MARTINSBURG, W.Va. — The retiring baby boom generation represents a demographic wave that stands to have a significant impact on state and federal budgets, officials said in a forum Thursday night.
“It’s going to be a tsunami,” said state Sen. Dan Foster, chairman of the West Virginia Senate Pensions Committee.
Foster, D-Kanawha, joined Del. Walter Duke, R-Berkeley, A. Harry Zeeve of The Concord Coalition and West Virginia Budget Director Mike McKown for the forum on state and federal budget deficits, which was hosted by Blue Ridge Community and Technical College.
Foster and Duke told a crowd of about 50 people who attended the forum that lawmakers have been looking at ways to give state employees who are eligible to retire incentives to continue working until they are closer to being eligible for Medicare as a means to shore up under-funded benefit programs.
State lawmakers years ago voted to provide retiring state employees, including public school teachers, additional health care incentives known as Other Post Employment Benefits (OPEB) in lieu of pay increases, but never set aside money to pay for the programs, according to the lawmakers.
With increases in health care costs, combined with increasing numbers of retirees, the estimated $8 billion unfunded liability problem the state now faces could get worse without some changes, Foster said.
While McKown said the state has weathered the national recession better than most, OPEB pose long-term problems if not addressed.
McKown cited a recent report that Maryland officials are considering early retirement buyouts to try to reduce state payrolls and noted other states, such as Ohio, have depleted their rainy day funds. McKown said Ohio had 87 cents in its fund. West Virginia has more than $600 million set aside, an increase from less than $100 million in 2002, Duke noted.
Zeeve said West Virginia, even with its liability, is pretty well positioned, all things considered. But Zeeve also said the financial woes of California, particularly could cause a negative “ripple effect” across the nation if it defaulted on its obligations.