(03/05/2008)
By Bob Weaver

Readers could be startled by Pew Center's 'real deal' research about West Virginia's problems.

West Virginia ranks below the national average in a study of state governments, receiving a C+.

The Pew Center on the States ranked the states based on how well they manage their budgets, staffs, infrastructure and information.

West Virginia was one of 19 states to score below the national average, which was a B-minus.

The Mountain State did receive a B for money management, but Cs for policies dealing with public employee hiring and retention, information services and infrastructure.

For more than a decade, the Pew Center's Government Performance Project has been the nation's premier source for comprehensive and independent information about state management.

The center's mission is to improve service to citizens by strengthening government policy and performance.

The Project systematically evaluates how well states manage their money, people, information and infrastructure—four areas critical to ensuring that states' policy decisions and practices actually deliver their intended outcomes.

SUMMARY OF REPORT ON WEST VIRGINIA

Skeptics have long labeled West Virginia as a governmental lost cause.

The coal industry has been in decline for decades—especially when it comes to providing jobs—and while the economy suffered, a long series of state administrations saddled the treasury with budget-busting pension bills.

These have had an obvious constituency: The number of West Virginia residents aged 75 and over has exploded in the past 30 years, at a time when the state's birth rate was the lowest in the nation.

No one is predicting a full-scale economic renaissance for West Virginia anytime soon.

But there's some reason to be hopeful. Coal prices have doubled since 2003, and largely as a result of this, the state saw double-digit growth in revenues for fiscal 2005 and 2006.

What's especially encouraging is that the state didn't blow this extra cash on pork-barrel extravagance.

One of the first things it did was to address its pension woes.

The Teachers Retirement System was by far the worst problem. Many years of inadequate funding had left it with an unfunded liability of nearly $5 billion.

"Teachers were getting out of teaching because they were unsure of retirement," says state Budget Director Mike McKown.

But since the pension's low point in 2005, the state has been pouring money into the system, including $673 million this year.

That doesn't mean that TRS isn't still a big problem. The state will need to spend about $289 million per year until 2034 just to fund teacher retirement.

West Virginia also is gradually moving back from the brink in workers' compensation. For years, the state-run and stateowned system deteriorated, and it reached near-bankruptcy by 2003.

Two years ago, however, West Virginia turned to a private insurance company to operate the system.

At the same time, it dedicated a severance tax worth more than $90 million each year to workers' compensation.

West Virginia still has about $2 billion in unfunded workers' comp liabilities, but by 2016, McKown insists, "this debt will be retired."

While pensions and workers' comp represent clear areas of progress, many of the state's long-standing management problems remain.

West Virginia has never done much long-range planning and needs to begin addressing this.

In the coming years, agencies are going to be hit with a huge number of retirements, but little work has been done toward evolving a strategy to cope with the departures.

The failure to plan applies equally to transportation. The Department of Transportation gets no money from the state's general revenue fund; it is funded largely by a state fuel tax.

A small increase in that tax several years ago contained a sunset provision, and the DOT has had to fight just to get it renewed.

The state's roads and bridges have been so badly neglected that transportation officials don't even try very hard to put a dollar figure on maintenance needs.

"We're not going to get the dollars," says Alice Taylor, the DOT's budget director, "so why spend precious staff time on calculating deferred maintenance?"

Even in this field, however there are small signs of improvement. This year, West Virginia will activate a new pavementmanagement system, and it is in the process of hiring a contractor to begin collecting data on the many thousands of miles of highways.

West Virginia, unlike most states, has responsibility for all of its roads, save city streets.

Officials say it should be ready to go by this spring, and then the department at least will have information at its disposal on such details as the number of cracks or potholes in a given mile.

One last piece of good news: The state's energy-fueled economic gains haven't induced any misplaced euphoria among its leaders.

They point out that the price of coal in futures markets has been sinking. To help prepare, they have stocked their rainy day fund at 15 percent of average general fund revenues, making it one of the strongest in the nation.

For additional data and analysis, go to   pewcenteronthestates.org


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