Retirement System. Every year the town appropriates money into a pension fund that invests it and pays retirees their monthly checks. In the general fund that payment was $5,380,625 in FY26 and is proposed at $5,843,360 for FY27, and it has climbed steadily for years.
Retiree health insurance is the mirror image. For decades the town paid its share of retirees' health premiums out of each year's budget and set almost nothing aside in advance for the retirees still to come. That deferred promise, OPEB, has piled up into a large liability that sits off to the side of the operating budget. The result is one promise that is mostly funded and one that is barely funded at all.
Share of each promise that has money set aside, as of June 30, 2025. The pension carried a net unfunded liability of about $40.1 million at a 72.49% funded ratio; retiree health carried a net unfunded liability of about $142.0 million at a 3.37% funded ratio. Both are the town's own plans.
A pension fund invests the money it holds, and market losses can leave it owing more than it has. The 2008 financial crisis did exactly that to public pension funds across Massachusetts, including Marblehead's. Once a system falls behind, state rules require it to pay the shortfall back on a fixed schedule, much like an amortized loan, which is why the annual appropriation has kept climbing even as the underlying benefits stayed the same.
Marblehead's schedule, set by its most recent actuarial valuation, raises the total pension appropriation 8.6% each year through FY35, with a final amortization payment in FY36. After that the catch-up portion goes away.
Marblehead's pension system covers town and municipal employees but not teachers. Teacher pensions run through the MTRS (Massachusetts Teachers Retirement System), which the state funds directly, so they cost the town general fund $0.
That is not the same as free. The state pays for MTRS out of tax revenue that Marblehead residents also contribute to, so the cost lands on the same taxpayers by a different route. It simply does not run through the town budget on this page.
The clean answer is retiree health insurance. In FY25 the town spent about $6.9 million of its own money covering health premiums for its retirees, roughly 7 cents of every general-fund dollar. That share was about 5 cents in FY18, and most of the climb came after FY22.
The town's own retiree health cost (its pay-as-you-go share of retiree premiums, net of what retirees pay) as a percentage of general-fund spending, FY18 to FY25. The general-fund totals are the same series used across this site and carry a small margin; FY25 general-fund spending is expended, not yet audited.
Pension is a separate story, and it is tempting but wrong to add it in. The pension appropriation is about another 5 cents of every dollar, but it is not cleanly money spent on former employees: it funds benefits still being earned by people who work for the town today, and it pays down past shortfalls, while the checks to current retirees come out of the accumulated pension fund rather than this year's taxes. Folding it into the retiree-health figure would blur three different things into one inflated number, so the honest measure of what the town spends on people who no longer work here is the retiree-health share.
The pension side is on track. It costs about 5 cents of every general-fund dollar and is on a fixed schedule to be fully funded by 2036, after which the catch-up payments end. The harder problem is retiree health: a promise of about $142 million that is roughly 3.4% funded, and one the town has consistently paid into below the level actuaries say is needed. In FY25 the annual determined contribution was $9.93 million and the town contributed $6.91 million, about $3.0 million short of the target for that single year.
Marblehead's audited statements report a pension expense of $11,402,956 for FY25 under the government accounting rule known as GASB 68. That is more than double the roughly $5.4 million the town actually appropriated into the pension fund that year.
The two numbers measure different things. The appropriation is cash out the door. The GASB 68 expense re-measures the plan's investment returns and assumptions each year and books the change as an accounting cost, which is why it lurches around: it was about $14.6 million in FY20, $16.0 million in FY21, and $10.4 million in FY22. Because it is driven by market swings, it is not a spending figure and does not tell a resident what the pension costs. The number the town budgets and pays is the roughly $5.4 million appropriation.
Setting money aside in advance lets investment returns cover part of a future obligation, so today's taxpayers pre-pay some of tomorrow's promise. When a promise is unfunded, none of that happens. Each year's retiree health premiums are paid from that year's taxes, and the roughly $142 million of promises already made to current and future retirees is a bill that future budgets absorb as it comes due. Deferring it does not cancel it; it moves it forward in time and forgoes the investment returns that pre-funding would have earned.
