Retirement games bad for Virginia
December 13, 2011
The new JLARC report out this week highlighted how misguided Bob McDonnell's plan is to shift the current state-controlled retirement plan to a 401(k)-style defined contribution plan, which would shift all the risk from the state to the employees. In order to change the plan, Richmond would have to pay off the $19.9 billion the state owes the current retirement system. The Richmond Times-Dispatch reports, "the state cannot afford to substantially reduce employee benefits without risking Virginia's competitiveness in hiring and retaining talent, the Joint Legislative Audit and Review Commission [JLARC] was told by its staff on Monday."
Progressive Point: JLARC's study reinforces that Governor Bob McDonnell's attempts to fix Virginia's budget problems on the backs of teachers and state employees are absolutely wrong. The bi-partisan study found that reducing retirement benefits or increasing the share of contributions they would have to pay would not only make Virginia less able to hired talented workers, but that McDonnell's failure to fully fund it in 2010 has left it dangerously in debt.
Bob McDonnell's retirement fund proposals are out of touch with middle-class Virginians. Wall Street's risky games are responsible for tanking our economy and now McDonnell is suggesting teachers and firefighters hand over their retirement accounts over for them to gamble with. McDonnell risking Virginia's ability to compete for the most talented teachers and state employees and providing less to those who already serve our students and our public safety. McDonnell's mismanagement is a disservice to those who serve, and if allowed to continue will damage our future.
Get the Facts:
- Reducing teachers and state employee retirement benefits and their share of contributions would damage Virginia's ability to hire and retain talented individuals. (Richmond Times-Dispatch, December 12, 2011)
- McDonnell has caused Virginia's state pension contribution rate to plummet by choosing to defer $620 million in payments at 7.5% interest since 2009. (Old Dominion Watchdog, December 13, 2011)
- The contribution rate has plummeted under McDonnell. Since 2009, Virginia has ranked 37th in the country for state pension contributions, due in part to McDonnell's decision to defer a $620 million payment at 7.5 percent interest, according to JLARC.
- JLARC's bipartisan staff, comprised of legislators, "strongly recommended against requiring state employees or teachers to pay more of their salary toward pension benefits, especially since the state itself often has not paid its full share of pension costs." (Richmond Times-Dispatch, December 13, 2011)
- Richmond would need to pay off the $19.9 billion in debt the state currently owes Virginia Retirement System before it could change it from a defined benefit plan to a defined contribution plan. (Old Dominion Watchdog, December 13, 2011)