Group seeks support on liability issue

Michelle Saxton

Nov. 4, 2009 (McClatchy-Tribune Regional News delivered by Newstex) -- CHARLESTON, W.Va.--West Virginia School Boards Association President Rick Olcott is urging county board members to contact lawmakers for support in removing financial liability for promised retiree health benefits from the local boards' books.

Olcott said Tuesday he planned to send an electronic memo in the next couple days to all 275 of West Virginia's county school board members about the unfunded liability of public employees' non-pension, other post-employment benefits, or OPEB.

"I am appealing to all of our school board members this week to talk to their legislators," Olcott said, adding of lawmakers, "If I were them, I would not want to leave the legacy of bankrupting 55 county school boards."

West Virginia's unfunded liability for these benefits, basically health insurance, has been estimated to be about $7.8 billion and growing.

States have been looking at the liabilities since the national Governmental Accounting Standards Board required them to determine how much money would be needed to cover benefits promised to public workers in retirement.

County school boards have been concerned about carrying a share of the debt on their books, saying it could affect their bond sales and their ability to provide services.

Olcott's memo also mentions a proposal being spearheaded by the governor's office to provide short-term relief to the boards by changing the way the state Public Employees Insurance Agency bills county school boards for the liability during the 2010 fiscal year.

The proposal could be discussed if a special session is called during this month's legislative interims, which begin Nov. 17, said Olcott, who also is president of the Wood County Board of Education.

"It's really important that our legislators understand the seriousness of it," Olcott said.

The accounting proposal was discussed during a recent work group meeting and would change a section in the state code that mandates what the PEIA finance board must bill, said Ryan Palmer, deputy general counsel for the governor's office.

Instead of billing the full annual required contribution determined by actuaries, the bill would reflect just the minimum annual employer payment, he said, adding that would be for the 2010 fiscal year only.

"This is just one small step in trying to find a broad solution in giving everybody the relief they need under OPEB," Palmer said.

Work group members still hope to come to a solution by the regular Legislative session, which starts in January, Palmer said.

"This isn't a long-term solution by any means," Palmer said. "We're trying to give ourselves a little time as we're sitting down at these meetings, try to find a permanent, long-term fix."

How the change would affect billing in terms of numbers is difficult to speculate until the proposed legislation passes, said Diane Holley-Brown, communication director for the state Department of Administration.

"But if the legislation would focus on addressing the billing of the ARC (annual required contribution), then there would be no change in the liability," Holley-Brown said in an e-mail Tuesday.

The proposal is a stopgap and a good-faith first step toward a permanent resolution, Olcott said, but he added the issue of liability still must be resolved.

"In simple family terms, the legislature birthed the 55 county boards many years ago, and those offspring are anywhere from 70 percent to 90 percent dependent on the state for funding," Olcott wrote in an e-mail last month.

"To direct the OPEB liability at local county boards is like parents who have been financially irresponsible to direct that neglect and its liability on its dependent children."

Legal action is pending as 49 county school boards have voted to join a lawsuit over the issue, and two others -- Fayette and Ohio -- have indicated they would support that lawsuit, Olcott said Tuesday.

Wayne County had not made a decision yet, while Grant, Mingo and Preston counties are under state control, he said.

"The lawsuit is pretty much ready to go," Olcott said.

About $100,000 has been approved in preparation work for the lawsuit, with counties dividing that up into a flat amount of about $2,500 each, he said. Olcott added that as the case moves forward, officials would have to determine the most equitable distribution for any future costs.

"Our desire would be to avoid a lawsuit," Olcott said. "It is truly unfortunate that we're having to spend taxpayer dollars to have to pursue this to get the attention it needs. It doesn't feel good."

"We're at the 11th hour," Olcott said. "And the next general session is it."

Contact writer Michelle Saxton at michelle.saxton@dailymail.com or 304-348-4843.

Newstex ID: KRTB-0477-39427797