CHARLESTON, W.Va. (AP) — West Virginia county school boards aren’t the only ones seeking relief from the costs of non-pension benefits, after an array of county and local officials addressed legislators Wednesday to object to the resulting burden on their finances.
The officials are balking at what they’ve been asked to pay toward other-post employment benefits, or OPEB. From county commissions and municipalities to transit authorities and rural water districts, these government employers are questioning both the estimated price tag and their ability to pay.
OPEB mostly reflects health care costs. The Public Employees Insurance Agency has estimated a $7.8 billion gap between on-hand assets and promised benefits for this budget year, which ends June 30, 2010. It also calculates the annual required contributions that government employers need to pay to begin to close that liability. These employers must otherwise report those unpaid amounts as debts on their books.
Lisa Dooley of the state’s Municipal League said OPEB costs equal 16 percent of the annual budgets of her members, on average. She compared that to their police costs, which range from 17 percent to 21 percent.
“The cities are in trouble. We can’t withstand the shockingly high contribution amounts,” Dooley told lawmakers. “We cannot sustain the amounts that we are being asked to shoulder.”
Dooley said cities and towns are reviewing their options, which include passing along the costs to their employees.
Mike McNulty of the Putnam Public Service District challenged the $356,000 annual payment calculated for his water and wastewater services provider, citing its low retirement rate. He also noted that those who do retire end up on Medicare at age 65.
“We’re going to put a lot money into this trust that our employees won’t benefit from, but that our customers will pay for,” McNulty said.
Several of the officials questioned the why the state has to follow the OPEB rules, recently crafted by the Government Accounting Standards Board. The agency sets national policy followed by state and local governments, but is not a government body.
“It begins to carry the weight of law, because it is an accounting standard,” said Patti Hamilton of the state’s Association of Counties. “We want out congressional delegation to know the impact that this is having.”
Hamilton said her members want a second opinion on the estimated OPEB liability. They also question whether the state should be footing the entire bill, as it oversees the health care program and sets its benefits, she said.
Nearly half the state’s 55 county school boards want to sue over their OPEB costs, citing similar factors. The finance board of the Public Employees Insurance Agency voted earlier this year to cut OPEB costs by ending the subsidy it provides to retirees for their premiums. Unions representing state educators have sued to block that change, which would start with those hired after June 2010.
PEIA Director Ted Cheatham sought to explain his agency’s estimates, and afterward agreed to meet with the county and local officials to address their concerns.
State News
October 14, 2009
Outcry continues over W.Va. OPEB costs
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