Once upon a time not long ago, in 2001 to be exact, Virginia’s pension fund obligations were fully funded — 106 percent funded. No longer. According to a new study by the Pew Charitable Trusts Center on the States, Virginia’s obligations for state employees is only 81 percent funded, or about $10 billion short. Additionally, the state is $2.3 billion short on funding “other” retirement benefits.
What’s going on? A couple of things. First, Virginia shifted to slightly more conservative actuarial methodology: assuming compounded returns of 7.5 percent annually instead of 8.0 percent, which is probably wise in the current financial climate. But the study also states, “The state has stumbled a bit in making its full annual contributions toward its long-term obligation. … In the last 10 years, the Commonwealth has frequently made less than the annual required contribution, as set by its own actuaries.”
Virginia’s funding ratio is a hair worse than the national mean — which means it’s nothing to be proud of. In the private sector, monkeying with pension payments is a notorious trick for boosting cash flow. Looks like Virginia has been doing the same thing since 2001. Before cranking up spending on other programs, Gov. Timothy M. Kaine and other lawmakers might consider taking care of core responsibilities first. Twelve billion dollars is a lot of money, even if spread over decades.