reform PEIA now!reform PEIA now!

How did we get here?How did we get here?Where we are!Where we are!Where do we go from Where do we go from here?here?

How did we get How did we get here?here?

Health Care costs are skyrocketingHealth Care costs are skyrocketing GASB Statement 45GASB Statement 45 OPEBOPEB PEIA Finance Board decisionPEIA Finance Board decision AFT-WV/WVSSPA responseAFT-WV/WVSSPA response

What is OPEB?What is OPEB? Other Post Employment Benefits (Health Care)Other Post Employment Benefits (Health Care) Promised benefitPromised benefit All enrolled active participants assessedAll enrolled active participants assessed Assumptions are used to predict a liabilityAssumptions are used to predict a liability How much money will be needed to keep How much money will be needed to keep

promise?promise? $8 billion?$8 billion?

What is the impact of What is the impact of OPEB?OPEB?

BOEs can’t afford to make the BOEs can’t afford to make the paymentpayment

Programs are cut and jobs are lostPrograms are cut and jobs are lost BOEs threaten to file lawsuitBOEs threaten to file lawsuit Governor panics, lobbies PEIA Governor panics, lobbies PEIA

BoardBoard PEIA Board eliminates retiree PEIA Board eliminates retiree

subsidy for new hires subsidy for new hires

AFT-WV/WVSSPA AFT-WV/WVSSPA responseresponse

Board votes to eliminate subsidyBoard votes to eliminate subsidy AFT-WV/WVSSPA challengeAFT-WV/WVSSPA challenge Board amends previous motion to eliminate Board amends previous motion to eliminate

subsidy againsubsidy again AFT-WV/WVSSPA file lawsuitAFT-WV/WVSSPA file lawsuit

Open meetings lawOpen meetings law PEIA Board acted outside Scope of AuthorityPEIA Board acted outside Scope of Authority 2 year provision2 year provision

AFT-WV/WVSSPA and AFL-CIO hire AFT-WV/WVSSPA and AFL-CIO hire actuary (Aon)actuary (Aon)

Participated in task forceParticipated in task force

Where do we go from Where do we go from here??here??

reform PEIA now!reform PEIA now! Retiree Subsidy for new hiresRetiree Subsidy for new hires Annual Experience IncrementAnnual Experience Increment The 80/20 RuleThe 80/20 Rule Revenue stream for retiree Revenue stream for retiree

subsidysubsidy Make-up of Finance BoardMake-up of Finance Board

Reinstatement of Retiree Reinstatement of Retiree SubsidySubsidy

WV has tradition of providing benefits to WV has tradition of providing benefits to offset lower salaries of education employeesoffset lower salaries of education employees

Retiree subsidy is portion of retiree PEIA Retiree subsidy is portion of retiree PEIA premium paid by the state and active premium paid by the state and active employeesemployees

Retiree subsidy granted in lieu COLAs time Retiree subsidy granted in lieu COLAs time and time againand time again

Today, there is a 70/30 premium split (30% is Today, there is a 70/30 premium split (30% is retiree share, so 70% of premium is subsidy)retiree share, so 70% of premium is subsidy)

New hires after June 30, 2010 will NOT New hires after June 30, 2010 will NOT qualify for subsidyqualify for subsidy

Retiree Subsidy in Today’s Retiree Subsidy in Today’s DollarsDollars

Lets say average premium today for pre-Lets say average premium today for pre-65 retiree is $1,000 per month65 retiree is $1,000 per month

That means the retiree share is $300 That means the retiree share is $300 (because of the 70/30 split) per month(because of the 70/30 split) per month

If teacher or service personnel is hired If teacher or service personnel is hired after June 30, 2010, retiree share is after June 30, 2010, retiree share is $1,000 (not counting medical inflation) $1,000 (not counting medical inflation) per monthper month

If medical inflation is included (9%), If medical inflation is included (9%), monthly premium is over $13,000 (in 30 monthly premium is over $13,000 (in 30 years)years)

What can we do about it?What can we do about it?

