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Bills to shore up PEIA could affect higher education funding

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By Brad McElhinny, WV MetroNews

CHARLESTON, W.Va. — The House Finance Committee passed two bills aimed at generating the $150 million that Gov. Jim Justice promised to shore up the Public Employees Insurance Agency.

One of the bills would revamp the PEIA reserve fund while also creating a new PEIA Rainy Day Fund.

They are meant to be savings accounts for the Public Employees Insurance Agency to prevent cuts or premium increases in hard times. The PEIA Rainy Day Fund is meant to hold the $150 million.

House Finance Committee Chairman Eric Householder, left, listens to state PEIA Director Ted Cheatham explains the new bill.

Those funds are also meant to soften the 80-20 rule, where for every $80 the state spends on insurance the ratio means the employee spends $20. Unintended consequences can mean significant expenses for employees.

But there may be unintended consequences with what the state proposes doing.

Of the $150 million, $105 million is from the General Fund, which is generated by a variety of tax collections. That was the main point of the second bill passed by the Finance Committee on Thursday afternoon. It was a supplemental appropriation.

But the remaining $45 million would come through a fee assessed to agencies who get most of their money through special revenue such as fees or federal government funding.

“The reason we’re doing it this way is to allow billing to your federal revenue agencies and your special revenue agencies,” said state Budget Director Michael Cook.

Delegate Isaac Sponaugle, D-Pendleton, commented: “We’re basically setting up a money laundering scheme.”

The proposed fee would particularly affect the state’s higher education system, which estimates its share to be $17 million. That could make institutions make difficult choices between further cuts or higher tuition.

“My concern is the ability of higher ed,” said Delegate Daryl Cowles, R-Morgan. “Their only option will be to get it out of students.”

He asked higher education Chancellor Carolyn Long, who was testifying, how that would affect colleges.

“For all the institutions, this kind of amount would be problematic. That’s an awful lot of money to have to come up with,” Long said.

“Cutting higher ed any more will be devastating to all the colleges in many ways. We can’t raise tuition much more if we’re going to be competitive and fair to students.”

Cowles contemplated an amendment to remove higher education from the fees. But the lawyers in the room said making an exception for a state-funded segment would endanger being able to apply the fee to federal shares.

“The federal government would not be willing to reimburse their portion of funding when we have exempted our own state agencies from that same source of revenue,” Cook said.

The bill wound up passing out of committee.

There was some talk of passing a supplemental appropriation for colleges if the bill becomes law.

“Let’s just make this presumption that we’re going to make the universities whole,” Sponaugle said.