Published: July 13, 2009 12:34 am      

Suit still threatened in PEIA retiree debate

Recent hearings may not keep West Virginia’s Public Employees Insurance Agency out of court over a proposal to stop subsidizing retiree health care, one advocate for state workers says.

The American Federation of Teachers-West Virginia still plans to sue, President Judy Hale told The Associated Press, if the agency’s finance board reaffirms its May move to end subsidies starting with 2010 hires.

Hale’s group and others representing workers vowed legal action after the board’s May vote, because it came during an emergency meeting convened to address current retiree coverage. The threat helped prompt the board to delay any final decision until after fielding comments from a series of six public hearings slated for throughout the state.

Those wrapped up last week in Morgantown and Huntington. The board next meets July 30, expecting to vote on the issue then, said Diane Holley, spokeswoman for PEIA’s parent Department of Administration.

But Hale said the delay and public hearings have not resolved her group’s concerns with the board’s process. AFT-WV also questions whether such a change is possible without legislation.

“We don’t believe that it’s clear that they board even has the authority to make policy as they have here,” Hale said. “We will challenge both the procedure and whether they have the authority, and let the courts decide.”

The board believes any legal action would be unwarranted, Holley said.

“If they didn’t believe that they were within the law to take that action, they wouldn’t have,” Holley said. “Due to the importance of the matter, the board went that extra step to solicit public feedback.”

Advocates of ending the subsidies cite the rising gap between on-hand assets and the non-pension benefits — chiefly health care and life insurance — promised to public workers once they retire.

Recently mandated to start accounting for these “other post-employment benefits,” West Virginia faced an unfunded liability of $7.7 billion, the fifth largest per-capita, according to a 2006 review by the Pew Center on the States.

While that funding gap subsequently dropped, it is again increasing and PEIA Director Ted Cheatham projects it will hit $18 billion by 2030. But the state can begin to whittle the liability down to zero by requiring future hires to pay the full cost of their health benefits once they retire.

The subsidies now cover about 72 percent of the premiums for PEIA’s 36,000 retirees. Ending those payments would hit hardest those who retire before they become eligible for Medicare at age 65 — if the federal health care program and even PEIA still exist when the future affected employees start retiring several decades from now.

Both sides in the debate appear to recognize that factor. Holley said a common suggestion from those at the public hearings was for the board to wait for whatever health care changes emerge on the national level.

“They’ve been asked repeatedly at the hearings to take a step back, take a deep breath,” Hale said. “I don’t see any need, and have not heard any need expressed, for them to act now.”

Around 500 people attended the six hearings, including about 130 who signed up to speak, Holley said. While she said some who commented supported an end to subsidies, Hale said that Administration Secretary Rob Ferguson could not cite any when asked at the second-to-last meeting July 6 in Morgantown. Ferguson chairs the finance board.

Holley noted that teachers groups, including Hale’s, presented the majority of comments against the subsidy proposal. Other groups also attended the hearings to support continued subsidies, including the West Virginia Troopers Association.

Like the teachers’ unions, the troopers argued that ending the benefit would hurt efforts to recruit and retain quality employees in a state already lagging behind in pay. Critics also cite how just five states offer no subsidies for retiree health care, according to a 2008 survey by the Center for State and Local Government Excellence.

West Virginia is among the majority — 29 states that partly subsidize retiree premiums, according to the nonpartisan Washington, D.C., group. Another 15 cover their retirees’ premium completely — including neighboring Maryland, Ohio and Pennsylvania, though the latter has moved to reduce that subsidy for future retirees.

Those speaking out against the proposal include some lawmakers. Besides attending the public hearings or rallies beforehand, several slammed it at last month’s legislative interim meetings while also questioning the worth of the hearings.

“The decision’s already been made,” Senate Majority Truman Chafin, D-Mingo, said at one of those meetings. “These are meaningless public hearings, it sounds like. This is a waste of time, effort and money, isn’t it?”

Holley said every finance board member attended at least one of the hearings, while several attended most or all of them. The agency will compile and distribute all the public comments to the board before July 30. Cheatham, meanwhile, is scheduled to discuss retiree coverage with lawmakers Wednesday, during this month’s interim session.