Friday, December 17, 2010

The Devil is in the details - more on the budget

We earlier told you that our comments on the Governor's amendments to the budget were based on comments made during briefings on Thursday. Again today we reported on the Governor's speech to the money committees. Nestled in that speech was the following sentence:

"Increase the state contribution paid on behalf of state employees and teachers for their defined benefit retirement programs by 2 percentage points effective July 1, 2011. We have put an additional $122 million in the budget for this purpose."

We have been advised that the import of this statement is that the employer rate for VRS will be increased by 2% and that the local school boards' share of the increase will amount to approximately $105 Million, which will have to be paid out of local funds!

Governor's Remarks on Proposed Budget Amendments

Below are excerpts from the Governor's remarks to the money committees this morning. As you will see, it confirmed what we reported here last evening: (1) the local composite index hold harmless will be eliminated for FY12 and $50M+ will be redirected to VRS and (2) local governments and school boards will be given the authority to require current employees to pay the 5% VRS premium IF they give the employees a 3% raise. Additional money for basic aid is forecast based on projected increases in revenue.

Several amendments have been made to K-12 public education funding.
The rate of student enrollment growth is slowing from what had originally been projected. Since public education is largely funded on the basis of per pupil amounts, these reductions in the enrollment forecast will produce savings in the state’s share of public education funding of approximately $49.4 million in FY 2011 and $43.0 million in FY 2012.

At the end of FY 2010, public school divisions received an additional $18.7 million from increased sales tax revenue collections. Going forward, the net increase in sales tax dedicated to public education, after the Basic Aid offset, will be an additional $19.5 million in FY 2011 and $21.0 million in FY 2012. That means Virginia school divisions will have $59.2 million in additional net revenue from above from what we originally anticipated in the budget.

It is important to note that since you departed last March, this new state money of $59.2 million and federal money of $249 million has been added to K-12 over the biennium. With our amendments to the budget that I am introducing today, state funding for K-12 over the biennium will increase by $57 million over final FY 2010.

As a result of injecting that new money, I have recommended a policy change to reprogram discretionary spending in FY 2012 to address a priority need in teacher’s retirement. At present, $57.6 million had been appropriated in FY 2012 for the 50% Local Composite Index hold harmless. I recommend those funds be reprogrammed to help finance the state’s share of a 2% increase in the teacher’s retirement rate at an estimated cost of $53.2 million. This action will make the teacher pension system stronger, offsetting future growth in retirement contribution rates and reducing the level of this unfunded liability, estimated to drop to only 57% funded by 2014.


· Afford localities the option to require the same 5% local employee share of contributions, but only if such requirement is offset by a 3% or more salary increase.

Click here to read the Governor's remarsk in their entirety:

Thursday, December 16, 2010

Governor's Proposed Budget Amendments

Today the Governor held a briefing on his proposed amendments relating to the Virginia Retirement System and the Secretary of Education held a briefing on proposed amendments to the K-12 budget. This information was shared with us orally and, as with most legislative matters, one has to wait until the information is in writing to see the all important details. These details should be available tomorrow after the budget amendments are presented to the General Assembly money committees. The most important points are that the Governor proposes to eliminate the local composite index hold harmless, which amounts to $57.6 Million for FY12. Three million dollars will be used to fund performance pay pilots. The remainder will go to VRS as the state's contribution to the fund. The Governor also proposes to give both local governments and school boards the authority to require current employees to pay their 5% share of the VRS premiums, if the local governments and school boards give their employees a 3% raise. The 3% raise would come out of local funds. We will have to wait and see whether the authority to require employees to pay the 5% premium and the 3% raise become mandatory.

Friday, December 10, 2010

Welcome to the new VSBA Legislative Update blog!

VSBA lobbyists Pat Lacy and Stacy Haney are excited to bring you this new blog where you will find information regarding the 2011 General Assembly session.  We will use this site to keep you updated on what we are doing at the General Assembly on behalf of the VSBA.

Be sure to check back often for updates as the session approaches!