Clarke County’s Joint Administrative Services committee delivered tangible proof yesterday of its willingness to support competitive salaries for future teachers and other new employees in the face of continuing budget erosion from Richmond. The decision helps Clarke County’s employee benefit package remain competitive as jurisdictions across Virginia react to state budget reductions for employee benefits and retirement. Given the opportunity to pass the buck to Richmond on budget shortfalls, Supervisor Chairman Michael Hobert (Berryville) and School Board Chairman Robina Bouffault (White Post) instead opted to take contol of the issue by filling the employee benefit funding gap for future Clarke County teachers and staff with local dollars.
Using legislative tactics designed to shift public ire from Richmond to local governments, the 2010 General Assembly decided to withdraw its contribution to the Virginia Retirement Service (VRS) accounts for employees hired after July 1st, 2010. The 5% contribution reduction, along with increased service requirements necessary for retirement, are designed to strengthen the VRS system after a 2009 stock market collapse that sent many pension funds and Virginia’s tax revenues tumbling.
Under the revised program Richmond will withdraw its monetary contribution for new employees while delegating the option to local governments to make up the difference using local money. Current employee retirement benefits will not be affected by the changes.
While many state governments are struggling to restore pension funds to financial stability, fiscal changes to the Virginia Retirement System were considered too politically sensitive to address as general elections approached last spring. Instead of providing legislative leadership by fixing the VRS issue on a state-wide basis, the General Assembly opted instead to push the fiscal problem out to local governments. The move creates a new fiscal landscape where employee benefit contributions will vary between jurisdictions.
School Board Superintendent Dr. Michael Murphy characterized the new approach as an attempt by the state to force localities to decide how employees should be compensated. “The worst part of this mess is that the state has gouged the VRS. The General Assembly, to a great degree, has balanced the budget with its retirement plan.”
Murphy’s inclination appears to be supported by the practical results of the General Assembly’s decision. According to a current poll being conducted by the Virginia School Board Association, 68 out of 80 Virginia school districts say that they do not intend to pass the prior State-funded cost of VRS along to employees in the coming year.
Supervisor Hobert probed the fiscal impacts, both on employees and County finances, of the State’s benefit contribution reduction throughout yesterday’s two-hour meeting. In response to Hobert’s questioning, Joint Administrative Services Director Tom Judge said that ultimately the decision to make up the benefit contribution using local budget money is driven by what other local jurisdictions are offering. “The General Assembly has created local competition for new employees where it may come down to benefits versus salary.”
School Board Chairman Bouffault endorsed Judge’s observation saying that competitive factors in recruiting quality teaching staff are intense despite weaknesses in some sectors of the labor market. “The school division is seeing huge competition for professional staff” Bouffault said. “I think that the best idea is to keep paying the VRS premium as we have been and keep base salaries the same. My recommendation is to continue the five percent VRS contribution.”
After full consideration the committee recommended that the County’s respective boards and employers extend the five percent retirement benefit to new employees despite reductions in financial support from Richmond.
The Clarke County Joint Administrative Services division provides finance, purchasing and risk management services to Clarke County General Government and Clarke County Public Schools.