Lawmakers have included $1.3 billion over 10 years to permanently fund retired coal miners' health care benefits in a budget deal that extends funding for the federal government through September 2017.

Sen. Mitch McConnell, R-KY, majority leader in the Senate, and Sen. Joe Manchin, D-WV, both released statements, with each claiming to have secured the money to fund the health care benefits of retired miners.

On March 1, 2017, 22,600 retired members of the United Mine Workers of America union were informed that their health care benefits would be terminated at the end of April.

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The deal was an extension of promises lawmakers in both parties made last December, when a continuing resolution to fund the government through April included only partial funding for UNWA members' health care.

Not included in the budget were funds to secure the UMWA 1974 Pension Plan, a multiemployer plan that is projected to be insolvent in the next decade. According to the plan's 2014 Form 5500 filing, the plan holds $4.16 billion in assets and has $9.7 billion in liabilities, accounting for a $5.6 billion funding gap.

The UMWA Health and Pension Plans were originally negotiated in 1946 under the watch of President Truman after the UMWA went on strike and the federal government temporarily took possession of the country's coal mines.

The ensuing Krug-Lewis Agreement guaranteed the health and pension benefits of mine workers. The UMWA has long maintained that the guarantees made 70 years ago were permanent. But those who are against the bailout of the health care fund, including analysts at the conservative think tank The Heritage Foundation, argue that the original federal backstop was intended to be temporary.

In his statement on the new funds to secure retirees' health care benefits, Sen. Manchin said, "I am more determined than ever to fulfill our whole obligation and secure retired miners' pension benefits as well."

The coal industry has been decimated by more than 25 bankruptcies over the past decade, as a supply glut in natural gas drove down coal consumption. Once employing 850,000 in the 1920s, the coal industry employed 50,000 workers at the end of 2016. There are now only about 10,000 union members paying into the health and pension funds for about 120,000 members.

The relief for the miners comes with the support of the White House. But it also comes on the heels of a recent audit by the Inspector General of the Department of the Interior, which is where the funding for the health benefits will come, that is critical of how the funding has been administered to the UMWA.

Between 2011 and 2015, the Office of Surface Mining Reclamation and Enforcement, which distributes funds to the UMWA health and pension funds, transferred $961 million to the funds. But the audit found that the OSMRE provided "minimal oversight" as to how the funds were used by the plans.

The audit alleges, among other things, that the staff at OSMRE lacks expertise with benefits plan administration, and "continued to fund the annual transfer requests to the UMWA without obtaining and validating the necessary information and supporting documentation from UMWA."

Of the 16 health and pension plans administered by the UMWA, three of the health plans received more than half of their funding from the Department of Interior in 2015, according to the audit.

"The Federal Government is not represented on the boards of trustees responsible for executing the federally supported health benefit plans' missions. Therefore, the Government is paying for these benefits but it does not have involvement in how this money is spent," the audit found.

In its response to the audit, the acting assistant secretary of the Interior said the OSMRE agrees with the audit's finding that "significant amounts of federal funds are being transferred to the UMWA health and retirement funds with no existing statutory provisions for federal oversight."

But OSMRE's oversight of the funds to the UMWA plans is limited by the "inadequacy" of the program's existing legislative authority, according to the response to the audit.

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Nick Thornton

Nick Thornton is a financial writer covering retirement and health care issues for BenefitsPRO and ALM Media. He greatly enjoys learning from the vast minds in the legal, academic, advisory and money management communities when covering the retirement space. He's also written on international marketing trends, financial institution risk management, defense and energy issues, the restaurant industry in New York City, surfing, cigars, rum, travel, and fishing. When not writing, he's pushing into some land or water.