According to a recent study commissioned by the General Assembly, the Virginia Retirement System (VRS) is underfunded by $18 billion. In his budget proposals, Governor Bob McDonnell will likely tell state employees to pick up some of the tab for restoring the system. With pay raises unlikely, that will be a pay cut for the Commonwealth's workforce.
One might ask why the VRS is ailing. Well, the simple and honest answer is because for several budget cycles the General Assembly and governor have cut the state's, local governments', and school boards' contributions below what was prudent to maintain a viable system able to meet its obligations. They've also borrowed from VRS to patch holes in the budget. They assured everyone that these actions would not endanger VRS' balance sheet. Due to policymakers' own actions the VRS is in some difficulty and those same policymakers want someone else to pick up the tab.
If that sounds unfair... it most definitely is. A quarter century ago the state (also most local governments and school boards) picked in the employees' 5% share of the contribution in lieu of a pay raise. In response to some skepticism, policymakers promised it would be permanent. Then last year legislation passed requiring new employees to pay that 5% themselves. At least newbies understood the deal when they took the job. Now the governor wants all employees to pick up (as yet undisclosed) some of the so-called "employees' share." If the state does so, it is probable that local governments and school boards will follow suit - like state employees, most teachers, police, and other local employees would effectively face a pay cut after several years without pay raises.
The governor's proposal is bad policy that breaks faith with the men and women who perform valuable services for the citizens. The General Assembly should reject this idea, restore rational contribution rates for VRS, begin paying back money borrowed from VRS, and delay funding new pet projects of the administration until current obligations to VRS are met.
Open Thread - Eight Short Years Ago.... - So much has happened since 2009 saw Sarah Palin interviewed while turkeys (and irony) died. h/t Heather. Open thread below....
4 hours ago