Commonwealth Competition Council of Virginia
Commonwealth Competition Council of Virginia
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VGEA's Foresight

October 1996

Ensuring effective government services to the citizens of the Commonwealth through a quality workforce.


Ballot 96 Shall the constitution of Virginia be amended to provide that the funds in the governmental employees retirement system shall be trust funds and be invested and administered solely in the interests of the members and beneficiaries of the system?


VRS Fall Referendum Deciding which man will lead America into the 2Oth Century as President is not the only decision Virginia voters will have to make at the polls in November. Voters statewide will decide on a constitutional change which would make the Virginia Retirement System (VRS) an independent trust fund, entirely separate from other state money, to be used solely for retirement benefits of employees in the Commonwealth's political subdivisions and school divisions. The proposed constitutional amendment relating to the VRS will be amendment #1 on the ballot. There will be four other amendments on the November ballot; however, amendment #1 is the only one relating to state employees. The wording on the ballot will appear just as it does above.

VGEA representatives feel that many Virginians will read the amendment and not fully understand the intent of the proposed change. A recent Virginia Commonwealth University poll revealed that most Virginia voters polled has no knowledge or understanding of the issue involving protection of employee pension funds.

The VGEA Retiree's Chapter has been focusing on promoting the amendment's passage and educating Virginia voters of this beneficial referendum. VGEA Retirees' Chapter president Lew Brett said, "voters must understand that this is a positive change for the Commonwealth. The passage of the amendment will not increase taxes or employee benefits - the passage will strengthen pension benefits by preventing the raiding of those funds." VGEA urges members to help ensure the passage of this referendum by educating your co-workers, friends and neighbors about the positive benefits that will result.

For more information on the VRS referendum you may contact the State Board of Elections: 200 North 9th Street, Room 101, Richmond, Virginia 23219 or phone: (804) 786-6551 or 1-800-552-9745.


Roll-Forward of Paydates Scheduled to Begin January, 1997 The salary plan passed by the '96 General Assembly and approved by Governor Allen is scheduled to begin rolling forward state employees' paydates in January, 1997. The plan (barring any changes by the '97 General Assembly or Governor Allen) will roll-forward paydates during an eight-month transition period. The salary plan will adjust state employee salaries 6.43% over the biennium (this figure comes from compounding one increase on top of another). The 6.43% increase come from a combination of across-the-board increases, a one- step increase and the roll-forward of the paydates.

Why did the Commonwealth want to change the paydates? The reasoning behind the change is to pay state employees for time actually worked-a concept embraced by most private companies. The roll-forward will have state employees receiving only 23 paychecks in 1997 - not 24 (however; gross salary will remain the same for '96 and '97). What happens to the 24th paycheck? State employees will receive that paycheck when they retire or leave state service (note: this paycheck will reflect the employees salary at the time of separation from state service).

There is no question that the roll-forward of paydates would be a hardship to many state employees. You may want to consider:

  • Contacting your senators and delegates to seek support for VGEA's proposal to move the scheduled December l, l997 salary increase to July 1,1997. This would help to ease the financial hardship which may be experienced during the roll-forward period.
  • Setting aside the increase you will receive beginning with your December 16, 1996 paycheck to help offset the delay in paydates.
  • Changing the amount withheld for federal and State taxes to increase the net amount of your pay check to help offset the delay in paydates. Planning ahead - planning now. Paydates are scheduled to begin rolling forward in January, 1997.
  • Looking at your budget before the roll-forward begins.
  • Developing a cash-flow chart. List all income and debt.
  • Looking at all income - consider possible tax refunds in your budget.
  • Taking advantage of "grace periods" for rent and mortgages.
  • Checking your due dates on bills.
  • Contacting your creditors and asking for their assistance.


Commonwealth Competition Council

The Commonwealth Competition Council was created in 1995 by the Governor and the General Assembly to examine and promote privatization, innovation and competition in providing state government services. The Code of Virginia defines privatization as a variety of techniques and activities which promote more involvement of the private sector in providing services that have traditionally been provided by the government.

While the Council will recommend alternative ways of providing traditional government services, state government's ability to protect the health, safety and welfare of its citizens will not be diminished by any of its recommendations. The Council will further suggest ways of minimizing any adverse impact of privatization upon state employees.

VGEA Executive Director Joan Dent spoke on behalf of state employees at a public hearing held by the Council earlier this summer. Excerpts from Dent's speech appear below.

