COMMONWEALTH OF VIRGINIA
DEPARTMENT OF EDUCATION
P.O. BOX 2120
RICHMOND, VIRGINIA 23218-2120

 

SUPTS. MEMO NO. 210
November 17, 2000

 

INFORMATIONAL

TO:

Division Superintendents

FROM:

Jo Lynne DeMary Superintendent of Public Instruction

SUBJECT:

Information from the Virginia Retirement System

 

The Virginia Retirement System (VRS) has asked that we notify school divisions of two important items. The first is a reminder of recent legislation dealing with the Optional Retirement Plan (ORP) for division superintendents and the second deals with employer contribution rates for the fiscal year beginning July 1, 2001.

Optional Retirement Plan (ORP) for Division Superintendents

The 2000 General Assembly passed and the Governor signed House Bill 79, amending ' 51.1-126.6, Code of Virginia, relating to ORPs for public school division superintendents. In summary, the bill:

  1. provides that school boards may offer an ORP administered by the VRS for newly hired superintendents within 90 days of the hire date;
  2. directs the VRS to develop policies and procedures for the administration of the ORP:
  3. directs the VRS to determine the employer contribution rate for the ORP (This was established at 10.4% of pay by VRS Board action.); and,
  4. provides that school boards that established an ORP prior to the effective date of the legislation may request that such plan be governed by the provisions of the legislation. The election by the school board must be made by January 1, 2001.

Prior to the 2000 legislation, existing law allowed for the creation of separate, but individualized, ORPs for superintendents. Only a few school divisions elected this option. Because of its sizable investment portfolio and its ability to leverage investment relationships, as well as its expertise in administering retirement plans, VRS can administer an ORP more efficiently and at a lower cost than school divisions administering a plan for only one person. Consequently, the General Assembly modified the existing law to provide for VRS to administer ORPs on behalf of school divisions.

School divisions that would like VRS to administer their existing ORPs should contact Laura Pugliese at VRS at (804) 344-3162. Any school division that wishes to offer an ORP for the first time for its superintendent should also call Ms. Pugliese.

With this ORP change, please be aware of two things. First, eligible employees who decide to enroll in an ORP will lose their VRS disability retirement coverage. VRS recommends that superintendents in an ORP consider purchasing an individual policy. Second, all elections to have an existing ORP administered by the VRS must be made prior to January 1, 2001.

Employer Contribution Rate

At its October 19 meeting, the VRS Board of Trustees certified a revised employer contribution rate for the teacher group (your VRS agency code 4-0XXX), effective July 1, 2001. The revised employer contribution rate that has been transmitted to the Governor for inclusion in his budget amendments is 5.87 percent of covered payroll. This does not include the 5.00 percent member contribution rate that you may be paying for your employees. The employer contribution rate, certified by the VRS Board of Trustees, for the current year continues to be 7.54 percent of covered payroll. We anticipate that the savings difference between this rate (7.54 percent) will be captured by the Governor in the budget he introduces to the 2001 General Assembly.

Employer contribution rates for school board "nonprofessional" groups (your VRS agency code 5-5XXX) will not change for the fiscal year beginning July 1, 2001, and will remain the same as you are currently paying. Likewise, there will be no change to group life insurance premiums for both groups for the fiscal year beginning July 1, 2001.

If you have any questions regarding this information, you may contact Gary Smith at (804) 344-3122 or Bo Harris at (804) 344-3121 at the Virginia Retirement System. You may also contact Dan Timberlake, assistant superintendent for finance, at (804) 225-2025.

JLD/DST