Albemarle County has decided to opt out of paying VRS contributions for new employees hired after July 1, 2010. The General Assembly allows them to chose whether to pay the employee contribution or not.

According to the Richmond Times Dispatch:

CHARLOTTESVILLE — Albemarle County officials have decided to stop picking up the tab for what local government employees have to pay into the state retirement system.

Albemarle, along with the bulk of localities in Virginia, has long been required to pay what is considered the employees’ retirement contribution share. But this year’s General Assembly gave localities the option to make new employees pay the contribution themselves — which equals 5 percent of their salaries — so Albemarle decided to make new employees start paying.

The change applies only to new employees who have never been in the Virginia Retirement System and are hired after July 1.

The benefit payouts will be deducted from employees’ paychecks.

Depending on how many employees the county hires after July 1, the move at a joint meeting last week between the Board of Supervisors and School Board could save the county a couple of hundred thousand dollars per year, officials estimated


It is unclear whether the school board will go the same route and the county. One thing being discussed is raising the pay to attract more teachers and then soaking the new employees for their VRS contribution. I hope they tell them this before they sign on. It almost seems deceptive. The VRS employee contribution is 5% of the employee’s annual salary. I am not sure I see where Albemarle County Schools would be saving money if they paid more to the new employees and didn’t pay VRS. Wouldn’t they have to pay highter FICA contributions? It also eventually raises the amount their pension is calulated on. Pay me now or pay me later. It seems to me that they are just being sneaky. I hope it ends up biting them in the butt.

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7 Thoughts to “Albemarle County Opts Out”

  1. marinm

    From the DailyPress.

    Fiscal fairness: Virginia’s city, county and school workers should share in the cost of their pensions

    June 12, 2010

    Every city, every county, every school board in Virginia has the chance, right now, to make a decision that is sound as social policy and prudent as a way to manage taxpayer money.

    It’s the decision that new employees should do what nongovernmental workers across Virginia and the nation do: contribute to their retirement.

    It is absurd that in Virginia, state and local government workers, including teachers and others who work for school boards, do not have to put one cent into their pension plans. That benefit isn’t rare only in the private sector, it’s rare in the public sector: Most states require government employees to share in the cost of their retirement plans.

    Virginia stopped doing that in 1983 when the General Assembly, in an effort to boost employees’ take-home pay, picked up the tab for the 5 percent of salary that employees are “required” to contribute to the Virginia Retirement System. And kept picking it up, so that short-term fix has become a long-term drain on state and local budgets.

    With taxpayers on the hook for both the employer’s share and what is still called the “employee’s share,” the cost grew so steep that in many years, not enough was paid in. Now, the pension fund is short, without enough money to cover the promises made to employees. Guess who will have to make up the difference?

    The VRS bill siphons money from the services governments and school boards deliver. In Hampton, for example, it came to $13 million this year (not counting the schools’ bill), or 18 percent of payroll.

    This year, in a big step in the right direction, the legislature granted localities and school boards the ability to make employees hired after July 1, 2010, contribute to VRS. It also voted to let localities require existing employees to contribute, but Gov. Bob McDonnell vetoed that sensible bid to allow localities to manage their own money and employees.

    The General Assembly applied the new policy at the state level: New hires will contribute to their pension plan. Every city, county and school board should do the same for their own work forces. Doing anything else makes no sense.

    It makes no sense because everyone should be urged to save for retirement. Officials shouldn’t be sending anyone a message that “You don’t need to plan ahead; you don’t need to be responsible.”

    It makes no sense because the current arrangement makes taxpayers pay the full tab for government workers’ pensions that are much more generous than their own. State and local workers can retire in their 50s, knowing their pensions are guaranteed no matter what the economy does. A typical taxpayer, on the other hand, can’t retire until 65 or later and his income flow is risky, depending on how investments perform.

    It makes no sense because the argument that richer benefits are necessary to make up for sub-par salaries no longer holds up. Government salaries are competitive; add in benefits, and public sector workers out-earn private sector workers.

    Some officials may argue that a locality shouldn’t require contributions because that will give it an advantage in competing for workers. That’s unconvincing. The low turnover rate in government is proof that it doesn’t have trouble attracting and retaining employees. The extra security and time off and diffuse approach to accountability make these jobs popular.

    Contributing to their own retirement funds is fair.

  2. Just out of curiosity, does military personnel have to contribute to their own retirement?

    VRS is not in that bad of shape. I would say part of what this person said is just crap. VRS lost 21% in the crash. Who amongst us can make that claim? Virginia pulls in teachers from all over the United States because it has a decent retirement system. It doesn’t pay nearly as well, however, as the NY State pension. It also doesn’t have health benefits paid for, just a stipend to help offset costs.

    I say it is just jealousy. Keeping and retaining decent employees is a good thing.

    The VRS bill siphons money from the services governments and school boards deliver. In Hampton, for example, it came to $13 million this year (not counting the schools’ bill), or 18 percent of payroll.

    doesn’t even make sense. Hampton doesn’t have the most sterling record on financial responsibility in the state. So they budget poorly and it becomes the fault of VRS? Didn’t they defer payments a time or 2? That kind of crap catches up with you.

    Private companies do have pensions. HP, Raytheon, IBM, all have or had pensions.

    The business about 1983 is also white washed. The VRS was used to replace raises. That was the choice localities made. That just boils down to pay me now or pay me later.

