Santa Bob Plays Grinch to State Employees

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    Since becoming governor, Bob McDonnell has blithely promised Virginians that they could have free transportation fixes and free increased graduation numbers from colleges and universities. He even magically pulled a phony “budget surplus” out of his Santa hat and gave a small salary bonus to state employees, in spite of hiding away a $620 million IOU to the state retirement system (VRS). Alas, now Santa Bob has been forced to become the Grinch, thanks to a blistering report by JLARC stating that VRS is unfunded to the tune of $17.6 billion. Why? Well, the General Assembly has used its required contribution to VRS as an ATM whenever the politicians needed extra cash to “balance” the budget.

    According to the Shad Plank, “In 16 of the last 21 years lawmakers have opted to underfund the [VRS] account rather then make painful and politically risky budget decisions.” Amazingly, the General Assembly did the same thing last session, but not before passing a law that would require new hires to pay the full 5% employee contribution the state had been paying since 1983, a perk originally given in lieu of pay raises. Now, Grinch Bob has also announced his plan to get the older employees to pony up some money. By using a 3% salary raise, minus a requirement that the employees pay 5% into VRS, Grinch Bob doesn’t have to come right out and say, “You’re getting a 2% pay cut next year.”

    This bipartisan fiscal mess that was created over the years through chronic state underfunding of VRS has become so awful that Del. Dave Englin announced that he will introduce a constitutional amendment at the upcoming General Assembly session to force the state to fund VRS at the level required by its board of trustees, unless four-fifths of each house of the legislature votes otherwise. The amendment would also establish criteria for the VRS trustees to use in determining contribution rates, based on industry best practices.

    It’s about time. If Englin’s amendment gets on the ballot – a big if – and then becomes part of the state constitution – another big if – one way for legislators to “cook” the state budget books would be ended. Good for you, Del. Englin!

    • pontoon

      I have family who work for the state and have not received raises for a couple of years.  Additionally, state employees  are required to take furlough days every year.  It is one of the most ineffective policies I’ve seen the state put in place.

      As an example, institutions like the Central Virginia Training Center are required by law to have a certain number of employees working to care for a certain number of patients.  The policy forces employees to be furloughed and the only way to cover those furlough hours is to have someone else work to meet the staff/patient ratio requirement.  Instead of paying an employee their regular rate to work their regular hours, the state now pays another employee an overtime rate to cover the hours the original employee would have worked had they not been required to be furloughed.  How many thousands of dollars is Bob McDonnell wasting in this cost savings requirement forced on state employees?  Perhaps he could reverse this policy and use it to fund the VRS.

    • Dan Sullivan

      Certainly PFM can twist this into something attractive in another $76,900 report. How about retirement derivatives?

    • Steve Vaughan

      Since the governor said nothing Friday about a budget amendment to begin repaying the $620 million “deferred” payment from last year, as promised, it appears state employees are being asked to finance the raid on their pension system.

    • Steve Vaughan

      by about $237 million. He’s still proposing some cuts, however to pay for other stuff he wants to do in the areas of economic development and higher education.