Wednesday October 26, 2011
In W.Va., a bill is not a bill that must be paid?
$8 billion worth of unfunded retiree benefits is one very hot potato
West Virginia legislators grandly promised public employees, including teachers, health care benefits in retirement. State officials made no provision for funding those benefits.
It's been estimated that keeping that promise would cost West Virginians $8 billion.
A change in accounting standards now requires states, counties, cities and school boards to show the cost of such unfunded liabilities on their balance sheets.
In 2006, lawmakers addressed this by passing a law.
County school boards already cover the current costs of retiree health care — $167 per month per employee.
But to cut the liability, the Public Employees Insurance Agency now bills county boards for an additional $794 per employee. Boards will be charged $200 million this year. What they don't pay goes on their books.
Again, legislators did not provide additional money to fund what it asks county school boards to pay.
Last week, all but six of the state's 55 county school boards asked the state Supreme Court to declare that asking county boards to pay that much violates the state constitution's requirement for a "thorough and efficient system of free schools."
"We have school boards that are reserving money that could be spent and should be spent to educate
children," said Howard Seufer, a lawyer for the county school boards.
"We're just asking the court to declare that it is unconstitutional to place the liability upon the county boards of education in a situation where they're not also given the funds with which to pay these hundreds of million of dollars . . . ," Seufer said.
Lawyer Ned Rose, who represents the agency,
argued that the boards are exaggerating the problem. They have to show the liability on the books, he said, but they don't actually have to set aside money to pay it because they have no obligation to fund it.
The state is not teachers' employer, he added help-fully. County boards are the employers.
Nice try, but county school boards are employers in name only. They don't set base salaries or benefits. Governors and legislators do.
County school boards didn't promise public employees health coverage in retirement. State politicians did. Now legislators are shifting part of the liability onto the balance sheets of school boards.
The state's balance sheet will look better and school systems' balance sheets will look worse.
Pity the county school board that tries to explain to ratings agencies that yes, these hundreds of millions of dollars are unfunded liabilities of county taxpayers, but local taxpayers don't actually have to pay them.
They're just, well, false bookkeeping entries — dodgy little West Virginia legislative artifacts.
Legislators, not the court, should clarify which taxpayers they intend to hit with this $8 billion hot potato