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VRS Pension Changes from WSJ Article
Source: Wall Street Journal Ever-Higher Budgets Can't Be the NormBy Bob McDonnell When I took office in January, we faced two massive budget shortfalls. The first was $1.8 billion in the fiscal year 2010 budget. To get this under control we cut spending and provided a financial reward for state workers to generate savings and not spend their entire agency budgets by the end of the fiscal year. Six months later we announced a $403 million surplus. The second shortfall was $4.2 billion in the current biennial budget. Again, we cut a wide variety of programs (including in education and health), reducing state spending to 2006 levels. As a result we closed that shortfall without a tax increase—indeed we threatened a veto if the legislature passed the previous governor's proposed $2 billion tax increase. The legislature rejected the tax unanimously. Virginia's state budget grew by 73.4% from 2000 to 2009, much faster than the rate of growth in population plus inflation. This is unsustainable and unacceptable, and the budget cannot be seriously restrained without addressing its two primary drivers: personnel and programs. As a result, we supported a significant overhaul of Virginia's pension system. All state employees hired after July 1 of this year will now, for the first time in a generation, contribute to their own pensions. With pension-system reform, we will save an estimated $3 billion over the next 10 years. Actuaries estimate that in the long run, our reforms will reduce the total cost of Virginia's pension system by 10%. Our second major reform was an immediate, statewide hiring freeze. We obtained enhanced authority from the legislature for the governor to order a freeze that covers all noncritical areas of state government, not just a select few agencies. This strict freeze, together with reductions in full-time positions, will save over $20 million a year. Looking forward, we've also created a commission on government reform that is evaluating over a thousand ideas to save tax dollars, by doing everything from cutting and consolidating boards and agencies to creating a one-stop shop where businesses can access every license, permit and registration they need to operate. For too long, state governments have operated on the assumption that ever-higher budgets are the norm. We intend to redo the way government operates. Mr. McDonnell, a Republican, is the governor of Virginia. |
Virginia Gov. Bob McDonnell on Tuesday formally opposed letting local governments force police, teachers and other workers to foot part of the bill for their own pensions
Source: Washington Examiner 14 April 2010 Virginia Gov. Bob McDonnell on Tuesday formally opposed letting local governments force police, teachers and other workers to foot part of the bill for their own pensions, responding to a lobbying campaign by public employee groups who said the change amounted to a pay cut. | FCTA Analysis: Time for Virginia State Government Employees to Contribute to the VRS SystemMost people living in Virginia do not know that Virginia State government employees do not contribute into the VRS. Virginia employs approximately 100,000 people and is the largest employer in the Richmond region with nearly 26,000 employees. The State is expecting a $1.35 billion shortfall in fiscal year 2010. The VRS funds approximately 600,000 participants. Currently, the State, as an employer contributes 6.26% of each worker’s annual salary into the VRS. The percentage of the state’s employer contribution varies every budget cycle. It is calculated based on actuarial studies of how much money is needed to keep the plan adequately funded. In addition, the State contributes 5% for the employee share of the worker’s annual salary. In other words, the State pays both the employer and employee share of their retirement without the employee contributing one penny! (Read More) |
Governor Proposes Underfunding VRS to Save Money for FY2011
Source: FCPS Bottom Line Newsletter The governor, house, and senate also proposed reducing the contribution that localities (such as Fairfax County Public Schools) pay into the Virginia Retirement System (VRS). The VRS is the major retirement system for FCPS employees, but it is controlled by the state, which defines the benefit levels for employees and the required contribution for local school systems. Any reduction in the rate would need to be made up for in future years, meaning larger increases in the contribution that FCPS must make in outgoing years. If the state adopts the reduced rates as proposed, this would reduce expenditures in FCPS' budget for next school year. However, this short-term fix has long-term consequences. |
VA House Bill HB1189 - VRS Modifications
The house is presently discussing additional reforms to the VRS system. See HB 1189 for more info. Virginia Retirement System; new employees. Modifies for new employees, all the defined benefit retirement plans administered by the Virginia Retirement System ("VRS"), as follows: (i) requires employees to contribute five percent of creditable compensation, and (ii) increases the number of months used to calculate average final compensation from 36 to 60, (iii) increases the cost, and decreases the time in which employees may purchase certain prior service credits, and (iv) reduces the portion of the increase in the Consumer Price Index used for determining annual retirement allowance supplements ("COLA") from three percent plus one-half percent of the additional increase up to seven percent, to two percent plus one-half percent of the additional increase up to ten percent. The bill also decreases the Commonwealth's contribution for employees in institutions of higher education participating in an optional retirement plans by 2.4 percent of creditable compensation. |
JLARC Recommendations to Change the VRS
The study conducted by the Joint Legislative Audit and Review Commission (JLARC) in October 2008 is a good starting point in the search for solutions to the VRS issues we are facing. One question that comes up is whether or not changes to the VRS can be made for current employees. According to the JLARC study each of the options described would apply only to newly-hired employees and current employees in the standard VRS plan who are not yet vested in their VRS benefit. (Source Pg. 98 JLARC Oct. 2008) Another place for information is the VRS Comprehensive Annual Financial Report For the Year Ended June 30, 2009 |
2010-02-19 Compare your Pension with a Teacher's Pension
How does your pension compare to what teachers get? Teachers get three pensions:
Enter the same information into the Employee Retirement Fairfax County calculator at http://erfc.gabrielroeder.com/ERFCPortal/DesktopDefault.aspx?tabindex=1&tabid=172 and it will calculate your pension from that fund. Both calculators can also be accessed from http://www.fcps.edu/ERFC/index.htm. |
2010-02-18 Chap Peterson 34th District Blog
Source: Chap Pertersen 34th District Blog
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2010-02-18 From the Washington Post
Source: Washington Post
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2010-02-18 from the Washington Post
Source: Washington Post Most industry and government experts say that pension systems that have fallen below 80 percent funded are in poor health. As of summer 2008, Maryland was 78 percent funded, while Virginia was at 84 percent. Both states saw large investment losses over the next 12 months, with Maryland's pension funds falling 20 percent and Virginia's dropping 21 percent. Those losses will make it even harder for the states to keep pace with the 8 percent return on investment assumption, the study noted. |