OPEB Put To Bed
West Virginia is the first state to have a comprehensive plan in place to address the debt created by health care costs for future state retirees. Gov. Earl Ray Tomblin signed the OPEB bill into law Monday afternoon.
OPEB, Other Post-Employment Benefits, was a $10 billion unfunded liability just a year ago. Now the state's plan would have that debt paid for by 2040. Two key decisions will make that happen.
The state Public Employees Insurance Agency Finance Board passed a plan last year that caps state subsidies for retirees’ health care. That move alone cut the $10 billion debt in half. The legislature did the rest by passing the OPEB bill last week.
The new law will require the state to take $30 million a year for 24 years, beginning in 2016, and apply it to the unfunded liability. The payment will come from money currently being used to pay down the debt in the old workers' compensation fund, which will be completed in 2016.
Sen. Brooks McCabe has worked on the OPEB issue for several years. He says he was confident the state would reach this day; it was just a matter of when.
"What's helpful this time around is everybody was pushing in the same direction. No one was trying to make it difficult. Everyone was candid in what the problems were, the issues we needed to address," McCabe said.
The senator says there's a good amount of pain involved, but it is spread equally.
"The state is putting more money into it and we are doing a better job of defining future benefits," McCabe, D-Kanawha, said.
Gov. Tomblin said the PEIA Finance Board’s decision will keep health insurance premiums at reasonable rates. But West Virginia Education Association President Dale Lee is taking a wait and see approach.
"The jury is still out on it," Lee said. "It's really going to depend on inflation, the medical rate of inflation."
Lee says that's why it was so important for the teachers union to keep the 12 cost containment measures in the final version of the bill. He says keeping costs down will help retirees to be able to have premiums they can afford.
"We need to do everything we can to keep premiums to a point where they can afford to make the decision whether they have health insurance and medicine or food," Lee said.
West Virginia American Federation of Teachers President Judy Hale says county boards of education will no longer have to put money aside to address their OPEB debt. She says that money should now be freed up to hire the personnel necessary to teach the children.
"For the last few years every time they have laid off somebody or we have needed a computer lab for example they've said, 'We've got to put money back for OPEB,' okay, that money for OPEB is now freed up," Hale said. "Even though the counties are not saying it-- they will not have to spend one penny on the OPEB liability."