After years of revisions and legal wrangling over West Virginia’s financially strapped teacher-retirement system, state lawmakers have finally come up with a plan they hope will settle the matter.
Now it’s up to the teachers.
The latest pension proposal, approved in the legislature’s recently concluded special session, offers teachers a chance to move from a 401(k)-style defined-contribution retirement system to a defined-benefit program that would give teachers a guaranteed pension upon retirement.
If at least 65 percent of the teachers in the retirement system approve, employees in the existing defined-contribution program will be able to move their invested money back to the more traditional pension program that had been in place until 1991.
Teachers who prefer to stay with the 401(k)-style plan will be able to do so, but they will not have a chance to switch later. New teachers are allowed only into the guaranteed-pension, or defined-benefit, plan.
“This bill isn’t exactly the way we would have liked to have seen it, but it’s a bill that provides a program so that people can transfer back to the defined-benefit plan,” said David Haney, the executive director of the 17,000-member West Virginia Education Association, an affiliate of the National Education Association.
Years of Changes
The bill is the latest in a complicated series of changes made by the state in the hope of relieving its problems with a substantially underfunded pension program. According to a recent analysis of pension programs conducted by the Pew Center on the States, West Virginia has the lowest proportion of funded liabilities of any state pension program, at 55 percent.
For decades, teachers in the state retired with a pension that would pay them a guaranteed amount. But in 1991, the state changed to a defined-contribution approach that would require teachers to invest a certain percentage of their income toward retirement expenses, with the state also contributing some.
Teachers complained, however, about a lack of investment choices in the defined-contribution system and investment guidance.
In 2005, the state voted to do away with the defined-contribution system and return teachers to the older pension plan. But some employees who were doing well under the 401(k)-style program sued successfully to stop the switch, though employees who were hired after 2005 continue to have the defined-benefit pension.
The latest change, approved March 16 in a special session of the legislature, is a compromise among the House, the Senate, and the governor’s office, said Lara Ramsburg, the spokeswoman for Gov. Joe Manchin III, a Democrat. But if fewer than 65 percent of the teachers vote for a change, the two systems will remain as they are.
In its regular session, which wrapped up just prior to the special session, the legislature approved funding education at $1.8 billion for fiscal 2009, up 2.2 percent from fiscal 2008.
The legislature also approved and the governor signed a $1,600 raise for teachers. According to the NEA, the average teacher salary in West Virginia is $38,604, which is lower than the average salaries in all five states that border West Virginia: Kentucky, Maryland, Ohio, Pennsylvania, and Virginia.
In other action, the lawmakers passed an anti-bullying bill that requires schools to form a panel of teachers, administrators, and parents to address disruptive acts by students.
Capitol Recap offers highlights of the legislative sessions. Precollegiate enrollment figures are based on fall data reported by state officials for public elementary and secondary schools. The figures for precollegiate education spending do not include federal flow-through funds, unless noted.
A version of this article appeared in the March 26, 2008 edition of Education Week