From Robley Jones email. Robley is a VEA outreach specialist.
The Richmond Times-Dispatch reported on Friday that Governor McDonnell says Virginia will have a surplus for the third year in a row. How has that surplus been achieved? This is a surplus achieved, in part, by shortchanging Virginia’s students and teachers. Here are a few ways the surplus was achieved which affect our schools and school employees:
- We are still funding our schools at a level less than what was provided in 2008-09.
- We are still funding VRS at a level significantly below the VRS Board of Trustees certifies rate for all employee groups. The 2013-14 certified rate for teachers was 16.77%, the state budget provides that state share of funding for 11.66%. This increases the unfunded liability of the fund.
- No funds have been provided for teacher salaries since 2008.
Shouldn’t some of the surplus go to funding public education?
Obviously, Virginia doesn’t have a real surplus because its pension liability is under-funded. How long are we going to operate on lies and bull crap? While this email specifically addresses VRS as it pertains to the teacher pool, the same can be said for all other state workers who are eligible for the state pension. While this communication is not just about teachers, it does show how enimic funding for education has been since 2008. When the state doesn’t fund, guess who picks up the slack? We do. We pay, pay, pay out of our local taxes. Next time you hit a pot hole that has been there since God was a child, start connecting the dots.
The Richmond Times Dispatch article can be read at http://www2.timesdispatch.com/news/2012/jul/13/1/mcdonnell-hints-at-fiscal-2012-surplus-ar-2054891/
Its time to face the music and tell the truth, Governor McDonnell. The chickens have come home to roost, to quote the Sheriff. He and I just disagree whose chickens.
Governments MUST face the music and stop playing games. Either they have the money or they don’t. They must prioritize. If they have contractual obligations to fund something…well, that’s what they do or change the contract for future employees.
I agree Cargo. In particular, they must stop saying they have a suprlus when there are unresolved issues like unfunded pension liability. Someone just needs to stand up and call him a liar the next time he says we have a surplus.
I bellowwed and hollered 2 years ago when that money was borrowed from the VRS. That was dead wrong. I felt like a lone voice in the wilderness and the press bearly covered it. So there are 2 wrongs here. The loan ($600 Million) and the GA shorting the funding.
We are soooooooooooooooooooo f%#@ed and we won’t even admit it. We are in really really really really bad shape and no one wants to say the emperor has no clothes because we don’t want to admit that at the dinner table — we may not even be able to afford a ham sandwich.
http://www.cnbc.com/id/48193471
I don’t agree with the last part but I’m also PO’d when I see commercials attacking Obama and telling him to pay down debt. Debt service is very important but should not be the number one thing. We have to agree that certain things just can’t be paid for by the public any longer.
I know you disagree with me on this MH but pensions are dead. They are unsustainable and apply downward pressure on government that hurts our future.
I’m all for saying that current pension obligations will be honored but we don’t enroll anyone new after today. After today you get a 401 or 403.
Two major factors are evidenced in all of the municipal bankruptcies we’ve been seeing. Clueless government and high pension obligations.
State and local governments are exempt from ERISA, the Federal law that governs pensions and other retirement programs. Private sector defined benefit pension plans are generally required to maintain a level of assets equal to the actuarially-determined value of their expected benefits. If they fall short, especially, if funding falls to around 90% of obligations, the company is required to make extra contributions to eliminate the shortfalls.
ERISA rules are complicated, but a private sector plan that only is only about 75% funded, as is PWC’s, would have the Feds taking it over most likely, and I would suspect also looking for whoever would be going to jail.
State and local governments, exempt from ERISA, can forego contributions and claim they are “balancing the budget” even though the long-term pension obligations don’t go away. In the private sector, management usually has equity or other interests in the firm and cares what happens to it, and their investment, after they leave. Politicians and senior bureaucrats on the other hand don’t care because they don’t hold a personal stake in the long-term financial well-being of the jurisdiction; they anticipate being off in another position and leaving the problems for someone else to deal with; they think they can just raise taxes later; they think they can default on the obligations later; etc. For the most part, they are correct. Being exempt from ERISA, they are also exempt from any of its penalties.
The guilt extends from the state level (governors past and present) and the General Assembly, and local government, including the Board of Supervisors and senior staff. They haven’t broken any laws of which I’m aware, but they know full well that the promises they are making to county employees and teachers can only be met with huge tax increases or cuts in spending elsewhere. If state and local governments were subject to ERISA, I suspect that we would fill up a cell block or two with people from Richmond, the McCoart Building, and other local governments in Virginia.
“Chickens coming home to roost” is a good metaphor for this situation, but I’m afraid the perpetrators will have flown the coup well before the full impact of their lying to taxpayers, county employees and teachers is fully manifest – all scot free because they are exempt from the same rules private firms must play by.
