Last week was a busy one for lawmakers, who met for the first, full monthly interim session. For three days, legislators gathered in back-to-back meetings, covering a myriad of topics ranging from our state’s criminal statutes to economic development and education.
* The Joint Standing Committee on Pensions and Retirement heard from the Consolidated Public Retirement Board, which announced it may hire independent actuaries to perform a study of the various alternatives to leaving about 19,000 teachers in the Teachers Defined Contribution Plan.
In 2006, the Legislature attempted to allow the members of that plan to merge back into the older Teachers’ Retirement System, rather than force them to stay in the 401-K-style Defined Contribution Plan. But a circuit judge struck down the move. The Consolidated Public Retirement Board has yet to decide whether it will appeal that decision. Even if the board does appeal, it is unlikely the case will be resolved until after the 2008 session.
So in the meantime, Board Director Anne Lambright told the committee that the board is considering commissioning the study in order to determine if other options, such as allowing for an opt-in period, are feasible and affordable.
* The state Transportation Secretary told the Joint Committee on Government and Finance (on which I serve), that a new program intended to better focus road crews on routine maintenance has been misunderstood by some Division of Highways employees.
Secretary Paul Mattox said the change – which involves focusing county road crews on "core maintenance," rather than larger projects – is intended to improve efficiency. Now, county crews are zeroing in on mowing, snow and ice removal and minor road patching and leaving the larger projects and heavy maintenance to the crews of the state’s 10 districts.
But some county employees, who noticed the transfer of some major equipment from the counties to the districts, mistakenly believed jobs would be lost, and have complained to legislators. Mattox assured us that was not the case.
* The Joint Committee on Government and Finance also received a monthly report from Administration Secretary Robert Ferguson on the fiscal condition of various agencies. Legislators took that opportunity to reiterate that we expect some aggressive moves from the Pharmaceutical Advocate toward lowering the cost of prescription drugs for West Virginia residents.
Advocate Shana Phares said the administration is taking steps, which include establishing a state central fill pharmacy to aid low-income residents in obtaining free or discounted prescription drugs from manufacturers.
* The Joint Committee on Education heard an explanation from fiscal officers regarding the Government Accounting Standards Board standards that county school boards are being required to adopt.
Officials from both the state Department of Education and the Public Employee Insurance Agency explained that this issue is affecting every state and local government in the country.
The accounting principle, often referred to as GASB, involves the financial obligations governments take on when they provide what is known as "post-employment" benefits, in particular health care benefits.
Although such benefits represent a very real and significant financial commitment, until now, state and local governments have been using a "pay-as-you-go" approach to their accounting, showing only the cost of benefits in a single year on their spread sheets.
For example, a county would list the cost of health benefits for retirees only after they retire. The county would not show the costs and obligations it has committed to in the form of future benefits for its current employees – in other words, the upcoming, known liabilities.
This approach can be dangerous. The state did something similar with the indebted Teachers Retirement System, and we are paying dearly for years of failing to account for that unfunded liability.
The new reporting requirement does not require additional funding for the benefits. How governments finance their benefits is a policy decision.
But to help alleviate some of the problems this has caused as it relates to Public Employee Insurance costs, the Legislature in 2006 adopted House Bill 4654, which created a trust fund to help counties. During the 2007 session, the Legislature adopted SB129, which ensures that excesses from PEIA’s recommended reserves are automatically deposited in the WV Retirement Health Benefit Trust Fund.
At the moment, it looks like West Virginia’s PEIA has found some relief through Medicare, although that it not a guarantee of future funding for these benefits.
Every government at every level across the country is now expected to clearly state its fiscal responsibilities regarding its employees. The Legislature is dealing with this regarding state employees. We are all being required to recognize that this responsibility exists and to reflect that in our financial reporting.
Two different legislative interim committees are examining this problem and how it affects county school systems, and lawmakers hope to work with local officials to come up with solutions.
I welcome and appreciate your input on these or any other legislative issues. Write to House Majority Leader Joe DeLong, Building 1, Room 228-M, 1900 Kanawha Blvd. E., Charleston, 25305, or joe@joedelong.com, or call 304-340-3220.