Pension and retiree-health benefit levels are set by state law (Chapter 32) and by union contracts, so the town cannot cut what it has promised current and future retirees. The one real local lever is timing: whether to pre-fund retiree health now by putting money into an OPEB trust, or to keep paying the bills as they come and leave a larger tab for later.
Massachusetts lets municipalities establish a dedicated OPEB trust and appropriate money into it each year, where it can be invested for the long term. Some communities do this and have built funded ratios well above single digits; many others fund little or nothing and pay retiree premiums year to year, as Marblehead does. The specific peer figures are in the comparison further down this page.
The pension schedule is not a local choice year to year: the Marblehead Retirement Board and PERAC (Public Employee Retirement Administration Commission) set the funding schedule through the actuarial valuation, and the town appropriates what that schedule requires. Retiree health is where local discretion lives: whether to appropriate money into an OPEB trust, and how much, is a decision Town Meeting makes.
Every Massachusetts town makes these same two promises under the same state pension law, which makes other Massachusetts communities the natural yardstick. Marblehead's pension is funded near the middle of a group of comparable towns; its retiree-health plan is funded below that group's median.
PERAC actuarial-basis funded ratios (actuarial value of assets divided by actuarial accrued liability). Systems are valued in different years, 2024 or 2025, so a gap of a few points between two towns is closer to noise than to a real difference. Cohasset, Duxbury, and Easton have no town-specific number here: each is a member of a regional system (Norfolk County, Plymouth County, and Bristol County respectively), so its bar shows the pooled county system's ratio, not the town's alone. Every Massachusetts system is on a state-mandated schedule toward full funding, and Marblehead sits mid-pack among these peers.
Retiree-health (OPEB) funded ratios from the PERAC May 2026 OPEB Summary Report (Commonwealth, Cities, and Towns), each town at its own most recent measurement date, which ranges from June 30, 2023 to June 30, 2025. Marblehead's figure is its June 30, 2025 ACFR value. Most Massachusetts towns fund retiree health at very low levels: about 57 percent of the roughly 300 cities and towns in the report are under 10 percent funded. Marblehead's 3.4 percent is below the median of these peers and within the near-zero range common across the state.
The Marblehead Municipal Light Department runs a separate retiree-health plan that is better funded, at about 45 percent, and is not part of the town figures above.
There is no state-by-state comparison here on purpose. Massachusetts public pensions run on a state-specific framework, Chapter 32 of the General Laws, that does not line up with how other states structure or fund their public retirement systems, so the comparison that carries meaning is Marblehead against other Massachusetts towns.
The pension and retiree-health (OPEB) liabilities, funded ratios, and annual figures on this page come from the Town of Marblehead FY25 ACFR (pages 31, 86 through 94, and 119). The FY27 pension appropriation is from the FY2027 Proposed Budget (page 4, line 217). The payoff schedule, the 8.6 percent annual step-up, and the FY2036 final payment are from the PERAC Marblehead Retirement System actuarial valuation report dated 2024 (pages 6 and 13). The pension peer comparison uses PERAC's published list of funded ratios by retirement system, and the retiree-health peer comparison uses the PERAC May 2026 OPEB Summary Report for the Commonwealth, Cities, and Towns.
The two comparison charts are backed by data/perac_funded_ratios_peers.csv (pension) and data/dls_opeb_funded_ratios_peers.csv (retiree health).
A few measurement caveats are worth keeping in view. The town's pension cost appears as two different numbers depending on the lens: the budgetary appropriation the town votes and pays each year, and the GASB Statement 68 pension expense reported in the ACFR, which is an accounting figure that moves with investment returns and actuarial assumptions rather than the cash the town sends to the retirement system. The two are not interchangeable. Funded ratios also rest on different bases: PERAC's figures use the actuarial value of assets and the funding schedule, while the GASB fiduciary-net-position ratio in the ACFR uses market value as of the measurement date, so the same system can show two funded percentages. Cohasset, Duxbury, and Easton participate in regional retirement systems (Norfolk County and Plymouth County), so their pension ratios reflect the pooled system, not a standalone town plan. And the OPEB funded ratios are measured as of each town's own most recent measurement date, which spans June 30, 2023 to June 30, 2025, so those comparisons are close-but-not-identical vintages rather than a single common date.