Candidates Reluctant to Talk About Underfunded State Pension System

By Amanda Iacone, Virginia Statehouse News Monday, October 31, 2011

RICHMOND - Candidates running for the General Assembly in the November 8 election are steering clear of talking about Virginia's underfunded public pension system.

“I’m not going to comment on that before the election," said Dick Black, a Republican seeking election in the newly created 13th Senate District.

Why?

“It’s the big issue that no one wants to talk about,” said Robert Carlson, a former Virginia Retirement System, or VRS, board member.

Virginia’s public employee pension system is about $20 billion short of the funds needed to cover future retirement benefits, according to VRS calculations. But the true amount of unfunded liabilities could be more than double, according to a 2010 study of state pensions by the American Enterprise Institute based on 2008 data.

The American Enterprise Institute is a Washington-based think tank focused on strengthening free enterprise.

Black, a Loudoun County lawyer and former House of Delegates member, did expound a bit on pension principles, but he wouldn't take a stand on how to fund the state's public pension.

“If we have a pension obligation, we should be sure that we are in a position to honor that,” he said. “We’ve seen states get in real financial difficulties over their pensions. We’re not in that condition, but it certainly bears watching."

Black's opponent, however, said the state should stay the course and avoid switching from a defined-benefit plan, which guarantees a certain amount for retirees, to a defined-contribution plan, which is similar to a 401(k) in the private sector.

“I absolutely oppose changing the current benefit program to a defined contribution program,” said Shawn Mitchell, CEO and president of Modern Mechanical, a mechanical contracting firm in Ashburn.

Lawmakers in 2012 will decide how much taxpayer money will fund the state employees’ pension program as part of the new two-year budget that will be debated during the upcoming General Assembly session.

While all 140 positions in the General Assembly are up for grabs Nov. 8, the focus of the election seems to be on the Senate, where Republicans are trying to wrest control from Democrats, who hold a 22-18 majority in the chamber.

The Virginia Education Association, or VEA, which advocates on behalf of 60,000 current and retired school employees, has been campaigning to drum up support for candidates who want to maintain the status quo of the pension system. The VEA, while not a union, works to “increase salaries, benefits and pensions” for active and retired school employees in the state, according to its website.

The group opposes a 401(k) style retirement plan.

“For those who work in Virginia’s classroom, that’s not retirement security at all,” said Kitty Boitnott, president of VEA.

John O'Neil, director of communications for VEA, said the group distributed questionnaires to candidates seeking their views on the pension question and used those answers to endorse candidates and direct campaign contributions.

VEA has endorsed mostly Democratic candidates for the Senate, and it has contributed $182,501 this year, mostly to the Senate Democratic Caucus, according to the Virginia Public Access Project, or VPAP, a nonprofit that disseminates election financing information from the State Board of Elections.

VEA urged lawmakers to fully fund the pension contribution rates set by the pension board, which for 2013 will be 13 percent of salaries for state workers and 16.8 percent of salaries for teachers, according to VRS.

“This is an opportunity to take a real and meaningful step toward properly funding the VRS,” Boitnott said.

The association said few incumbent state senators are actively supporting protection of the existing retirement fund this campaign season. The group, however, did point to state Sen. John Miller, a Newport News Democrat seeking re-election in District 1, as a supporter. Miller could not be reached for comment. His new district represents part of the Historic Triangle.

Miller’s opponent, Mickey Chohany, said the state needs to uphold its pension promise to current workers and continue providing the defined-benefit plan of the existing pension system.

Chohany does support finding a new program to cover future state employees. He did not specify how a future plan should be structured, but said it should be financially sustainable.

He said fully funding the pension system should be the goal, but that budget constraints will prevent lawmakers from making the full contribution.

“Sometimes you have to work with what you’re able to participate with,” said Chohany, who owns the Second Street Restaurant an American Bistro in Williamsburg.

Virginia Statehouse News reached out to the several other state employee groups, which did not return calls seeking comment, including:

• The Virginia Governmental Employees Association, which advocates for about 20,000 state workers. The association has contributed $11,250 to campaigns this year, most of it going to Republican committees, according to VPAP.
• The American Federation of State, County and Municipal Employees, which has about 2,000 state employee members.