Of course, shenanigans such as these explains the “surplus” that we had in the 90’s.
@Cargosquid
Government accounting works differently than the private sector. Businesses must report future liabilities, etc. and many other things government can ignore. Businesses are governed by the IRS for tax reporting and the SEC if they have publicly-traded stock. Failure to comply means prison.
In government, failure to adhere to the same standards to which the private sector is held accountable often means reelection by gullible voters (or promotion to higher office).
The most glaring example of government legal “fraud” is when we are told that the Federal debt is $15 trillion, or whatever it’s up to today. That number ignores expected Social Security, Medicare and other liabilities, which are anywhere from $70 to $90 trillion. It’s staggering. Prince William County does not have to include the $1 billion or so in unfunded pension liabilities in its financial statements, although they are reported elsewhere in the CAFR. Somebody – PWC and/or state taxpayers is going to have to pay that, or default on obligations to pensioners. I can see Moon and other pensioners recreating the riots Greece had in Richmond and at the McCoart Building if that happens. I wouldn’t blame her. Mrs. NTK is due some pension money from VRS at some point in the future.
State and local governments claim they balance their budgets, but then borrow hundreds of millions to build roads for the developers that contribute to BOCS members’ campaign funds, and accumulate $1 billion in unfunded pension liabilities. Thank you BOCS and senior PWC staff (I’ll abide by Moon’s rules and not name names).
Actually I would just sue the State of Virginia.
How about the governor right now announcing that Virginia has a surplus for the 3rd year in a row?
Any objections to that kind of talk?
http://www2.timesdispatch.com/news/2012/jul/13/1/mcdonnell-hints-at-fiscal-2012-surplus-ar-2054891/
If we are going to start holding people responsible, lets start with holding the person responsible who is telling the lies.
@Moon-howler
I voted for McDonnell and would for him again most likely, but do not appreciate the phoney accounting or misleading claims of a budget surplus when it’s done by not making necessary VRS contributions. If we excluded every politician who lied or misled us, we would have virtually no candidate for whom to vote. Sad, really.
As in everything else, I think Federal, state and local government should be held to the same accounting and pension laws and rules as is the private sector. That would stop most of this nonsense.
@Need to Know
“As in everything else, I think Federal, state and local government should be held to the same accounting and pension laws and rules as is the private sector. That would stop most of this nonsense.”
Agreed. Interesting how a private sector person goes to jail for a violation but a public sector person gets re-assigned or promoted.
“If we are going to start holding people responsible, lets start with holding the person responsible who is telling the lies.”
We try to but anytime we mention Obama the Admins here tell us we’re liars or racists. I’m bold enough to say both parties are doing it. Both parties are allowing you to think that everything will be ok and that as long as we keep doing what we’re doing everything will be fine. It ain’t.
Mark my words it’s going to be ugly. We’ll may never see it (like Global Warming) but our kids will. They are SCREWED.
I hope you are including the governor, Congress and the GA in your list of people to hold accountable.
The phoney accounting goes much deeper than most realize. Not only is the “surplus” generated from things like raiding VRS but also from other “revenue” streams that the GA taps into. Quick to crow that they don’t raise taxes, what they don’t tell you is that they accomplish that by forcing localities to either raise taxes or cut services to offset money grabs by the GA.
Wonder what I’m talking about, most do. In past years localities collected or received a share of things like the wine liter tax, railroad rolling stock tax, communications taxes, etc. Over the past several years the GA has slashed the share received by localities, eliminated the local share entirely or transferred collection to the state which then only gives a percentage back. This years target, local fine revenues generated by the local PD. Each jurisdictions fines are now collected by the State, analyzed to ensure that they aren’t stealing fine revenue from the State Police by writing tickets that our state boys otherwise would (presuming of course that they actually could write them given their diminished numbers) and then reimbursed to the jurisdictions minus processing fees and if the State deems appropriate less a percentage that they keep. Of course that percentage is subject to review by the GA annually and will likely increase. As the theft (and yes that is exactly what it is) grows, so too does the burden on already strapped localities. The worst part of this most recent grab is that could make our local constabulary less likely to enforce laws as the fruits of their labors (fines) won’t be realized. Similarly, if fine revenues decline as a percentage of the local jurisdiction’s budget, a time may come where cuts to the manpower levels may have to be considered to offset the lost revenue.
Thanks for pointing this out, MoM. If the State really needs to cash in through the State Police they ought to get “Trooper” Buck Owens reinstated. He could collect “jobs” for cash [wink wink nudge nudge] and really run a decent racket.
If ever a person should have gone to prison, it was Buck Owens. He got off real easy. I refuse to give to the state boys now because of that slime ball.
@Moon-howler
Yes. Government has failed.