Temporary relief from OPEB possible
By Lawrence Messina
Associated Press Writer
CHARLESTON — Relief may be in the making for West Virginia’s county and local governments worried about non-pension retiree costs, a Manchin administration official told lawmakers Thursday.
The official, Public Employee Insurance Agency Director Ted Cheatham, said the administration is drafting legislation that would change the way these employers now address the projected cost of “other post-employment benefits” or OPEB.
With Gov. Joe Manchin weighing whether to call a special legislative session next month, the measure could come up then, Cheatham said. The regular, 60-say session starts in January.
OPEB costs largely reflect health care and life insurance coverage promised to workers once they retire. Cheatham’s agency has estimated a $7.8 billion funding shortfall between on-hand assets and these OPEB costs for all of West Virginia’s state, county and local government employers.
National standards issued in 2004 have required an accounting of OPEB liabilities. To tackle West Virginia’s, the Legislature in 2006 told Cheatham’s agency to bill each government body for their calculated amount each must contribute toward the liability annually. Any unpaid amount ends up on that employer’s books as a current debt.
More than half the state’s 55 county school boards have threatened to sue over those provisions. They argue they lack the funds to cover the annual required contributions, while listing them as current debts threatens their ability to issue low-interest financing bonds.
Officials from an array of other government employers — including county commissions, municipalities, transit authorities and rural water districts — raised similar concerns during a Wednesday interim legislative meeting.
Addressing the interim Joint Committee on Government and Finance, Cheatham said the administration proposal would allow his agency to bill for only part of the annual required contribution. The government employers could then list what remains unpaid toward their OPEB liabilities as long-term debts.
“But we need to change the wording of the statute to stop billing,” Cheatham told the committee, made up of top House and Senate leaders.
Such a measure would give the administration some breathing room as it meets with county school officials to dissuade them from suing. But Cheatham said the state must ultimately still find a way to reserve enough funds to pay these promised benefits.
Cheatham’s agency decided earlier this year to erase the liability eventually, by ending the subsidies that the state provides to help retirees with their health care premiums. Subsidies would cease starting with employees hired after June 2010, but teacher unions have sued to challenge that change. Administration officials are also meeting with those groups to resolve the dispute out of court.
Cheatham also outlined several ways the state could either reduce the liability from subsidized retirees or pay down the liability. Those options include linking premium rates to years of service.