General Assembly Members Talk Mainly Money at Legislative Forum

December 21, 2010 — The future of the Virginia Retirement System – along with the state of Virginia's finances – was very much on the minds of those who attended Monday's legislative forum at the University of Virginia.

Held in the Dome Room of the Rotunda, the forum featured three local members of the Virginia General Assembly: Sen. R. Creigh Deeds, D-Bath; Del. Robert B. Bell, R-Albemarle; and Del. David J. Toscano, D-Charlottesville. They were introduced by U.Va. President Teresa A. Sullivan, who said that Gov. Robert F. McDonnell's plan to require state employees to begin contributing to the retirement system would be a tough pill to swallow.

The governor's budget calls for employees to contribute 5 percent of pre-tax income to VRS, and it reduces the employer contribution to optional retirement plans from 10.4 percent to 8.5 percent of salary.

"We're concerned that some of the actions in the governor's budget will reduce the compensation package for our employees," Sullivan said. "While we're grateful for the one-time 3 percent bonus, the last time our employees had a base salary increase was in November 2007."

Sullivan said that faculty salaries have slipped to the 30th percentile among U.Va.'s peer institutions, as ranked by the State Council of Higher Education for Virginia. "Our ability to offer competitive compensation is critical to being able to recruit and retain outstanding faculty and staff," she said.

The legislators agreed that there are choppy fiscal waters ahead, and something has to be done to plug a $17 billion hole in VRS. Deeds and Toscano were skeptical of the 5 percent deduction without a compensating pay increase, but Bell said, "The VRS is 40 percent underfunded. Every year we put it off, it gets worse. There are no easy answers, and if we don't take steps of this level of significance, we're kidding ourselves." The $17 billion shortfall, he said, is more than half of the state's biennial budget of $31 billion.

All three noted that the state's budget surplus was the result of a $650 million loan from VRS. Toscano added, "The hole has been dug deeper and deeper every year. You're going to have to increase the funding, and it's got to come out of the budget. The alternative is to raise some additional revenue. There's not a lot of appetite for that down in Richmond."

Sullivan said that if all University employees were in the optional retirement program "so we all have defined contribution rather than defined benefit, that would be ideal. But we don't have the autonomy we need to do all the things we'd like to do."

She added that the retirement programs constitute a promise to employees. "And not reneging on those promises should be an important priority for us," she said.

Whatever happens during the General Assembly session, Sullivan said, must happen in a transparent fashion.

As to Virginia's general financial health, the legislators said that the commonwealth is better off than most states, but that's not saying much because other states are in such terrible shape. The state's fiscal management, budget cuts and the 5 percent cap on the amount of General Fund money that can be used for debt repayment have all helped. Bell noted that the state also used federal stimulus money to help balance the budget, and "although we have the most restrictive Medicaid in the country, it's eaten a hole in the budget."

Lacking a strong recovery from the recession, the state must talk about shared sacrifice and priorities, Toscano said. "Decisions are coming back to haunt us – decisions not to fund infrastructure, to not fund VRS," he said. "One group doesn't want to talk about cuts. The other doesn't want to talk about raising revenue, but somebody's got to talk about it."

The governor's goal of increasing by 100,000 the number of college degrees awarded statewide is a worthy one, the legislators agreed. Deeds said McDonnell's recent move to withhold state money from Virginia Commonwealth University after it raised tuition 24 percent to make up for losses in state funding sends a mixed signal. "Improving higher ed is going to take real bucks and prioritization," he said. "The governor's goal is right. Some of the actions I'm not sure I'm going to agree with."

Investments in higher ed will be needed, Toscano said. "If you want to increase college enrollment in the STEM fields, you need faculty, and faculty don't get paid out of IOUs," he said. "If that's a priority, the state needs to step up with the cash."

None of the legislators favors what Bell described as the "hardy perennial" issue of capping out-of-state enrollment at state institutions. "The University's plans to increase the number of students is the way to address this issue progressively," Deeds said.

Asked about legislative oversight of efforts by Attorney General Kenneth T. Cuccinelli to obtain e-mails by former U.Va. professor Michael Mann about his climate research, among his other quests, the legislators said separation of powers keeps them out of that fray.

"He's an elected official," Bell said. "He has four years. If he gets re-elected, he has four more years."

Deeds said with a laugh, "I guess we could cut his budget and put it into education."

The General Assembly convenes Jan. 12 for a 45-day session, during which it will consider about 3,000 pieces of legislation. Bell said that one bill of interest to U.Va. will allow anyone to obtain a protective order against someone who is threatening them, even if they're unmarried or don't have children together He noted that a study of the issue was under way before the death of U.Va. student Yeardley Love in May; her former boyfriend stands accused of her murder, and under current Virginia law, she would have not been able to obtain a protective order against him.

— by Marian Anderfuren

Media Contact

Marian Anderfuren

Director of Media Relations U.Va. Media Relations