The Council wants to hear from state employees about their thoughts and ideas on any of the following issues:

  • What program, service or initiative state government should be handled by the private sector? Why?
  • Is there a program, service or initiative could be done by the private sector: (a) in a more efficient manner; (b) at less cost to the taxpayer; (c) that would improve the quality of service; or (d) all, or a combination of the above. If so, what is it?
  • For those services that must be provided by state government, what is your suggestion on how to make state government more internally efficient and effective?
  • What issues do you see concerning state government competition with the private sector?

Please send your comments to P.O. box 1475, Richmond, Virginia 23218 or FAX to (804) 786-1594.


Excerpts from Joan Dent's speech to the Commonwealth Competition Council

"...VGEA looks forward to a continuing relationship with the Council. VGEA offers an overview of what we see as flaws in the area of state personnel management. These issues should be addressed before the Council can successfully move forward, with the cooperation and support of state employees.

...Without exception, Virginia's employees are the envy of other states. We are admired for the stability and professionalism of our workforce. This professionalism is particularly admired given the structure of the Virginia Constitution which limits the Governor's term of office to four years. This accomplishment is due to the continuing commitment of the General Assembly to state employees.

Unfortunately, in the minds of state employees, all that changed at the beginning of the current admiration [when letters were addressed to 500 top management employees requesting their resignations, then the announcement by the Governor's Blue Ribbon Strike Force that the Commonwealth's workforce needed to be reduced by 16,000 employees]. These actions did more to reduce productivity than any other occurrence in recent history.

The negative consequences of these actions are still apparent in the attitudes of employees. Downsizing, outsourcing, privatization and contracting out without planning and for reasons that are perceived as political rather than fiscal have led to an atmosphere of distrust.

Lack of communication has resulted in the loss of experienced, knowledgeable and dedicated personnel and has dramatically affected the motivation and commitment of the Commonwealth's workforce. Communicating honestly and directly to all parties involved will help to improve current attitudes.

VGEA will be publishing articles in our publication, Foresight, to address the work of the Council, and at this time we invite you to submit any articles regarding the establishment of the" Council, the actions and recommendations of the Council and the affect the Council's efforts will have on state employees. Our membership consists of both active and retired members. Soliciting comments from retired employees may prove valuable."

Council member Otis Brown and the Council Staff Members met with VGEA retired members on September 10, 1996.


The Rumor Mill: Early Retirement? The VGEA office has received numerous calls relating to "rumors" of another Early Retirement program ranging from a lO and lO to a 4 and 4 offer. These rumors have been coming in from every comer of the state and almost every State agency. As a result, VGEA Executive Director Joan Dent contacted Governor Allen's Chief of Staff Jay Timmons. Timmons expressed his desire to quell the rumors and set the record straight He responded: "There are no plans for another voluntary "buy-out" [i.e. an early retirement program). The voluntary separation program (WTA) instituted in 1995 has been beneficial to all of our hard-working employees. For those who took advantage of the voluntary separation package to retire early or go to the private sector, the program provided an easier transition. For remaining employees, savings from the reduced workforce have been used to funnd pay increases and have resulted in the fewest layoffs in recent memory. Additionally, the Commonwealth now provides a permanent package of severance benefits for employees similar to those provided in the private sector. The combination of a reduced workforce and this permanent severance package alleviates the need for a new voluntary "buy-out" or early retirement offer." -Jay Timmons, Governor Allen's Chief of Staff


VGEA 1997 Legislative Agenda

Competitive Compensation VGEA requests an across-the-board salary increase of 5% to meet the goal of the goal of competitive salaries for employees of the Commonwealth. This increase should be effective July 1,1997 to ease any financial hardship during the scheduled eight-month paydate roll-forward. As a result, this would reduce the salary disparity between the public and private sectors.

Performance Evaluations VGEA requests a new evaluation system can be established. This plan should be simplified to a "pass-fail" evaluation.

Management of State Government VGEA requests legislation to establish the Joint Commission to study the Management of the Commonwealth's Workforce as a permanent oversight group. This commission is charged with a study of the state's compensation, personnel and management policies, as well as making recommendations for improvements to Virginia's system.

Privatization VGEA will work with the Commonwealth Competition Council. This council is a bipartisan state organization created by the Governor and the General Assembly to examine and promote privatization, innovation, and competition in providing state government services.

Education for State Employees VGEA requests that state employees be given an opportunity to further their education through state supported colleges and universities.

