The school boards filed a lawsuit Monday in Kanawha County Circuit Court against the state’s Public Employees Insurance Agency, its finance board and the state auditor.
The lawsuit challenges the constitutionality of a measure the Legislature adopted in 2006 that allows PEIA to charge government employers yearly amounts to address the state’s unfunded liability.
PEIA, which pays 70 percent of the cost of retirees’ health care premiums, has also decided to stop subsidizing insurance premiums starting with July hires.
The school boards argue that the state should be responsible for paying for the benefits it promised current and retired public employees, as it sets retiree health benefits and rates. They also object to having to list as current debt what they don’t or can’t pay toward their “annual required contribution.”
“That totally distorts their financial picture,” lead attorney Andrew G. Fusco of Morgantown said Wednesday.
If allowed to continue, the payments could force cash-strapped school boards’ to cut staff and educational programs, and delay school construction and maintenance plans, among other things, Fusco argues in the lawsuit.
The 50 school boards’ liability range from about $36,000 a year to nearly $1.1 million for larger school systems, for a total of about $45 million.
A call to the PEIA was not immediately returned Wednesday.
General Counsel Lisa Hopkins said the state auditor’s role is to ensure that local governments follow generally accepted auditing standards.
Lawmakers were hoping to address the state’s nearly $8 million gap for benefits promised to all state, county and local government employers during the current legislative session, but missed Monday’s bill filing deadline.
A special Senate committee chaired by Sen. Brooks McCabe, D-Kanawha, had identified 17 options for tackling the shortfall. A half-dozen would require legislation. One would raise the minimum retirement age for public workers from 55 to 60. Another would reduce the amount county school boards and other government employers set aside for their share of these costs.
McCabe has said the Senate committee could still launch a limited bill by Friday, but a special legislative session on the issue may still be necessary, something Gov. Joe Manchin’s office said the governor would consider as long as it is not the sole topic to be considered.