States in Crisis Not Role Models

Among arguments being made in favor of irresponsible government in West Virginia is one we ought to know better than to heed: Everyone else is doing it. To paraphrase what some of our parents told us when we asked for permission to do something foolish or that our families couldn’t afford, should we want to jump off a bridge because “everyone else is doing it?”

Of course not.

Last month the West Virginia Public Employees Insurance Agency’s finance board voted in favor of fiscal responsibility. The board agreed to discontinue subsidies for health insurance coverage provided to government retirees – but only for people hired after Jan. 1, 2010. No one currently on the public payroll will be affected by the change.

PEIA Finance Board members took the action because the state has a massive unfunded liability – about $7 billion – for health care benefits promised to existing government employees and retirees. State officials have no realistic idea of how to pay for those benefits. Finance board members wisely decided that it was imprudent to add to the burden.

Since the decision was made, the PEIA has faced a firestorm of criticism. One argument, as we noted in a Sunday editorial, is that the change will make it more difficult for West Virginia to attract and retain good public employees, including school teachers.

A study of retiree health insurance programs in other states has been dredged up to bolster the critics’ arguments. That study, conducted by the Center for State and Local Government Excellence in North Carolina, shows that only five states now require retirees to pay all their health insurance premiums. Fifteen states cover premiums entirely. West Virginia now uses state resources to pay about 72 percent of the cost of insurance for government retirees.

Left out of that argument is the state’s dismal situation in regard to unfunded liabilities. According to the Pew Center on the States, West Virginia has the nation’s fifth-largest liability, on a per capita basis, for government retiree benefits.

On Thursday, the PEIA Finance Board is to discuss the matter again. According to a published report, the earlier action may be rescinded, then reconsidered at a later date.

West Virginia simply cannot afford to continue piling debt upon debt. Other states may be doing just that. However, a look around the nation at other states that are in fiscal crises indicates that West Virginia should be doing all it can to pay down – not build up – unfunded liabilities. This clearly is a situation in which it would be foolish for West Virginians to do what “everyone else” is doing.