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VEA Reacts to Gov. McDonnell's Pension Proposal

Gov. Bob McDonnell is pushing for school employees to pay 5 percent of their pay to the underfunded Virginia Retirement System (VRS), according to a proposal he outlined this morning to members of the budget committees of the General Assembly.

The proposal concerns VEA President Kitty Boitnott, who points out that lawmakers earlier this year deferred a needed $675 million payment to VRS. "The state created the VRS solvency problem and now it is putting it squarely on the backs of the employees who can least afford it," she said.

McDonnell's proposal would permit localities to require employees participating in VRS to make a 5 percent employee contribution to the plan. Beginning in 1983, employers have paid the employee contribution because at that time, the contribution was given in lieu of a pay increase. Localities wishing to require that employees to pay the 5 percent would have to agree to increase employee pay 3 percent, according to McDonnell's plan. But the state would not participate in the cost of the pay increase. Instead, hard-pressed local governments would have to pick up the full cost.

The plan also calls for the creation of a new "defined-contribution" retirement plan that new employees could opt into.

Boitnott said VEA will work with lawmakers during the upcoming session of the General Assembly to find solutions to challenges facing VRS. The teacher fund within VRS is currently 69 percent funded. But she remained concerned that the timing is very poor for a proposal that would make teaching a less attractive career. Recent budgets from the state suspended payments for local school divisions to give salary increases, and VEA research shows many school employees are paying more in health insurance costs.

In addition, a VRS analysis showed recently that the number of professional staff members applying for retirement this year had risen 42 percent from the year prior. The Virginia Department of Education says 22 percent of teachers are age 55 or older.

"Many of the educators my age are headed for the door, and we are already facing shortages finding qualified new teachers to step in," said Boitnott. "The state needs to live up to its obligation to public education. We should be making education a more attractive career, not cutting the benefits of school employees who already are doing more with less."

To be kept informed of proposals on your retirement benefits, sign up to be a VEA cyberlobbyist and check the VEA's Daily Reports from the General Assembly.


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