CHARLESTON, W.Va. — The Public Employees Insurance Agency is on solid financial footing for now, but is keeping a close eye on a trend of people leaving their school or state positions.
During a PEIA Finance Board meeting on Thursday, agency officials including director Ted Cheatham acknowledged watching the effects of a shrinking pool of members.
The number is a couple thousand a year, Cheatham said.
On the one hand, that is fewer people being served by the state’s insurance plan. On the other hand, that’s fewer people paying premiums.
Cheatham, speaking to reporters after the meeting, said the unknown factor is the relative health of the people staying in the plan versus those who are leaving.
“Less people are paying premiums and less people are getting services,” he said. “And we’ve been doing our best to try to figure out if the risk is the same — the population that are leaving is the same as the population that we’ve had. At the moment that risk is pretty stable, within a couple of percents. But we are monitoring.”
Cheatham said there are two factors at work.
One is that a decreasing student population has affected the school aid formula, resulting in fewer teaching positions in schools.
The other is vacancies left open at state agencies.
“They’ve been looking at those holes and not filling them potentially and eliminating positions in the state,” Cheatham said.
State officials — and the teachers who are insured — spent much of last year focused on PEIA’s financial stability.
Cheatham has said PEIA’s year over year cost growth is about $50 million. So: an additional $50 million, then an additional $100 million the following year, then an additional $150 million the third year.
Gov. Jim Justice promised an additional $150 million for PEIA reserves for the coming fiscal year, and the Legislature approved that.
Cheatham said fiscal 2022 lines up as the first year that dipping into that reserve would be necessary.
“Maybe in ’21, but definitely in ’22 I see that we’ll need to tap into that,” he said.
The new fiscal year begins July 1. A financial report showed the fund doing fairly well right now.
The plan for active employees shows a year-end surplus of $13.5 million. That surplus will go into reserves to offset future costs.
The plan for retirees shows a year-end surplus of $52 million. That will go toward other post employment benefits.
This is the time of year when PEIA begins preparing for next year’s insurance plan. Part of that process is a series of public hearings around the state.
Cheatham said he does not expect premiums to go up or benefits to be cut.
“I do not see significant changes based on our financial situation,” he said.
Justice promised pay raises for public employees, and the Legislature approved that. When that happened last year, PEIA agreed to adjust its insurance tiers to avoid unintended consequences — higher pay resulting in higher insurance costs.
Cheatham told the finance board that another tier adjustment will happen this year.
That means all the tiers will be raised by $2,700.
“We are changing the tiers based on the raise that was just passed. We’ve gotten approval,” Cheatham said. “We’re going to increase all the salary tiers just like we did last year.”