    No one has offered up one shred of proof to me that VRS is in bad shape. I am waiting to see proof rather than some newspaper editor just saying its so. I believe it snapped back nicely. It will snap back nicely again if Virginia will stop using the fund at an ATM.

    All the moaning and groaning from ‘taxpayers’ is simply jealousy. They are free to apply for state and local jobs so they can partake also. What is stopping them?

  3. marinm

    Oooooooooooooooooooooooooooooooooh! Thank you for bringing up HP. Having been an employee of EDS I can tell you about HP and pensions. 😉

    Long story short, I do have a pension with EDS (HP). When HP acquired EDS they saw what EDS was paying out on the pension plan and killed it. They’re still responsible for paying people out but no further allotments were being made to the account and employees weren’t being enrolled into it.

    Now, assuming that HP exists 40+ years from now I get whatever my monthly allocation is. Now, if HP doesn’t exist there is a chance that the govt will bail out the pension account but generally speaking you can kiss the pension good bye.

    Will the govt ever go Tango Uniform? Nope. So, that pension never runs at risk because you can soak future taxpayers to pay current and future obligations.

    Eliminate VRS and put teachers on a 401K where they contribute on there own for retirement. Even the federales moved to 401Ks for the govt civil service (non-union). I’m not against giving teachers a retirement. I am however against it being on the backs of the taxpayer. A 3% match on 401K contributions is generally what you see on the free market.

    1. Disagree. I have a friend who was with HP many years ago and his pension is still fine. This was before they bought out EDS. I don’t know what arrangements they have made with their pension after then. I am sorry, it was Honeywell, not HP. I was wrong on that one.

      So if you put teachers on a 401k, what about everyone else? You are aware that some teachers have the equivalent of a 401k? Do just the teachers get it and not the bus drivers or the planning office employees?

      I know plenty of people who get a 5-10% match with their employer. Why this fixation on public employees? Do you assume you don’t pay for someone’s 401k or pension just because they aren’t public employees? It is almost like you want to punish people for being public servants.

      Think about those rail road pensions. Those must haver really frosted you.

      Back to teachers. You are slowly but surely removing any incentive to teach. No retirement, longer hours, NCLB hoops to jump through through, 50 kids per classroom. Glad my kids are grown is all I can say.

  4. marinm

    If we were to eliminate VRS I have no objection to a 401K for all Virginian civil servents. You encourage them to save by providing a match and let them direct how they want to invest that money. To be clear, I was NOT a fan of what Bush wanted to do WRT privitizing social security. While I see SS as an evil, evil entity his idea of clawbacks and payouts was a system to enrich the investment companies and not ‘save’ future taxpayers.

    If you know a place where I can get 5-10% match on my 401K and it’s an IT company.. Send over the information. I’ll jump ship. 🙂 My loyalty goes as far as my next paycheck!

    I don’t want to punish public servents. I think they provide a valuable service generally. But, because they’re pay is set by what’s redistributed by me I do have a say in how that pay is allocated. 401s or 403s offer a more cost effective approach to the taxpayer as the majority of the retirement savings are made by the employee and not the employer. The employee is free to even decline to participate and just take home there normal full paycheck.


    Incentive to teach doesn’t really change. If your in it for the money, Washington DC pays 6 figures in public schools. If your in it for the kids modifying VRS to a 401K puts us on par with every other state in the union. 50 kids in a classroom? Please. I think the avg in PWC is 26 or 28? At 50 we could recover a lot of our costs!!

    You think with our current math investigations programme in PWC that we can have kids string beads or paint dog houses and then sell them for cost recovery? — JOKE!!

  5. Prince William County would match you at 5%. I am sure they would welcome you and they need IT people. They just fired some for being crooks.

    Incentive to teach has changed a great deal. DC doesn’t start you at 6 figures. People can be in it for kids and still want to earn an adequate living. The minute we say kids, people start thinking teachers should turn in to Mother Teresa. That simply isn’t true and it wont be true, ever again.

    Professional women are no longer locked out of jobs other than teaching and nursing.

    What do you know about math investigations, marin? Who has tapped into your brain? Ever seen it taught? There is so much false crap being spread about that program I don’t even know where to begin. Think of it as a discovery approach to math that employs maniputatives and kinesthetic rather than memorization, drill and practice.

    The average class size will increase everywhere in the state as there is less money to hire teachers. And don’t believe the average crap…it is deceptive.

    I guess I am wondering why newcomers to the state think they can come in here and start making changes to a program that has benefitted teachers since 1908 and has benefitted all state and most county employees since the 40’s. All those years no one bitched. They were pleased to do something for those who ate death dogs in the cafeteria every day and put up with their kids.

    Fortunately, the VRS is an integral part of Virginia and there are enough people who think it is a good plan, it isn’t going anywhere. Also remember that those already in the program have a contract with that institution for already allocated money contributed. Future contributions may be tweaked.

    How come the program has worked for over 100 years and always been able to meet its obligations and now, all of a sudden, things are supposedly iffy? I will believe it when I see the facts and figures. Right now, all I have seen is opinion pieces by people who are saying something is true. Bunk!

  6. marin, if someone can show me facts and figures that it wont be solvent because of the crash, I will buy into changes for new people or even changes for people still paying into the system. However, the only problems I know of it having is from those localities not paying.

    I won’t have a problem with those localities having difficulites being exempt from new people having their own contribution paid. However, for those already onboard, the localities will need to make some adjustments and balance their budgets better.

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