“I would say that the San Jose vote is a harbinger of things to come” reminded Alicia H. Munnell, director of the Center for Retirement Research at Boston College. Referencing San Jose’s overwhelming vote -70 percent, to cut pension benefits promised to San Jose city workers, she concluded governments generally need more flexibility to solve their funding problems.
Residents in both San Jose and San Diego stormed the polls – not just cutting benefits for future employees, but scaling back pension benefits of current city workers. California, here they come.
The Commonwealth’s Virginia Retirement System is not struggling with pension-cutting measures. Unceremoniously, we suffered self-inflicted wounds: a $28.7 million mistake in the 2009 VRS COLA calculation. It seemed the COLA in 2009 was figured at 3.84% instead of an accurate 3.42% – this – a more than momentary indiscretion.
Emblazoned with headlines, suffering a what-the-hell moment, clearly cringing over rehashing the embarrassment, VRS absorbed the actuarial miscalculation dispatched from Cavanaugh MacDonald Consulting, requiring mea cupola’s all around. Amid it all, Paul Timmerick, VRS colleague, former Secretary of Finance for Virginia Governors Allen and Wilder, simply concluded, the System will be made whole, period…and it will.
So where are we?
In the decade of this trusteeship, the range of change in services seems unfathomable: our membership now includes approximately 146,859 teachers; 104,499 in local political subdivisions (counties and cities); 79,000 State Employees; 1,892 in the State Police Officers’ Retirement System (SPORS); 384 in the Judicial Retirement System (JRS); and 9,410 in the Virginia Law Officers’ Retirement System (ValORS), bringing a total active membership of 342,024. Current Retirees/Beneficiaries include 162,357, added with 111,031 Inactive/Deferred Members.
The VRS overall responsibility carries about 615,412 participants!
Last year The Bank of New York (BNY Mellon), master custodian of VRS investments, transitioned to BNY Mellon’s Compliance Monitor application to check compliance with the Public Equity investment guidelines. Collaboratively, VRS worked closely on the product project. Meticulously, Investment management explores options for improving flexibility, reliability – checking investment guide lines.Stake holders continue to have investment inquiries – predictably unending. Year end, 2011 reported external investments valued at $51.0 billion ($52.5 billion on May 29, 2012). Approximately $37.8 billion is managed externally, representing 74.1% of the entire portfolio. Those figures broken down into asset classes are: $14.2 billion Public Equity; $7.7 billion Fixed Income; $7.4 billion Credit Strategies; $3.9 billion Real Estate; and $4.6 billion in Private Equity.
Tactically, VRS ceaselessly works insuring security of its wireless network, regularly performing monitoring and logging procedures. Program specifics, contents, upgrades, are exempted from disclosure under the Freedom of Information Act – for overarching reasons. Privacy, confidentiality, integrity of the VRS IT system are safe ….reassurances beckon.
For the security of stakeholders and Commonwealth taxpayers, the Office of the Auditor of Public Accounts is char
ged with conducting annual examination of Virginia Retirement System – often commencing in May or June, concluding in November. Questions, inquiries are thorough; e.g.: “are there any potential restrictions on your audit scope or other matters that could affect your audit opinion?”
Heavy lifting by employees, headed by L. Farley Benton and Denise Rasmussen, Project Managers, continues unabated on VRS’s Modernization Program – with exceptional sensitivity to the needs of stakeholders. Correcting design flaws, online learning, employer-testing, are utilized regularly. Solemn-eyed, we become reluctant to accept another extension on a completion goal date. Technological complications and additional design changes generate unforeseen schedule interruptions.
Robert J. Schultze, director; Ronald D. Schmitz, CIO (now, not so new); and Franklin O. Berry, Internal Audit Director, continue to provide secure leadership….professionalism abides. The Commonwealth of Virginia is not required to share necessary retirement melt-downs of a distant, overwrought west coast. California….here we come, not.
Raymond B. Wallace, Jr., former CEO, Godwin High School retired teacher, current Trustee – Virginia Retirement System. Contact him at firstname.lastname@example.org.