McDonnell raids pension fund
The Virginia Retirement System is the pension fund for state and local government and public school employees.
The General Assembly has already shortchanged VRS 10 of the previous 18 years.
Now Governor McDonnell is deferring $620 million in state payments to VRS over the next 2 years, replacing them with IOUs to repay it with interest over the next 10 years (after he is long gone from office).
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July 1st, 2010 at 3:42 pm
Gee. Sounds a lot like what a Democrat-controlled Congress started doing to Social Security in the 1960s.
July 1st, 2010 at 3:55 pm
Seems like Virginia is not alone in facing the tremendous burden of the public employee pension program burden. From what I have been hearing as I travel around, this is being zeroed in on by numerous states as being a large contribution to the budget problems most states are experiencing.
Seems to me most civilian government employees receive better pension benefits then retiring military service members without putting their lives on the line. I think reform of the governmental employee pension program is warranted. It was not wrong for government employees to receive such when it was the norm for private employees, but that is no longer the norm for private employees. Even many private pension programs are becoming wards of the state and I suggest that public pension programs should at least be subject to the same compromises.
At one time I thought public employees received lower wages then the average private employee and thus they earned their preferable retirement benefits. However a recent study of comparable public verses private employees discovered the average public employee received more compensation then the comparable private employee. That is as long as you only compared public civil engineers to private civil engineers and public janitors to private janitors. This held true up to the higher levels where private CEO compensation tipped the scales. But Joe average public employee? He’s paid better then his counterpart in the private economy.
Reform of the public employee pension system is necessary, proof is not just in Virginia but comes from across the nation. I do not have a solution and I am waiting for my elected representatives to propose one. I realize promises have been made and I hope my elected officials do not try to overdo the sacrifices that must be made due to the extreme economic challenge we presently face. However even if we return to good times, reform is still necessary.
July 1st, 2010 at 6:18 pm
That is BS… You do not know what the hell your talking about.
The public wants you to wortk your butt off for them and put your life on the line but they want to do it on the cheap. You folks expect top notch service for pennies on the dollar. It isn’t going to happen. Your military compairison is also BS. Frankly I have retired from the military and found not many folks actually face death on a regular basis as is done every day in state and local public safety jobs. And I also earned more in the military than I did in the civilian job market for many years. Get real and get out there in the real world before you spew more ignorance.
The real problem is the government has not fund their own requirements for the last twenty years to meet the retirement needs of thier own employees. The politicians steal from VRS, they do not meet their own funding requiments and they have the nerve to blame the employees. We didn’t make the rules, agree to fund the retirement fund to a set standard or go back on our duty to the citizens we serve. It the the politicians who as screwing up the funding for retirement and they continue to scream it is Unsustainable!!!! Hell yes it is, if you do not fund it or steal hundreds of millions every couple of years. They make me sick with this BS… Remember you get what you pay for…
July 2nd, 2010 at 7:07 am
LittleDavid: Please provide your source of information. I would be interested in seeing any study that shows public sector employees are paid more than comparable private sector employees.
July 2nd, 2010 at 7:08 am
There are basically two problems with funding VRS:
First, their investments lost value (along with everyone else’s). That is a relatively short-term problem that will correct itself as the market recovers.
Second, the General Assembly habitually underfunds the plan. It is always politically easier to cut contributions to the pension fund than it is to lay off teachers, or close rest stops, or whatever. The retirement benefits remain the same, so it doesn’t immediately affect anyone. However, In the long run, the plan becomes underfunded to meet all its obligations.
Gov. McDonnell’s deferral of state funding to future years has seriously exacerbated the problem. Now would actually be the best time to put more money in so VRS can invest it while the market is still relatively low (buy low, sell high).
July 2nd, 2010 at 7:53 am
Here I am in the private sector.
I don’t have any pension plan.
I just pay taxes.
July 2nd, 2010 at 10:31 am
Brian: Cry baby… Who’s fault is that? If you made bad choices in your career path please do not cry to me. You made your career choices and now you have to live with them.
BTW: You had and still have the chance to change your life around and get a career that allows you to serve the public and still retire with a minimal pension. Oh and we all pay taxes…
July 2nd, 2010 at 12:13 pm
Although I believe that this action is a tragedy and will result in a higher debt service, it took more than just the Governor to approve this measure.
July 2nd, 2010 at 12:17 pm
Bailey, crybaby? You’re the one whining about your benefits constantly.
July 2nd, 2010 at 12:36 pm
Wally Erb: True, Gov. McDonnell didn’t do it all by himself. His budget proposal was passed by the General Assembly. At the insistence of Senate Democrats, the budget included language to require repayment beginning in 2013.
July 5th, 2010 at 6:16 pm
General Assembly members and politicians have a lot of nerve complaining about pension costs for regular state and local government employees. They cut themselves and their retired friends a special deal so they get extra credit for their part-time work in the General Assembly, even though they have other well-paying jobs as well.
July 6th, 2010 at 2:08 am
Good post. Thanks
July 14th, 2010 at 6:24 pm
David Campbell,
Here is the link you requested to an article in USA Today which reports that FEDERAL employees receive higher compensation then comparable private employees:
http://www.usatoday.com/news/nation/2010-03-04-federal-pay_N.htm
Please note that I put emphasis on Federal because it really does not cover state government employees.
I am surprised you did not hear about this study. It was widely reported on in NPR’s reporting (where I first heard about it) as well as other radio networks as well as numerous internet websites.
I also will note the study results were released just days after I posted a comment on Bearing Drift on how government employees generally receive lower compensation. I was aware of numerous studies that showed government employees are underpaid. I then did a little research of my own and noted that it sure seemed to me all the comparisons noting government employees underpaid seemed to have some association with government employees. I consider USA Today a much less biased source and, no, it is not “as bad as the FOX network”. This analysis was successful in changing my opinion.
July 15th, 2010 at 4:55 am
It is extremely difficult to make direct comparisons, because there can be major differences in responsibility between jobs with the same title. It may be better to compare salary ranges instead of actual salaries, because there can be significant differences related to longevity (government has less turnover and employees stay employed longer to advance further within salary ranges). There can also be significant differences in cost of living (much higher in Washington D.C. than most parts of the country). This study at least compared similar titles across a wide range of occupations and I accept it as valid within those limitations.
The study also found that state government employees earned about 5% less than comparable jobs in the private sector and local government employees earned about 2% more than private workers in similar jobs. However, their total compensation is higher when benefits are included (at least until we start cutting those benefits). The other advantage of government employment is the relative stability (until we start laying them off).
What bothers me is the view of some conservatives that any compensation received by government employees is a waste becasue they are not real jobs that contribute anything to society.