Leave Policies VGEA opposes the "Universal Leave" concept proposed by the Governor's Blue Ribbon Strike Force. VGEA requests an increase in annual leave after 15 years of service. VGEA wants to ensure that any changes in current leave policies protect current leave balances and provide an enhanced benefit to state employees. VGEA supports the concept of short and long-term disability coverage for state employees. VGEA requests that the "layoff policy" be revised to a system based on seniority and satisfactory performance.

Retirement Issues

Cost of Living Allowance (COLAs) VGEA requests retirees' COLAs be granted on July 1 of the next calendar year after the employee's date of retirement.

Increase Retirement Benefits Increases in retirement benefits are necessary to offset the 5.75% state tax which many retirees pay on their state retirement. The 3% increase is not an adequate increase when current state tax rates are taken into account.

Premium Conversion Allow retired employees to use premium conversion for their health care premiums deducted from their Virginia Retirement System pension checks to reduce the amount of retirees' taxable income.

VRS COLA Funding Assure that funding of the cost of living increases provided to retirees under the Virginia Retirement System will not change the current formula for determining the amount of COLA increases.

Payroll Deduction of VGEA Dues VGEA requests that membership fees for retired members of the Virginia Governmental Employees Association be deducted from VRS benefit checks, if requested by the retiree.

Life Insurance, Coverage

-VGEA requests employees be allowed to continue their optional life insurance coverage after retirement up to age 70 1/2. Allow employees who leave state service prior to retirement with at least 20 years of service, and 5 years of participation in the optional program, to continue such coverage after retirement.

-VGEA requests that employees who retired prior to age 65 maintain the full amount of their life insurance coverage. The formula to reduce the face value of coverage would begin at age 65, or when the employee retires, whichever comes first.


Be a Part of the Solution: Privatization and Competitive Government Programs

By Otis Brown, Chairman of the Commonwealth Competition Council

This is the first in a series of articles to familiarize state employees with the mission and role of the Commonwealth Competition Council created by the General Assembly in 1995. This series will provide information on the work of the Council and encourage state employee involvement.

Government performance continues to receive considerable study, debate and scrutiny. Fiscal pressures have prompted governments to cut spending and adjust services. Government officials are increasingly tuning to some form of public/private arrangement as a viable option to reduce the size and cost of government.

Utilizing the private sector for service delivery is not new, as it has been addressed during several past administrations in Virginia Competition in the provision of government services is new and is gaining momentum across the country. What is new in Virginia is the extent to which competition and privatization is being given serious consideration as a policy option. The Commonwealth Competition Council has many duties of which the development of an institutional framework for a state-wide competitive program is paramount.

The Council's Role The Council's role is to advocate, develop and accelerate implementation of competition in the state government's delivery of services to taxpayers. The bipartisan Council has four members from the executive branch appointed by the Governor; one member of the House of Delegates, one member of the Senate, and four private citizen members-two appointed by the General Assembly and two appointed by the Governor.

The Council has developed a process in support of their mission to assess opportunities for competition and privatization. This process involves factors to consider such as the availability of vendors, risks, legal barriers, quality of service and impact on employees, as well as a cost model to use when comparing private sector versus public sector costs. The objective in most instances is to increase competition in government services rather than simply replacing a government monopoly with one that is private. It is not about public versus private delivery of state services; it's about monopoly versus competition. It is an effort to establish standards for competitive government.

The process recognizes the value of motivated state employees and their concerns resulting from competition and privatization. Clearly, employment security and pension issues rank near the top of the scale for employees. Employee involvement and participation is desired and needed not only to address concerns but to add their ideas and suggestions to the list of opportunities to further improve Virginia Government. There are several ways to contact the Council to make your views known.

This is the time for you to be part of the solution to good government and share your ideas and concerns with the Council. The input and cooperation of public workers is essential to a successful competition and privatization program. Public officials must communicate a commitment to fair treatment for current employees.

The second article in this series, provided by the Council, will discuss the system created to analyze Public and Private Performance.

VGEA Virginia Governmental Employees Association 3105 W. Marshall Street Suite 101 Richmond, Virginia 23230 (804) 355-3120 Fax (804) 355-3316

Foresight is the official publication of the Virginia Governmental Employees Association. Foresight is sent to the membership of the VEGA six times per year. Copies are also provided to other interested persons. This publication is provided to members as part of their membership fee of $24.00 (active) or $16.00 (retired) annually.


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