Kaine: Have state employees pay into pensions

Gov. Timothy M. Kaine proposed Friday that state employees start contributing to their retirement benefit plans, an expense that has been borne entirely by the state since 1983.

Under the outgoing governor's budget, state employees would contribute 1 percent of their salaries toward their pension next year and 2 percent the following year.

The change could affect 80,000 state employees, 150,000 teachers and 100,000 local government employees who are part of Virginia's retirement system. It could save the state $55 million over two years. Currently, the state pays both employee and employer contributions to the Virginia Retirement System.

Local governments and school boards would have the option of requiring employees to do the same, Kaine said.

The budget is subject to approval by the General Assembly and incoming Gov. Bob McDonnell, a Republican. A McDonnell spokeswoman wouldn't comment on the proposal by Kaine, a Democrat.

"This is not what we hoped to announce, but these changes are necessary to manage through this very difficult fiscal situation," Kaine said.

Virginia is one of eight states that do not require government workers to contribute to retirement plans and one of three that pay contributions on behalf of employees.

Two Republican legislators reached Friday had differ ing opinions.

Del. John Cosgrove of Chesapeake said he hoped changes would involve only new employees. "That would have been the most equitable way of going about this."

Del. Chris Jones of Suffolk, a member of the House Appropriations Committee, said he and others on the committee are concerned about the rising cost of the retirement system, which could need an additional $400 million from the general fund over the next two years. "I don't think it's unreasonable for employees to share in the cost of funding their retirement," Jones said, adding that making changes for only new employees would not result in major savings this year.

Requiring state employees to contribute 2 percent of their salaries could save the state general fund about $46 million each year and local school districts as much as $186 million per year, according to Senate Finance Committee documents.

Virginia Beach Mayor Will Sessoms, who started a task force to examine retirement costs, said it's too early to know whether the city would want to adopt the proposal. "It's certainly something that needs to be considered for new hires, but we'll have to wait and see what our committee says," Sessoms said.

Chesapeake Councilman C.E. "Cliff" Hayes Jr. said he imagines his board would also consider changes to new employees' pension contributions before changing the deal for current employees. At least one Chesapeake schools official said teachers may have to ask themselves a question.

"The question becomes, am I better off paying that 1 percent than either me losing my job or the person in the next classroom losing their job?" said Vicki Lucente, a Chesapeake assistant superintendent.

Dominic Melito, president of the Virginia Beach Education Association, said he hoped that if Kaine's proposal is adopted it could be rescinded if the economy improves or that local school boards would consider picking up the cost for employees.

Beach School Board President Dan Edwards said, "Clearly, it's a huge paradigm shift and one we would clearly not want unless there were no other options."

Aaron Applegate, (757) 222-5122, aaron.applegate@pilotonline.com

Mike Saewitz, (757) 222-5207, mike.saewitz@pilotonline.com