PARKERSBURG - Legislation to pay down the massive Other Post Employment Benefits debt is on its way to the governor.
The Senate on a 32-0 vote approved the version adopted Thursday by the House of Delegates. Senators passed the original version last week while the House made a few changes Thursday.
Officials have called the $834 million-and-growing OPEB liability for West Virginia's 55 school systems stems from the state's retirement system one of the most pressing education issues for the state this year.
The legislation mirrors a proposal from Gov. Earl Ray Tomblin and gradually reduce the debt from non-pension costs mostly from retirement health care promised to teachers and other public employees.
The bill dedicates $35 million from annual personal income tax revenues and endorses a dozen cost-saving steps. It also relieves 80 percent of the burden from these costs that county school boards now carry.
The House passed the bill Thursday, 83-17. Several Republican delegates opposed the bill's cost-cutting language, and questioned the constitutionality of shifting the cost burden for county schools.
The debt began when the state retirement system subsidized health care premiums for retirees by allowing them to use unused sick days as payments. As more employees retired, the cost of the program grew. In recent years the state placed a cap on the practice, but the amount of debt had already spiraled nearly out of control.
A change in federal accounting law required the local school systems to carry the debt on their balance sheets, even though the school systems so far have not be asked to make payments. Wood County Schools alone would owe about $24 million, which is expected to rise to about $35 million by the end of the current school year.
Delegate Bill Anderson, R-Wood, said the plan requires time and planning.
"We think we will be able to pay it off," he said. "It is like paying off a house, you pay it a little bit at a time and eventually you pay it off."
The legislation would change a 2006 law that requires all public employers, including county schools, to pay toward their retiree health obligations annually. Amounts left unpaid end up on their books as debt. Fearing the impact on financing bonds and classroom funding, most of the 55 county school boards sued without success to challenge this law.
Wood County School Superintendent Pat Law said he believes any move to remove the debt from local school systems would be a positive move.
"If this is something that will give us some type of relief from something we don't think belongs on the schools' books we are interested," Law said. "We would be interested in how that will function; obviously a bill that would move it from schools would be a help."
Late last year one member of the Wood County Board of Education resigned over the handling of the OPEB issue.
Rick Olcott announced his plan to resign in November after the state Supreme Court threw out a lawsuit appeal by school systems throughout West Virginia to have the growing other post employment benefits debt moved onto the state's books.
Olcott said the state's unwillingness to address the issue amounted to an unethical business practice and said he could no longer work under such a flawed system.
Tomblin's bill does not specify how the Retiree Health Care Trust Fund would be administered, but calls for the legislative Select Committee on Other Post Employment Benefits to work with the PEIA Finance Board to develop a plan.
Last year a similar proposal passed the Senate but died on the last day of the session after the House of Delegates leadership pushed to raid the state's rainy day emergency reserve funds to pay down the liability.
By gradually erasing the OPEB liability, the state is following the same path that is resolving a $4.3 billion shortfall in the main fund for teacher pensions. By budgeting general revenue funds toward it annually, the state remains on track to close that gap in 2034.
A second pressing education issue, that of teacher evaluations, has yet to be addressed.
In his state-of-the-state address, Tomblin called for annual teacher evaluations tied to student performance. So far no concrete plan has been put forth.
