VRS and the Budget – Update
This budget season we’ve tracked and either fought against or lobbied for a number of bills dealing with VRS. Here’s a summary of the “final” results on VRS:
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There are some changes being made to the Cost of Living (COLA) adjustments, Average Final Compensation (AFC) formula, and retirement age calculations. However, these changes do not affect current employees and will apply only to new hires/those with no prior VRS service as of July 1, 2010. Retirement benefits are being reduced for these new hires, and this is a loss.
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For employees who are in the system prior to that date, one piece of good news is that the VRS multiplier (1.7%) is not changing. There was a major push to lower the multiplier, but those proposals were defeated.
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Now – for ALL employees, current and future, here’s what the released budget does: 1) It allows school boards/localities the option of requiring employees to pay some portion from 0 – 5 percent of the employee contribution to VRS. School boards can decide individually what, if any, whole percentage of this burden that they will shift to employees. This would effectively lower take home pay while maintaining the same retirement contribution. THIS IS A CONCERN, because it could certainly result in localities pressuring school boards to seek revenues via this route, and any change here WILL decrease take home pay for employees. 2) It included language that allows for localities to opt out of the group life insurance coverage that has been a standard component of VRS benefits. This would not be an option until 2012.
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As these are both new developments, finalized in the just-released budget, we have no sense of where Madison stands on either of these issues. It is interesting to note that both changes do not affect state employees; they merely give localities/school boards the option of making these changes at the local level.
