The Virginia General Assembly just couldn’t help itself. It had to put the sticky fingers into the pension fund before closing for the session.
The State of Virginia is helping itself to more than $620 MILIION that belongs in the state pension fund, VRS, to pay pensions to state employees, some county employees and teachers. Virginia must begin to pay back the money by 2013 at an interest rate of 7.5% over 10 years.
Predictable. So the state who must have a balanced budget doesn’t really have one and the Emperor has no clothes. According to the Richmond Times Dispatch:
The provision, sought by the state Senate and included in the joint budget adopted by the General Assembly yesterday, is aimed at easing jitters over the decision to defer state and local payments to pension plans for the portion of future retirement liabilities that aren’t funded by the system.
Sen. Walter A. Stosch, R-Henrico, called the provision the most important step taken by the assembly to protect the retirement system, even as it relies on deferred pension contributions for almost one-fourth of the money used to balance the two-year budget.
“I don’t want anybody to feel that their pension is in jeopardy, because it isn’t,“ Stosch said yesterday. “But we’re recognizing the unfunded liability and requiring it to be repaid.“
But that wasn’t the only important step taken by the legislature to guard the $48 billion retirement system. It also adopted a package of changes that will lower the cost of pensions for future employees by more than $50 million in the next two years and $3 billion over a decade.
The above sounds like politico-speak for “I’m from the government and I am here to help you.” The warm, fuzzy feeling just isn’t there if you have anything to do with the $48 Billion VRS. This sounds like the government doing what the government does best: Robbing Peter to pay Paul. However, there is no free lunch. Retirement ages will increase and a greater part of employee contributions will come of the the employee’s pocket.
This house of cards doesn’t sound like the foundation is real firm:
House budget officials had argued that the deferral would not harm the retirement system because of benefit changes that would reduce long-term costs and a likely recovery of stock market investments.
The VRS lost 21% of its assets during the free fall of 2008. Actually, it ended up better than most individuals. However, I don’t think our lawmakers should be gambling pension money away on the shaky premise that the stock market earnings are going to take up the slack.
Part 2 will continue when more unfolds about the great robbery of 2010. (subtitle: Public Employees: This will only Hurt for the Rest of Your Lives) They just couldn’t keep their grubby mitts out of the pension fund. News is sketchy at this point on the great robbery. If the Washington Post even mentioned it, I didn’t see it. The budget news is overwhelmingly horrible.
NOT ANY MORE. DADDY HAS HIS HAND IN THE POT.
Sounds like what the federales did with Social Security. I think it’s horrible when the govt makes a financial commitment to people and backs out of it.
I disagree with Social Security but (including VRS) if it was part of your contract when you started I dislike the idea of the govt just turning it off. New employes should be transitioned to 401Ks instead of this pension ponzi scheme.
Got a question. If the Federal government doesn’t have enough money in the trust fund, it has to come out of the general fund. Wouldn’t the same be here in Virginia?
If it comes out of the general fund, it doesn’t mean that an individual’s benefits are changed (unless there is a corresponding change in the law). Thus, by borrowing the money would not in and by itself cause a loss in benefit. I don’t mean to suggest that there isn’t the possibility of changing the laws but it would require some subsequent action.
It also sounds like any changes affect future employees and not current ones, so it isn’t making a commitment and backing out of it.
I’ll believe the payback when I see it. Gov. Bob will be a lame duck and if the legislature delays it one year in 2013, he’ll be well out of office when the bill comes due.
Some of the other changes are to base a new retiree’s benefit on their highest five years instead of three and raising the retirement age for all employees.
Prince William County employees, like private sector employees, have had no pay increases for the last two years. However, County Finance documents show that there are no planned pay increases at least through 2015. So that will be at least seven years at the same salary, which is bad enough. But now to pass on the cost of the pension of 5% to the employee while at the same time making them work longer for a lower pension because of using five years instead of the top three, none of which they were hired under, is just plain wrong.
Have we ever seen a government here in the states that doesn’t raid the cookie jar? It’s always wrong, no matter who does it. And somehow it always happens. Just put off the problem until later. One of these days, it will be later.
