RTD: Howell Targets Virginia Entitlement Reform

howell_fxbg600pxHow do you eat an elephant?  One bite at a time…

Speaker Bill Howell is certainly approaching the twilight of his legacy with the energy of a much younger man, and perhaps in an area where his leadership has remained unsung for so long.

On target?  Entitlement reform… and right on time:

“I think we made some good first steps … (but) I think we haven’t solved the problem,” he said in an interview with the Richmond Times-Dispatch.

Howell expressed concern about the size of the state’s unfunded liability for state employee and teacher pensions — estimated at almost $21 billion — and the need for a new, more portable package of retirement benefits as the state faces a major turnover in its aging workforce.

“I think it’s more than just fully funding the pension plan,” he said. “I think you ought to look at changing the plan.”

Read the rest of Michael Martz’s piece in the RTD for more in what has to be the best treatment of VRS reform I’ve read in a long time.

What strikes me as somewhat obtuse is Sen. Watkins’ parting shot:

“To arbitrarily say we’re going to change it, I don’t think that’s prudent,” said Sen. John Watkins, R-Powhatan, who will retire from the Senate in January. “You can’t keep changing it just to change it.”

…which of course is Chicken Little accounting here.  Howell and others have focused assiduously at tailoring around the edges of a frayed fabric with the Virginia Retirement System.  At some point, you have to tackle the $21 billion dollar elephant in the room to make Virginia solvent.

401(k) style plans are a good start and will probably offer greater incentive not only for employers to save, but to also start tackling that curious task of voluntary contributions — the real lift in any successful savings program.

Now if we could only get to HSAs + HDIPs as the grand solution for a Virginia state exchange on health care… of course, since that would be consumer driven rather than bureaucratic, I suspect it would have many foes and few heroes on Capitol Square…

But we digress.

Kudos to Speaker Howell for setting the agenda for this year’s budget and constricting Virginia’s unfunded liabilities.  The structural reforms of the VRS are one heck of a bite, and Howell’s policy shop has done a masterful job setting the table for true, systemic reform.

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