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Friday, August 16, 1996
VRS board hails study of pensions
But Allen administration's secrecy draws fire from some members
BY JEFF E. SCHAPIRO
Times-Dispatch Staff Writer
VIRGINIA RETIREMENT SYSTEM
Trustees of the Virginia Retirement System yesterday welcomed an Allen administration study of self-managed pensions for state workers but scolded the administration for going about it in a hush-hush way.
''You can't do these things in secret,'' said Donald L. Cahill, a Prince William County police sergeant appointed to the nine-member board of trustees by Gov. George Allen.
''It would have been kind of nice to know that he was going to do it,'' said University of Virginia lobbyist Stuart W. Connock, who holds one of four VRS seats controlled by the Democrat-dominated General Assembly.
The Department of Planning and Budget is considering recommending that classified state employees choose either a self-directed pension or the current once-a-month benefit set by law and distributed by the VRS.
Study under wraps
The administration tried to keep the study under wraps, fearing it might be seen by employees and retirees as a first step toward a wholesale shift in benefits.
Secretary of Finance Ronald L. Tillett defended the secrecy.
''It may be somewhat problematic to discuss all of these issues . . . until we know what the scenarios look like,'' he said.
Knowledge of the study was so closely held that some VRS trustees -- among them Elise L. Emanuel, a Williamsburg teacher named to the board by the legislature -- didn't learn of it until the Richmond Times-Dispatch broke the story last week.
''People were upset,'' said Emanuel.
In requesting information from the VRS, planning and budget director Robert W. Lauterberg asked in an Aug. 1 letter that the data be kept secret under an exemption to the Virginia Freedom of Information Act.
The act allows the governor or members of his Cabinet to designate as ''confidential working papers'' documents on possible legislation or regulations.
Request rejected
VRS executive director William H. Leighty rejected Lauterberg's appeal for secrecy, noting that the pension fund was under court order to obey the Freedom of Information Act. The order dates to violations by the old VRS board.
''Failure on my part to openly and fairly comply with provisions of FoIA results in personal penalties to me,'' Leighty wrote. ''As director, I do not wish to attempt to aggressively defend any document as confidential.''
Another Allen appointee, stockbroker R. William Bayliss III of Winchester, said the study should be bipartisan -- not just the purview of the Republican administration.
Could save millions
That, Bayliss and others argue, would help create an atmosphere in which the administration, the legislature and employees could consider the advantages and disadvantages of self-managed pensions.
Self-directed programs have been touted as a way to save taxpayers millions. But they require state employees to weigh the risks and benefits of making their own investment decisions.
That makes Emanuel and Cahill nervous. They represent some of the VRS' largest -- and most politically influential -- constituencies: teachers and municipal employees. The VRS pays pensions to 75,000 people.
''A school administrator called me up and said, 'I don't have time to make those decisions. That's why you're there,' '' said Emanuel.
Because they frequently switch jobs, instructors at state colleges often enroll in TIAA-CREF, a giant retirement program for faculty that allows participants to style their own pensions.
The current, so-called defined benefits plan is costly for the state. Virginia is liable for monthly payments and the $22 billion portfolio that covers those benefits.
''The time may have come to look at alternatives (to the current pension program) whether the board agrees with (the administration) or not,'' said Connock.
Virginia isn't the only state to consider or adopt the self-managed option, which is available in the private sector through employer-sponsored 401(k)-type savings plans.
Others include California, with the biggest public pension plans in the nation; Washington, Colorado and West Virginia.