Virginia Gov. Bob McDonnell announced Thursday that he is recommending pumping $2.2 billion into the state retirement system for state and local employees for the next two years – the largest employer contribution to Virginia Retirement System in history.
“I have determined this is an absolute top priority for our state government,’’ McDonnell (R) said on his monthly radio show on WRVA. “We must structurally rebalance that system. I’m going to make sure state government does it’s part... I have determined that the problem is so severe that I am not going to pass on this problem to another governor.’’
The amount includes money for the first two years of repayment of $620 million borrowed from the retirement system in recent years to close a budget shortfall and fund government services. The General Assembly agreed to repay that loan over 10 years, starting in 2013.
But McDonnell declined in his monthly call-in show to say exactly where the money will come from except to say say revenue growth and cuts in other areas.
“There is revenue growth that will impact fund these new initiatives...but part of the money is coming out of savings,’’ he said. “We can’t afford to do the same things we have always done in the same way.”
Last year, McDonnell proposed increasing the amount employees pay into the retirement system, but the General Assembly killed that proposal. He said Thursday he has not decided whether to propose changes in employee contributions.
In the past two years, from 2009 to 2011, the gap between the VRS liabilities and assets on hand to pay such liabilities increased 69 percent from $11.8 billion to $19.9 billion,’’ according to a recently legislative audit.
The recommended employer contribution for state employees alone for fiscal year 2013-2014 is a record $596.9 million.