Local Legislators React to Governor’s State Retirement Proposal

By RAY REED
Published: December 17, 2010

Lynchburg-area lawmakers were looking closely Friday at Gov. Bob McDonnell’s proposal to require state employees and teachers to contribute 5 percent of their pay into the Virginia Retirement System pension fund.

Del. Ben Cline, R-Rockbridge, called McDonnell’s idea “a complicated proposal,” and said he didn’t want to reduce the employees’ take-home pay.

The governor’s plan tries to keep workers’ paychecks at their current level, Cline said.

McDonnell wants to offset the retirement contribution by giving employees a 3 percent pay raise and encouraging local governments to do the same.  In addition, McDonnell said he hoped to give a 2 percent bonus to workers at the end of 2011, so the retirement contribution would be fully offset.

“We have to ensure that any additional request of state employees to help contribute toward their retirement doesn’t leave them with less in their monthly paychecks,” Cline said.

He added that those legislators also have a responsibility to keep the VRS solvent.

Del. Scott Garrett, R-Lynchburg, said he had found, in talking with retired teachers in the Lynchburg area, that their top concern was the General Assembly’s dipping into the VRS pension fund this year for $620 million to balance the state budget.

“I have heard from folks their consternation, and that their retirement benefits are very important to them,”Garrett said.

He said he told the retired teachers the VRS retirement funds usually earns more than 8 percent interest each year.  A bad 2008, in which the system lost 21 percent, was followed by a much-improved 2009 in which it gained 14.1 percent, Garrett said.

A bigger question for the retirement system involves liabilities for coming years as more people retire,Garrett said.

“It’s going to be a huge story when the feds finally give guidance” on how they expect those liabilities to be accounted for, Garrett said.

Another aspect of the budget proposals McDonnell announced Friday holds particular interest for Lynchburg,Garrett said.

Tuition assistance grants, which are heavily used by students at Liberty University and Lynchburg College, would be increased $3 million for next year.  The grants were worth $2,600 to each recipient this year.

“A lot of their graduates stay local,” and become nurses, teachers and law enforcement officers inLynchburg, Garrett said.

State Sen. Steve Newman, R-Lynchburg, said he was impressed by McDonnell’s focus on economic development and creating new jobs.

“During his campaign, the governor repeatedly pledged his commitment to creating jobs,” Newman said.

“These budget amendments are proof positive that ‘Bob’s for Jobs’ was not just a campaign slogan. The package has a series of job-creating initiatives,” Newman said.

An independent group, the Commonwealth Institute for Fiscal Analysis, noted that Virginia has gained 55,000 net new jobs in the past year, better than most states.

Patrick Getlein, the institute’s spokesman, said the state nevertheless has a jobs shortfall, and would need to create 11,000 per month the remaining three years of McDonnell’s term to catch up.