FISCAL NOTE

Date Requested: January 11, 2018
Time Requested: 02:10 PM
Agency: Public Employees Insurance Agency (PEIA)
CBD Number: Version: Bill Number: Resolution Number:
1003 Introduced SB254
CBD Subject:


FUND(S):

RHBT

Sources of Revenue:

Special Fund

Legislation creates:

Increases Existing Expenses



Fiscal Note Summary


Effect this measure will have on costs and revenues of state government.


The purpose of this bill is to expand the PEIA Finance Board’s discretion to include subsidies in its financial plans for employees who meet four enumerated elements. This will allow the finance board to expand the number of employees or retirees eligible to participate in the West Virginia Other Post Employment Benefit Plan (OPEB) and receive subsidized healthcare insurance. Passage of this bill will expose the State to an increase in the State’s current Unfunded OPEB Liability balance of $2.5 Billion. There is currently a minimum of six known retirees meeting the criteria outlined in this bill. The current per retiree OPEB cost as of 2018 is $39,460. Passage of this bill will cause exposure to additional unfunded liabilities worth a minimum of $236,763 upon passage. It will also increase the current expenses due to the additional retirees and their dependents enrollment in the plan by a minimum of $20,000 per year. Further concern regarding this bill is any expansion of the OPEB eligibility will undermine the current policy preventing post 2010 new hires participation. The value assessed to exclusion of post 2010 new hires was valued at $355 million in the 2013 valuation. The current $2.5 billion unfunded liability referenced above represents reductions to the WV OPEB liability of approximately $7 billion. These reductions are the result of the significant work and sacrifices by many West Virginians over the past decade to achieve an affordable OPEB for the State of West Virginia. If passed, future audits of the OPEB valuation will expose the States perceived lack of dedication to these previously enacted OPEB cost control policies. This will result in a lack of confidence in the State’s resolve regarding its unfunded OPEB liability, causing the unfunded OPEB liability to increase dramatically. A higher unfunded OPEB liability could result in lower scoring from credit rating agencies, increasing financing costs for the State.



Fiscal Note Detail


Effect of Proposal Fiscal Year
2018
Increase/Decrease
(use"-")
2019
Increase/Decrease
(use"-")
Fiscal Year
(Upon Full
Implementation)
1. Estmated Total Cost 0 257,036 0
Personal Services 0 0 0
Current Expenses 0 20,273 0
Repairs and Alterations 0 0 0
Assets 0 0 0
Other 0 236,763 0
2. Estimated Total Revenues 0 0 0


Explanation of above estimates (including long-range effect):


Please explain increases and decreases in personal services, current expenses, repairs and alterations, assets, other costs and revenues, including assumptions and data sources and delineation between start-up and ongoing costs. Please also include a long-range schedule of costs and revenues if fiscal impact is expected to vary in future years.



Memorandum


Please identify any areas of vagueness, technical defects, reasons a bill would not have a fiscal impact, and/or any special issues not captured elsewhere on this form.



    Person submitting Fiscal Note: Jason Haught
    Email Address: jason.a.haught@wv.gov