West Virginia Senate passes Gov. Tomblin’s OPEB fix (audio)

By westvirginia on February 1, 2012
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By Steven Allen Adams | West Virginia Watchdog

CHARLESTON — The West Virginia Senate put Gov. Earl Ray Tomblin’s public retiree health care funding proposal on the fast track to full passage by the Legislature later this week.

The state Senate suspended the rules requiring a bill be read on three separate days before passage and sent SB469 the House of Delegates 32-0 with two absent or not voting.

SB469 would dedicate $30 million annually to the West Virginia Retiree Health Benefit Trust Fund, transferring $5 million each month to pay off the state’s $5 billion other post-employment benefit (OPEB) debt by 2036. Another $5 million annually would be transferred into a trust fund for public workers hired after July 1, 2010.

The $35 million would come from personal income tax revenue currently being used to pay of the Workers’ Compensation Old Fund. State officials say the Workers’ Compensation debt will be paid off by 2016, something that lawmakers called “monumental.”

“It’s huge,” said Senate President Jeff Kessler (D-Marshall). “It shows that once again West Virginia is at the forefront of getting its financial house in order and keeping it in order. I think it sends a clear signal…that we are the first state in the union that has addressed this issue. Again, we’re ahead of the curb.”

The bill also provides relief for county school systems, with the state taking responsibility for retiree health care costs within the school aid formula, though schools would have to take responsibility for amounts billed outside the school aid formula.

The bill now goes to the House of Delegates, where it could be passed out as early as Friday. Kessler said the Senate has coordinated its efforts with the House of Delegates and each chamber’s OPEB subcommittees.

“It’s my expectation that they’ll dispatch and work the bill in quick order as well,” Kessler said. “I believe they have an accord and are working with the Governor’s office.”

Listen to President Kessler’s remarks below or click here:

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Ted Cheathem, executive director of the state Public Employees Insurance Agency, explained SB469 to members of the House Pensions and Retirement Committee this morning. Last summer the PEIA Finance Board capped the liability for retiree subsidies at $343 per active retiree in the plan per month starting in fiscal year 2013, with yearly increases capped at no more than 3 percent. The premium cap cut the OPEB liability in half, from $10.3 billion to $5.3 billion.

The Retiree Health Care Trust Fund will have approximately $500 million by July 1, 2012. The funds collects almost $30 million in interest annually. Another $170 million sits in an active reserve fund. All of these funds are used to fund OPEB.

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Posted under Featured, Finances, Governor, Health Care, House of Delegates, Legislation, Legislature, News, Spending, State Senate, Video, West Virginia.
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