Shortfall slashed in retiree funding
CHARLESTON – West Virginia has reduced a shortfall in funding for non-pension retiree costs by nearly half in one year, Standard & Poor’s Rating Services said in a new report.
The state’s unfunded liability for these other post-employment benefit costs, also known as OPEB, was $3.57 billion at the end of the 2012 fiscal year, down 49 percent from $7.43 billion at the end of the 2011 fiscal year, according to the report released Monday.
The 50 states’ total unfunded liability fell about 3 percent to $529 billion during the same period.
West Virginia’s per capita unfunded OPEB liability declined from $4,083 per resident during the period. Nationally, states’ total per capita unfunded OPEB liabilities declined 13 percent from $1,884 to $1,632.
West Virginia is reducing its OPEB costs, which are mostly health coverage, at a faster pace than many other states. The state has the 11th-highest OPEB funding ratio in the country, covering 11.7 percent of its projected future obligations, the report said. That’s up from 5.4 percent in the 2011 fiscal year.
West Virginia lawmakers have passed several reforms to reduce the state’s OPEB liability.
One measure approved in 2012 requires that only state employees hired before June 1, 2010 can receive subsidies for retiree health benefits. The legislation codified a reform that the Public Employees Insurance Agency board had previously approved.
The bill also diverts $30 million in annual personal income tax revenue to OPEB beginning in 2016. An additional $5 million in tax revenue will be set aside for a trust fund designed to assist those state employees hired after June 1, 2010.
“If the plan that’s all in place today continues for the next 20 years, we have solved the OPEB issue,” PEIA Executive Director Ted Cheatham told Charleston Daily Mail.
West Virginia is one of 30 states that has established some type of trust fund for its OPEB liabilities and is currently funding it, the report said.