West Virginia lawmakers late last week passed a bill appropriating $25 million to help with the transfer of public school teacher retirement funds from the Teachers’ Defined Contribution Retirement System into the state-run Teachers’ Retirement System. Gov. Joe Manchin is expected to sign the bill.
Lawmakers approved HB 101, which authorized teachers to transfer to the state-run pension system, during a special session in March. The legislation was in response to complaints from some teachers who realized poor results when investing in the defined contribution plan. HB 101 specified dates for an election and required at least 65% of the members to vote to transfer.
From April 1 through May 12, the 18,990 actively contributing teachers in the defined contribution plan voted on whether to transfer to the state-operated pension plan. More than 78% opted to transfer during the voting period, according to the West Virginia Consolidated Public Retirement Board.
In June 2007, the state sold $807 million of tobacco settlement bonds to help reduce the unfunded liability in the state-run teachers’ pension program. The bond proceeds and cash boosted the Teachers’ Retirement System’s funding level to 51% from 22%.
However, the state’s combined pension funds are still estimated to have a $4 billion unfunded actuarial accrued liability.
West Virginia’s general obligation bonds are rated AA-minus by Fitch Ratings and Standard & Poor’s and Aa3 by Moody’s Investors Service.