Pass legislation that guarantees new Pass legislation that guarantees new public employees will receive health public employees will receive health care assistance (subsidy) upon care assistance (subsidy) upon retirementretirement

Increase the Annual Exp. Increase the Annual Exp. IncrementIncrement

Teachers have a salary schedule that Teachers have a salary schedule that provides an AEI for each year up to year 35provides an AEI for each year up to year 35

Service Personnel have a salary schedule Service Personnel have a salary schedule that provides an AEI for each year up to year that provides an AEI for each year up to year 4040

Higher Ed get AEI as long as they workHigher Ed get AEI as long as they work Average age of retirement in TRS is 61Average age of retirement in TRS is 61 Medicare kicks in at age 65Medicare kicks in at age 65 If the average retirement age moves up, If the average retirement age moves up,

OPEB goes downOPEB goes down Incentives, not penalties, should be Incentives, not penalties, should be

embraced to encourage employees to work embraced to encourage employees to work longerlonger

What can we do about it?What can we do about it?

Pass legislation that extends the AEI Pass legislation that extends the AEI from years 36 to 40 for teachers and from years 36 to 40 for teachers and increases the increments from 36 to increases the increments from 36 to 40 for service personnel and higher 40 for service personnel and higher education employeeseducation employees

Real 80/20 cost-sharingReal 80/20 cost-sharing In 2001, law changed to make the cost-sharing In 2001, law changed to make the cost-sharing

split between the state and actives at 80/20 by split between the state and actives at 80/20 by 20072007

80/20 is not co-insurance, but premium cost-80/20 is not co-insurance, but premium cost-sharingsharing

PEIA interprets law to apply to premiums only, PEIA interprets law to apply to premiums only, not counting co-pays and deductibles (out-of-not counting co-pays and deductibles (out-of-pockets)pockets)

If all costs are included, ratio is closer to 70/30If all costs are included, ratio is closer to 70/30 Instead of covering 20%, employees cover 30%Instead of covering 20%, employees cover 30% Employees are paying 50% more Employees are paying 50% more

What can we do about it?What can we do about it?

Pass legislation mandating Pass legislation mandating premiums and all out-of-pocket costs premiums and all out-of-pocket costs (primarily co-pays and deductibles) (primarily co-pays and deductibles) be included in the 80/20 calculationbe included in the 80/20 calculation

Permanent Revenue Stream Permanent Revenue Stream for Retiree Subsidyfor Retiree Subsidy

There has never been a dedicated source There has never been a dedicated source of revenue to pay for retiree benefitsof revenue to pay for retiree benefits

Retiree care is paid from legislative Retiree care is paid from legislative appropriations and active employee appropriations and active employee premiumspremiums

Without dedicated revenue stream, no Without dedicated revenue stream, no ability generate additional dollarsability generate additional dollars

Best case scenario is maintain what we Best case scenario is maintain what we have from year to yearhave from year to year

What can we do about it?What can we do about it?

Pass legislation that creates a Pass legislation that creates a permanent, dedicated revenue permanent, dedicated revenue stream for the retiree share of stream for the retiree share of health carehealth care

Parity on the Finance Parity on the Finance BoardBoard

Responsible for setting benefit levels for Responsible for setting benefit levels for both active and retired public employeesboth active and retired public employees

Established by legislature years agoEstablished by legislature years ago There are 9 seats on BoardThere are 9 seats on Board All 9 individuals are appointed by the All 9 individuals are appointed by the

Governor with the consent of the SenateGovernor with the consent of the Senate Of the 9 seats, two are designated to Of the 9 seats, two are designated to

represent public employees and there is 1 represent public employees and there is 1 seat for a retireeseat for a retiree

Clearly, plan participants are under-Clearly, plan participants are under-representedrepresented

What can we do about it?What can we do about it?

Pass legislation that changes the Pass legislation that changes the make-up of the PEIA Finance Board make-up of the PEIA Finance Board that gives public employees equal that gives public employees equal representationrepresentation

Our ASK of You!Our ASK of You!

Generate conversationsGenerate conversations Encourage completion of Governor’s Encourage completion of Governor’s

postcardpostcard Distribution and completion of Legislative Distribution and completion of Legislative

postcardspostcards Board of Education resolutionsBoard of Education resolutions Labor Council resolutionsLabor Council resolutions Activists for Legislative Education (ALE) Activists for Legislative Education (ALE)

mtgs.mtgs.