The House of Delegates will not ask local governments to pay back money for teacher retirement plans after all.
Robert P. Vaughn, staff director of the House Appropriations Committee, said yesterday that it's unlikely that the payback mechanism would be necessary to avoid violating terms of federal stimulus money that Virginia is receiving for public education.
The House had proposed to require localities to return $181.6 million to the state in aid for education next year, specifically the state's portion of contributions to the retirement and health-insurance plans for teachers.
The payback proposal would have prevented state expenditures on K-12 education from falling below what the state spent on school aid in 2006, about $5.2 billion.
The American Recovery and Reinvestment Act required that the state maintain its level of effort as a condition for receiving hundreds of millions of dollars in stimulus aid for schools.
"I don't think we're going to have that issue when we finally settle the budget," Vaughn said.
Vaughn and Appropriations Vice Chairman M. Kirkland Cox, R-Colonial Heights, delivered the same message this week to Chesterfield County Administrator James J.L. Stegmaier in a 40-minute briefing on retirement issues pending in the budget deliberations between the House and Senate.
"We talked about the confusion of money coming in and having to be sent back," Stegmaier said.
The House and the Senate propose steep cuts in contributions for teacher pensions -- a responsibility shared by the state and by local school divisions.
The House proposal, which is 9.01 percent of payroll in the next fiscal year, would be about 8 percent lower than the Senate contribution rate and about 36 percent less than the current contribution rate for teacher retirement.
Vaughn said yesterday that he expects the budget conference committee to compromise on the proposed rate cuts, which account for nearly $500 million in savings in the two-year budget. The potential compromise would adopt the House methodology in the first year and the Senate's in the second, he said.
Local governments also are concerned about the reductions in pension contributions, even though they will share in the savings.
But they were most alarmed by the House plan to send them money based on the retirement and health-insurance rates proposed by then-Gov. Timothy M. Kaine in the first year of the budget. Localities would have to repay the difference between those higher rates and the ones proposed in the House budget.
The difference was sizable, about $9.5 million for Chesterfield and about $7 million for Henrico County, whose finance director welcomed the news that the House was backing away from that plan.
"If that's the case, that's a relief," said John A. Vithoulkas, Henrico's finance director.
Contact Michael Martz at (804) 649-6964 or mmartz@timesdispatch.com.
Staff writer Holly Prestidge contributed to this report.
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