Posted: Wednesday, January 25, 2017 11:00 pm
Local school divisions are not likely to get their wish for a delay in making full contributions to teacher pensions recommended by the Virginia Retirement System.
Del. S. Chris Jones, R-Suffolk, House appropriations chairman, said in an interview that “there is no plan to retreat” from the commitment the state made last year to fully fund the rates VRS recommended for teacher pensions in the fiscal year that will begin July 1.
Instead of backing off the commitment to fully fund teacher pension contributions a year ahead of the schedule adopted in 2012, the Appropriations Committee intends to use more than $200 million in state funds to free money from the Virginia Lottery that local school divisions would be able to use without restriction.
“If we achieve this goal, the schools get much-needed flexibility in allocating dollars where they think it best served, be it a pay raise for their teachers or funding their share of getting to 100 percent of the required VRS contribution rate,” Jones said in the House of Delegates on Wednesday.
The Virginia Association of Counties has made a top priority to persuade the money committees to back off the accelerated VRS payment, which it said would save local governments $76 million for their share of the higher rates that school divisions would be charged for teacher pensions.
Dean Lynch, executive director of the association, said the savings range from $700,000 in Wise County to $21 million in Fairfax County.
However, Lynch said localities like the House approach to freeing lottery funds to give school divisions more money to spend where they need it most, as the state did last year.
Five legislators submitted budget amendments to wait a year before fully funding the contribution rates certified by the VRS Board of Trustees in late 2015 for the two-year budget.
Under the schedule adopted with pension reforms in 2012, the state committed to fully funding those rates by the fiscal year that will begin July 1, 2018, but last year included money to bring the state’s share to 100 percent in the second year of the budget.
“We need to get the full contribution rate so we don’t keep building up the liability,” Secretary of Finance Richard D. “Ric” Brown said.
Brown also was concerned about the potential reaction of bond-rating agencies if the state backed off the accelerated payment. “If you make a change on that, it draws some curiosity from Wall Street,” he said.
VRS Director Patricia S. “Trish” Bishop said fully funding the recommended contributions would save state and local governments $186 million over 20 years.
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