July 2009
1. Suggestion FORM YOUR OWN SOLUTION GROUP if you haven’t done so already- TASK FORCE. Since PEIA can only suggest cutting benefits form an ad hoc committee with 3 or 4 representatives from each union or retiree group plus a few other interested actives and retirees not associated with any union or retiree group. PERSA an CORPE too. Get actives from each agency DHHR highways etc. and retirees from each. Divide into subcommittees as needed. Group can consult with delegates and senators who are committed to saving benefits and finding funding. Board did not mail out notice of public hearings to plan participants. PEIA Board does not represent the public employees. Make a group that does. Name group and can do press releases, plus then each union or retiree group and go back and release their own take on things. The committee would:
a. Identify possible state funding sources and state waste (See number 2 below). Must be many more. Apparently there’s about $ 475 million (about half a billion) in several state ‘rainy day’ reserve funds. Surely part of this could be used for the PEIA unfunded liability fund, as it would still be saved. (note though article notes a drop of about $76 million in market meltdown, a previous article indicted WV would regain most of this drop as the market goes back up as it had very little in risky investments like Lehman).
b. Look for wasteful state spending ( example 200 million tax break to a coal – to liquid plant for a Texas/Penn that only provides 60 jobs (that’s 3 million per job) and they may build 4 more. Does that mean another 800 million in tax breaks? That equals 1 billion, if invested at a conservative 5% compounded daily for 30 years, equals 4.48 billion, a sizable part of the OPEB.
c. Identify unfair spending – Governor got $55,000 raise. IF completes 30 years of service, will increase his pension by almost 1 million ( $990000) if he lives 30 years past retirement.
d. Identify extravagant state spending like $37,000 for leather embossed conference room chairs. 2 million plane (a trade up) when had 2 , liquor for parties, etc.
e. Identify failures to fund PEIA, like not putting the 51 million into the OPEB this year, which is only $510 per active or retiree and some of those workers only make$17,000 a year, and some pension are only 4 or 5 hundred a year. If one looks at 2007 fiscal reports it looks like about 4 of previous 5 years, state did not do a full 20/80 match and was short by many many million. Emphasize interest over 30 years this could have produced.
f. Identify wasteful and questionable spending at PEIA, like $30,000 for fitness books from friend of governor etc. Review profit margin given contracted companies and CEO wages and bonuses. OR PEIA being only insurance company pay to start over priced exercise facility in Marshall ounty that is open to public. ($37,000 for 10 bikes and a wii)And it may be a proto type. Review expense accounts. This money could be earning interest for OPEB.
g. Identify changes in Medicare etc. and any future federal health plan by new federal administration that will help PEIA. Even just filling the donut hole in Medicare part D prescription drug plan would save PEIA millions a year. Nothing should be done until we see what US Congress does over the next few years.
h. Identify legal changes that will help, such a passing a drug transparency law that will save everyone money, not just PEIA. There must be other laws that can help. The menu law, and laws to limit profit & administrative fees and expense accounts for insurance companies. Coventry’s profits went up over 900% since 2000. CEO got 11.3 million in salary, bonuses, and stock options in 2007. Coventry is parent company of our Medicare Advantra Company.
i. Identify and counter every misleading statistics released by PEIA. Get newspapers to print retractions and corrections. Example the OPEB. They overinflated, plus are they not reporting the OPEB for state, counties, and cities together. The state part of OPEB should be reported separately. etc.
j. Identify funds not collected, and interest not earned- several counties and cities failed to pay their share of premiums for some of their participants ( retirees) for years, and this cost the rest of plan interest because the plan had to use other funds to cover this and lost interest. k. Be aware that any money wasted by PEIA, or over paid to contracted insurance companies, also costs PEIA interest it could have earned on those funds. Every dime wasted is like wasting 44.8 cents over 30 years. l
You should insist at public hearings to PEIA that one solution to problem is for the unions and retirees to form a group to come up with solutions. You don’t need PEIA permission to do this, but they will either have to recognize group, or look like they don’t want solutions if they don’t. Keep control of your group, each union and retiree group picks their representatives not PEIA.
m. Unions compete for members but there are plenty of people not in any union & seeing the unions work together will help recruit members for all, especially from the new hires.
n. Be aware that at 4% inflation over 30 years, incomes & taxes will be up 324%, so state will have more & be paying with dollars worth 1/3 of what they are now, but retirees don’t have COLA’s.
The laws to make agencies look at unfunded liability for post employment benefits was not meant to be used to take benefits way, but to fund them.
Remember Options C & D in PEIA presentation take benefits and defeat the 30/70 split., as do increases in deductibles, copays, coinsurance, and OOPM. It’s cost shifting away from the 30/70 and gives employees/retirees 100% of those increases. As Medicare pays 80 to 85% of most things, the PEIA Option C and D at 80% and 50% could really means they’re paying only 16% or 7.5%. We were promised traditional coordination of benefits and C&D are not that.
