Pension Plan Pay Cut

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    Don’t know what’s worse: our Governor who knows little about public policy or his agendas based on slogans and mantras. Probably our Governor since it is his administration which spawns so many half-baked and potentially deleterious initiatives. But they show savvy for shifting responsibility. Take the state employee pay cut.

    Really, that is what the sea-change to the state pension plan portends. It is also part and parcel of another Republican Ponzi scheme. The brilliant idea to go into debt to build highways is another. Oh, and selling off revenue generating assets for a one time “windfall” without a strategic plan to replace the recurring revenues is one too. There is a clear pattern here: make promises someone else will pay for. Jim Gilmore redux.

    “The legislature also is likely to discuss whether to offer state employees the option of contributing to a 401(k) plan they can manage themselves instead of a defined-benefit plan run by the state.” as reported in today’s Richmond Times Dispatch

    Delegate Chris Jones (R-76th) says he is disappointed that localities decided to pay the new employee share of the defined-benefit plan cost. What would he say if they hadn’t paid and the employees rose up? That it was a local decision and he is disappointed that localities hadn’t fulfilled their obligations to employees? There’s your savvy political posturing. It isn’t as though we have the highest paid teachers in America and aren’t competing with other states and within the state for the best.

    “It’s going to make it that much harder to get good people in the classroom,” said Robley S. Jones, lobbyist for the Virginia Education Association

    For years Delegate Bob Purkey (R-82nd) has been sounding the alarm regarding defined-benefit plans. About all you get out of Purkey is alarm. In a typically Republican manner, he never gets down to saying if he wants to do away with them or just find a better way to pay for them, only that they are a festering financial fiasco. One would wager that Purkey would favor the 401(k) plan approach, but how responsible would that be if, as the Speaker of the Virginia House, Bill Howell (R-28th) believes, there is a secret plan for the government to steal all our private pension plans? Remember though, that that defined-benefit festering financial fiasco was brought closer to reality by Governor McDonnell’s maneuvering to underfund the pension plan itself in this year’s budget.

    That underfunding is okay, however, if we change the entire retirement system so that all employees are required to make contributions. Those contributions will make up for the shortfall, at least for his term in this office, and maybe long enough for him to fulfill aspirations for higher office where he can extrapolate his malfeasance.

    A fellow who has degrees from both Notre Dame and Regent University has to be familiar with the concept of robbing Peter to pay Paul. Or does he? You see, there a whole lot more to finance than you glean from management courses or is offered in a law school; even an accredited one. So maybe McDonnell just doesn’t understand that a one-time bonus for state employees justified by raiding their retirement plan isn’t going to make up for the long-term net pay reduction his lackeys are about to render in the name of fiscal responsibility. Or maybe Peter and Paul will both be dealt with by Ponzi.

    McDonnell said he created a work group several months ago to consider pension options. He cited concerns about unfunded, long-term liabilities; the increasing number of employees retiring; and the potential for big increases in employer contribution rates next year.

    “The numbers just don’t add up,” he said.

    No, Governor, yours never do.  

    • Moon Howler

      If the governor and the rest of the Republican good ole boys would get their hands out of the cookie jar the fund would be in better shape.  

      You can’t borrow that much money from the fund and expect it to be in good financial health.  

      To borrow from the fund and say that the Virginia budget is balanced is simply a lie and probably unconstitutional.  

    • Elaine in Roanoke

      All this posturing on the part of Republicans is a sham to hide the fact that the state has underfunded it share of VRS lots of times, this past year simply using the VRS obligation as a way to borrow money from the future to “balance” a state budget grossly out of balance.

      I remember well when teachers in my area were given a reprieve from their 5% share of VRS. It was back in the late 70’s and early 80’s when bad budget years meant that most school divisions went years without giving cost of living raises. So, freeing teachers and other employees from the VRS share was one way to give a “raise.” I said at the time that it was a bad mistake to agree to that because I thought that it would mean we employees lost the ability to demand some say-so over the system due to our contribution to it. That was a long time coming…but here we are.

      As for the 401K “option,” the idea that an employee has the ability to choose where that money is going is a sham. They will be given three or four options – chosen by the employers for God only knows what reasons – whether they are good returns on money or not. Any person who was alive and of sound mind during the latest stock market meltdown has to be aware of the drawbacks to the 401K system. Yes, the individual retires with money in his/her control, but the scheme benefits most the employer who never has to worry about additional costs. Believe me, if state and local employees get a measly 5% annually from their employers into some 401K, they will retire with insufficient funds, unless they are able to add much more themselves.