CHARLESTON -- One of the state's teachers' unions is threatening a lawsuit over a decision to terminate certain health benefits for retired teachers and other state employees.

The Public Employees Insurance Agency Finance Committee voted May 14 to end health insurance subsidies for retirees for any employees hired after Jan. 1, 2010. The vote came during an emergency meeting of the committee, and according to Judy Hale, president of the American Federation of Teachers of West Virginia, the vote had not been on the agenda.

"We will challenge the decision and let the courts decide whether a public body can function like this," she said.

Hale isn't concerned just about the procedure but about the decision itself. Retirees currently pay 30 percent of their insurance premiums thanks to the state subsidies. Employees hired after Jan. 1 will need to pay 100 percent if the decision stands, according to the union.

She said the subsidies were part of the few incentives West Virginia has for attracting new teachers and other employees. Starting pay for teachers is among the lowest in the nation.

"We are having a great deal of trouble recruiting good teachers into the profession, and one of the things we have been able to offer them are pretty good benefits," she said.

But the subsidy is coming at a large cost to the state, PEIA Director Ted Cheatham said. Projections indicate the state could face a liability of $18 billion by 2030 had the subsidies remained in place. Their removal trims $7 billion off that figure.

He said West Virginia is taking a second look at the benefits it provides retirees because those benefits are getting more expensive.

First, the state has seen its investment portfolio shrink during the last few months thanks to stock market troubles, Cheatham said.

Second, the federal government is cutting back on overpayments to states made through its Medicare Advantage program, which means the Mountain State will lose the equivalent of $104 million every two years. That money could've been used to bolster the benefits program.

Finally, health care costs are rising, and it is hard for the state to keep up.

As for whether the vote was appropriate, Cheatham said the agency believes the board was on sound ground.

"I know the unions are concerned about it, but even if the board held a regular meeting, they can take the same vote," he said.

State law states that notice for any emergency meeting can be posted "any time" before a meeting and that it shall state the "date, time, place and purpose of the meeting and the facts and circumstances of the emergency."

Hale said the union's attorney is reviewing the case.