CHARLESTON (AP) — West Virginia lawmakers hope to start as early as midweek on proposals meant to help the state gradually erase a massive funding shortfall that threatens future retiree benefits.
Senate and House leaders met late last week to discuss an array of 17 possible options for tackling the estimated $7.8 billion liability from other post-employment benefit or OPEB costs.
These costs mostly reflect retiree health coverage. The options include dedicating annual revenue toward the funding gap, and helping county school boards with their share of costs.
A number of the suggested measures would affect both health insurance and pensions for public employees.
A special Senate committee developed the proposals and is waiting on word from delegates before deciding which options to pursue. Six of them would likely require legislation, and the ongoing regular session ends March 13.
“We’re trying to work with the House and get them comfortable with various aspects of the details of it,” said Sen. Brooks McCabe, D-Kanawha and the committee’s chairman. “If we gain a level of comfort with them, we can work together rather than it be just the Senate.”
The committee first shared its list of suggestions last week during separate, closed-door meetings of Senate Democrats and Republicans. The Associated Press has since obtained a copy.
Stakeholder groups continue to assess the various options, while they wait on a final list of proposals from lawmakers. OPEB costs confront all manner of government entity — state, county and local — that covers its workers through the state’s Public Employees Insurance Agency.
“If we’re given the flexibility to look at what’s best for this county, or what’s best for that Public Service District, then we can come up with some pretty good solutions,” said Patti Hamilton of the West Virginia Association of Counties.
Besides arresting the massive unfunded liability, the proposals also aim to dissuade school boards from carrying out plans to sue the state over retiree costs. Nearly all 55 county boards say they object to the annual payments required by PEIA for reducing the funding gap.
Amounts left unpaid become current debts. The boards fear that hurts their ability to issue financing bonds. They also question whether the state should shoulder the cost burden.
One suggested proposal would allow boards and other public employers to pay just part of the “annual required contribution.” A related option would count any unpaid portion of this “annual contractual obligation” as current debt, and any part of the rest not paid as long-term liabilities.
Another pair of proposals address teachers whose salaries come from the state’s share of school funding. The state would take over paying for their OPEB costs. The county boards would be billed for the rest of their personnel, and possibly get help with some of that.
Other possible options would require teachers and other public employees to work five years longer before they could retire or qualify for pensions, and 10 years longer for retiree health benefits. These changes would affect those hired after July 1, 2011. The minimum retirement age is 55, while employees become vested after five years.
To help the state pay its share, one suggestion would cap the value of subsidies that help retirees with their premiums at $150 million annually. The Legislature would have to commit revenues toward those “pay as you go” costs, after devoting a total of $200 million toward the funding shortfall between 2011 and 2012.
To balance such changes, another proposal would gradually increase salaries for starting teachers over five years until they averaged $38,000. Another item on the list would limit the pay-based range of deductions and out-of-pocket expenses that employees now pay for health coverage. A third would offer an alternative health care plan with premiums based on the benefits that enrollees choose.
“I am concerned with how they would do the suggestion regarding new teachers,” said Judy Hale, president of the American Federation of Teachers-West Virginia. “While we need the increase in pay for new teachers, we need an increase in pay for everybody.”
Some of the options are more open-ended. “Medical inflation is a key component of the formula for projecting the OPEB unfunded liability,” one reads. “Any and all policies that, by consensus of experts, have been clearly shown to control health care costs while maintaining quality should be strongly supported.”
Senate Finance Chairman Walt Helmick said lawmakers in his chamber remain willing to make tough choices to start closing the massive funding shortfall.
“It may strangle the state financially for years to come, but I believe we can handle the OPEB debt,” said Helmick, D-Pocahontas.
State News
January 24, 2010
Capital Focus: West Virginia lawmakers nearing OPEB strategy
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