WV panel axes gov's offer on retirement costs

AP News
Posted: Nov 18, 2009 1:38 PM

West Virginia school boards worried about paying for retiree benefits may go without temporary relief from the Legislature, after the Senate Finance Committee voted Wednesday to reject Gov. Joe Manchin's special session proposal.

The governor wants lawmakers to allow government employers to pay just what they owe their current retirees in "other post-employment benefit" costs this budget year. A nearly unanimous committee instead favored pursuing a long-term solution that also addresses future, promised benefits during the 2010 regular session. It starts in January.

"I don't think we should be doing this in a special session," said Sen. Robert Plymale, D-Wayne. "We need to do a lot more work on this, from the Senate's standpoint."

Manchin spokesman Matt Turner noted that the House has yet to act on its version of the bill.

Among West Virginia's government employers, county school boards have raised the loudest concerns over the costs, which mostly involve health care and life insurance coverage promised to workers once they retire.

The state's Public Employee Insurance Agency has estimated a $7.8 billion funding shortfall between on-hand assets and these retirement-related costs for all of West Virginia's state, county and local government employers.

The Legislature in 2006 told PEIA to bill each of the employers for its contribution 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. 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.

Manchin administration officials have brokered meetings to avoid a lawsuit, and say the legislation offers breathing space for that process.

Plymale and other committee members greeted the boards' threat to sue with a bring-em-on stance.

"If this suit goes on to a court of law, and a court of law says, 'These are your employees, this is your debt,' what are they going to do then?" asked Sen. Roman Prezioso, D-Marion and an educator in that county, among the first to consider legal action.

But Prezioso also noted the counties might be correct that the debt is the state's. While teachers and school service workers are considered county employees, they get their health care from the state's Public Employee Insurance Agency. That agency sets the benefit and contribution rates.

"Somebody owes this debt, and somebody's going to have to pay it, and that's going to be the people of West Virginia," said Chairman Walt Helmick, D-Pocahontas.

Sen. John Unger, D-Berkeley, said West Virginia would be "cooking the books" by pretending for one year that this debt is not owed, for bond-selling purposes.

"I can't believe we're actually discussing this," he said. "It may not be illegal, but it seems unethical if we're starting to shift debt around without anyone taking responsibility for it."

"We are doing nothing dishonest, nothing unethical," replied PEIA Director Ted Cheatham, who took issue with Unger's read of the proposal.

Sen. Brooks McCabe appeared to be the sole committee member to support the bill in a voice vote. The Kanawha County Democrat cited the counties' fears about their bonding powers.

"As unpleasant as this may be, I think it's probably important to pass it," McCabe said.

The special session began Tuesday, and Manchin placed around a dozen items on its agenda. Lawmakers hope to finish by the time their previously scheduled series of interim study meetings end Thursday.