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reform PEIA now!

reform PEIA now!. How did we get here? Where we are! Where do we go from here?. How did we get here?. Health Care costs are skyrocketing GASB Statement 45 OPEB PEIA Finance Board decision AFT-WV/WVSSPA response. What is OPEB?. Other Post Employment Benefits (Health Care)

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reform PEIA now!

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  1. reform PEIA now! • How did we get here? • Where we are! • Where do we go from here?

  2. How did we get here? • Health Care costs are skyrocketing • GASB Statement 45 • OPEB • PEIA Finance Board decision • AFT-WV/WVSSPA response

  3. What is OPEB? • Other Post Employment Benefits (Health Care) • Promised benefit • All enrolled active participants assessed • Assumptions are used to predict a liability • How much money will be needed to keep promise? • $8 billion?

  4. What is the impact of OPEB? • BOEs can’t afford to make the payment • Programs are cut and jobs are lost • BOEs threaten to file lawsuit • Governor panics, lobbies PEIA Board • PEIA Board eliminates retiree subsidy for new hires

  5. AFT-WV/WVSSPA response • Board votes to eliminate subsidy • AFT-WV/WVSSPA challenge • Board amends previous motion to eliminate subsidy again • AFT-WV/WVSSPA file lawsuit • Open meetings law • PEIA Board acted outside Scope of Authority • 2 year provision • AFT-WV/WVSSPA and AFL-CIO hire actuary (Aon) • Participated in task force

  6. Where do we go from here??reform PEIA now! • Retiree Subsidy for new hires • Annual Experience Increment • The 80/20 Rule • Revenue stream for retiree subsidy • Make-up of Finance Board

  7. Reinstatement of Retiree Subsidy • WV has tradition of providing benefits to offset lower salaries of education employees • Retiree subsidy is portion of retiree PEIA premium paid by the state and active employees • Retiree subsidy granted in lieu COLAs time and time again • Today, there is a 70/30 premium split (30% is retiree share, so 70% of premium is subsidy) • New hires after June 30, 2010 will NOT qualify for subsidy

  8. Retiree Subsidy in Today’s Dollars • Lets say average premium today for pre-65 retiree is $1,000 per month • That means the retiree share is $300 (because of the 70/30 split) per month • If teacher or service personnel is hired after June 30, 2010, retiree share is $1,000 (not counting medical inflation) per month • If medical inflation is included (9%), monthly premium is over $13,000 (in 30 years)

  9. What can we do about it? • Pass legislation that guarantees new public employees will receive health care assistance (subsidy) upon retirement

  10. Increase the Annual Exp. Increment • Teachers have a salary schedule that provides an AEI for each year up to year 35 • Service Personnel have a salary schedule that provides an AEI for each year up to year 40 • Higher Ed get AEI as long as they work • Average age of retirement in TRS is 61 • Medicare kicks in at age 65 • If the average retirement age moves up, OPEB goes down • Incentives, not penalties, should be embraced to encourage employees to work longer

  11. What can we do about it? • Pass legislation that extends the AEI from years 36 to 40 for teachers and increases the increments from 36 to 40 for service personnel and higher education employees

  12. Real 80/20 cost-sharing • In 2001, law changed to make the cost-sharing split between the state and actives at 80/20 by 2007 • 80/20 is not co-insurance, but premium cost-sharing • PEIA interprets law to apply to premiums only, not counting co-pays and deductibles (out-of-pockets) • If all costs are included, ratio is closer to 70/30 • Instead of covering 20%, employees cover 30% • Employees are paying 50% more

  13. What can we do about it? • Pass legislation mandating premiums and all out-of-pocket costs (primarily co-pays and deductibles) be included in the 80/20 calculation

  14. Permanent Revenue Stream for Retiree Subsidy • There has never been a dedicated source of revenue to pay for retiree benefits • Retiree care is paid from legislative appropriations and active employee premiums • Without dedicated revenue stream, no ability generate additional dollars • Best case scenario is maintain what we have from year to year

  15. What can we do about it? • Pass legislation that creates a permanent, dedicated revenue stream for the retiree share of health care

  16. Parity on the Finance Board • Responsible for setting benefit levels for both active and retired public employees • Established by legislature years ago • There are 9 seats on Board • All 9 individuals are appointed by the Governor with the consent of the Senate • Of the 9 seats, two are designated to represent public employees and there is 1 seat for a retiree • Clearly, plan participants are under-represented

  17. What can we do about it? • Pass legislation that changes the make-up of the PEIA Finance Board that gives public employees equal representation

  18. Our ASK of You! • Generate conversations • Encourage completion of Governor’s postcard • Distribution and completion of Legislative postcards • Board of Education resolutions • Labor Council resolutions • Activists for Legislative Education (ALE) mtgs.

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