Bill adds pension cost for teachers, local workers

All public school teachers and local government employees would have to contribute 5 percent of their pay toward their retirement plan under legislation introduced in the Virginia Senate.

Sen. John C. Watkins, R-Powhatan, also wants to prohibit school boards and local governing bodies from paying the employee share of their pensions as almost all school divisions and many local governments have for decades.

The idea is to help school divisions, in particular, pay for big increases in pension contributions for teachers required under the two-year state budget proposed by Gov. Bob McDonnell.

The legislation, Senate Bill 497, would allow school boards, but not local governing bodies, the option of imposing the requirement on teachers by 1 percent a year over five years instead of all at once.

"I don't want to cripple them in their take-home pay," said Watkins, who also represents parts of Richmond and Chesterfield County. "This provides school boards the chance to adjust their salaries."

The General Assembly took a similar step last year with state employees, by requiring them to pay 5 percent of their salaries toward retirement, while offsetting most of the increase with a 5 percent wage increase.

McDonnell has proposed that state employees, but not teachers, pay an additional 1 percent of pay toward retirement.

Teachers, like state employees, gave up raises in the early 1980s in exchange for a promise by school divisions to cover their share of pension contributions. But the state isn't providing additional money to help school divisions raise salaries to offset the cut in teacher pay, say school board and teacher advocates.

"The state's not providing their share of the money to do it," said Robley S. Jones, lobbyist for the Virginia Education Association.

The legislation would make the contribution mandatory for all public school and local government employees, regardless of whether they were hired before sweeping state pension reforms took effect on July 1, 2010.

Local school divisions were given the option then of making employees hired on or after that date pay their 5 percent share, but only eight decided to shift all or part of the cost to teachers.

Local governments were given the same option for their employees, covered by 570 municipal pension plans, and 122 chose to require workers to make the contribution. (Thirty-eight small local subdivisions, such as sewer and water authorities, have required employees to pay their share all along.)

The Virginia Municipal League would like the option of requiring the contribution from all employees, but not a mandate to do so. "If it was an option, we would be delighted," said Mary Jo Fields, director of research.

School boards have a similar position on the proposal for their employees. "We would prefer that it be a local option, so each school board can decide for itself whether it's a good thing to do," said D. Patrick Lacy Jr., lawyer and lobbyist for the Virginia School Boards Association.

However, Lacy and other school officials caution that a 5 percent cut in pay, without offsetting raises, could put Virginia school divisions in a bind.

"It would make it hard for some school divisions to attract top talent," said Chesterfield Superintendent Marcus J. Newsome.

Chesterfield was among the localities that chose to make newly hired employees pay the 5 percent share, but the county's school division continued to cover the contribution for teachers.

However, Newsome proposed on Tuesday to make employees hired on or after July 1, 2012, contribute 5 percent of their pay toward retirement.

The county's proposed 2013 budget also includes an additional $16.7 million in pension and other post-employment benefit contributions, as well as money to restore a 2 percent cut made in teacher pay two years ago.

Frank Cardella, president of the Chesterfield Education Association, said he supports McDonnell's proposal to put $1.2 billion in state and local funds into the teacher retirement plan.

"It's been underfunded for decades," Cardella said on Monday.

In contrast, he's frustrated by Watkins' proposal. "At the same time they're trying to address the mistakes of previous General Assemblies, they're shifting the burden to the employees," he said.

Watkins said his proposal is in teachers' best interests.

"This is not my retirement program," he said. "This is for the teacher retirement program."