The least glamorous legislative issues are sometimes the most important, and the state’s unfunded Other Post Employment Benefits (OPEB) is a good example.
In a nutshell, by funding 70% of health care coverage for retirees, the state has over-extended itself, because such costs are not fixed and continue to rise significantly over time, a phenomenon that was never anticipated when these benefits were put in place. To put this in perspective, consider that the state of Virginia funds almost none of the health care benefits for its retirees.
West Virginia’s unfunded OPEB liability is estimated to be $7.8 billlion and growing, which means this issue dwarfs the previously unfunded Workers Compensation debt of $3.9 billion. Since 2004, the Legislature has reduced the Workers Compensation unfunded liability by more than $2.5 billion, but the OPEB debt continues to increase.
Only four other states, on a per-capita basis, have a greater unfunded OPEB liability than West Virginia. Those states of New Jersey, Hawaii, Louisiana, and Connecticut are struggling with the issue as well.
If West Virginia were to fully fund this obligation, the annual required contribution for the OPEB liability, over time it would consume 20% of our General Fund. This compares to 11% for Kentucky and Ohio, 7% for Maryland and almost 3% for Pennsylvania. Virginia’s annual required contribution is less than 1%.
Senate President Early Ray Tomblin (D-Logan) has appointed me to chair a special OPEB study committee that will explore the matter and report back to the Senate by the 2010 regular session in January. Joining me are Senators Richard Browning (D-Wyoming), Mike Hall (R-Putnam), William Laird (D-Fayette), Robert Plymale (D-Wayne), Roman Prezioso (D-Marion) and Dave Sypolt (R-Preston).
This group has been charged to better understand the many facets of the problem and pose a range of legislative and administrative solutions for consideration. Once the work group understands the issues and has suggestions for corrective action, a major effort will begin on bringing together various stakeholders for input and support.
Your advice or suggestions would be greatly appreciated. Solving West Virginia’s OPEB unfunded liability will take input and support from a variety of constituents.
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As a concerned citizen, please do not take this liability from our school systems. Our children will suffer greatly by taking away programs and/or staff. There are cuts to be made in the way spending is done in WV, but taking away from our children is not one that I would support.
Senator McCabe:
I have some ideas on how to address this problem … just as I participated to derive a solution for the “Old Fund” unfunded liability in WV Workers’ Compensation. Obviously, that solution derived with a former leader within the WVWCC and resurrected under a different name is working.
Thank – you for serving in a leadership capacity to resolve one of WV ’s most difficult problems AGAIN.