And that is exactly what has happened, the government has raided the cookie jar. Rez, I don’t know. I simply don’t trust the government to pay back the money. They can always make a law that says they don’t have to. Its gone. And as far as I am concerned, it shows that Virginia is skirting around the balanced budget idea. They are raising taxes. Its just all a big lie.
Lucky Duck is right. And spreading the money out over a 5 year average only reduces benefits. Those who got out while the getting is good are lucky.
I don’t understand the hostility to pensions. Pensions are wonderful if they are handled correctly and if no big government hand starts helping itself.
The fact that Virginia pays for the pension makes up for the years their poor beleagured employees didn’t get raises. Now I hear whining. I sure didn’t hear it when Virginia didn’t feel it could afford raises year after year…and that was back 25-30 years ago.
Now it is time to pay the piper. And the payer doesn’t like it.
And in similar money-grabbing news, Social Security has gone to the Treasury to cash in some of the IOUs left by the government, and guess what? The Treasury has no money! So we have to borrow it!. Ready for us to lose our AAA rating? After that, the interest rates go up, and we start down the tubes! The wheels are coming off the entitlement bus.
Unbelievable. Steal from Peter to pay Paul?
with all the concern about the budget cuts the 5% tax hike on all public employees who participate in the Virginia Retirement System (VRS) has gone un-noticed.
while not officially a tax hike (we know the flat earthers don’t do tax increases, just fees, charges, enhancements, add-ons, tariffs, allowances, etc like the 100 million in this year’s budget) HB 1189 allows local government to pull the 5% they now contribute to retirement of public servants (those who work for 15-20% less then they could get in the private sector but have opted for job satisfaction, and public service – and a pension) as an exercise in balancing the local budgets due to state underfunding.
now i can understand if the R’s wanted to ping these groups that don’t support them in elections, BUT HB 1189 was co sponsored by Bob Brink. the companion senate bill passed 39-1 with on D-Edwards voting against. and in the house the list of people normally thought of supporting working families took a huge dive. 19 voted against
NAYS–Abbott, Armstrong, Bulova, Carr, Carrico, Ebbin, Englin, Herring, Hope, James, Johnson, Keam, Kory, Plum, Sickles, Surovell, Torian, Tyler, Ward–19.
notice any names missing from this list?????
the dem response to our state fire fighters was won’t it be wonderful to get several million more in your local budgets? total BS. where will the money come from? the pockets of the public servants.
this is disappointing to say the least. one thing’s for sure, the people who voted for this can take me off thier call lists.
b
Bruce,
How do you reconcile your statements above with http://www.usatoday.com/news/nation/2010-03-04-federal-pay_N.htm showing (on the federal level) government salaries especially benefits trumping the free market.
Look towards the bottom for this nugget.
State and local. State government employees had an average salary of $47,231 in 2008, about 5% less than comparable jobs in the private sector. City and county workers earned an average of $43,589, about 2% more than private workers in similar jobs. State and local workers have higher total compensation than private workers when the value of benefits is included.
The pension is a benefit…. How much does the average PWC govt employee make with benefits……………………………………………………………..
The compensation needs to come down.
the reconcile has a few elements. first off in the “best state in the union to do business” teacher pay is somewhere in the middle nationally. i’ll focus on teachers since they are about 52% of the demographic here.
since you admit that the pay is already 5% less than the public sector with another 5% cut that’s 10% below public sector.
by your figures then with a 5% cut city and county workers will earn 3% less than the private sector.
the argument now seems irrelevant as the general assembly has opted not to make the state contribution into VRS, so they can balance the budget on the backs of retirees. it isn’t going to happen next year, but these are the same folks that tell us health care reform is bad because we’re not including the future costs and our kids will pay.
marin, maybe your salary needs to come down. You are always looking for ways to cut state and local government employees’s salaries. actually the compensation needs to go up.
The VRS members also stand to get less compensation if their disbursement is calculated on 5 years rather than on 3 years. Additionally, retirement will be later. Maybe McDonnell can invest in some wineries with the pensions of public servants.
I am very tired of this attitude that seems to be pervasive that public servants are children of a lesser God and therefore should be happy to be paid less.