Amid cuts in services and staffing, Fairfax County has had to spend millions in recent years to bolster its employee pension funds hit by the tumbling economy. To compensate for the funds’ soured investments, Fairfax has had to pay $35 million in the past two years toward pensions for county government employees, cops and firefighters. On top of that, the county’s schools are asking for $14 million more than expected in fiscal 2012 to pay for a state-mandated increase in the contribution to the Virginia Retirement System. And beginning in 2013, the county will need to begin paying back $25 million per year for the next 10 years to make up for a delayed payment to VRS in 2011.
But in part to keep the promised employee retirement funds afloat, the county raised the property tax rate and made about $190 million in cuts over the past two years, resulting in everything from larger public school class sizes to fewer security guards at county facilities.
And even with the $35 million backfill and recent higher returns on investments, the county system faces a $1.7 billion unfunded liability — that is, based on the number of employees and their projected life spans, the county has about $1.7 billion less than what it needs to provide employees their retirement benefits.
The $1.7 billion means that pensions are about 77 percent funded — a figure that, as big as it is, looks pretty good compared to the state of Maryland’s 64 percent, New Jersey’s 62 percent, or the city of Pittsburgh’s dire 27 percent. But in buttoned-up Fairfax, it’s enough to put some officials on edge.
“The fact of the matter is that right now, I don’t believe our current funding formula is going to close that gap,” said Supervisor John Cook, R-Braddock. “We ought to make changes [to the formula] at least for new hires.”
Cook suggested alternatives such as requiring employees to contribute more, upping the age or the years served before retirement becomes an option, or switching to a 401(k)-style retirement plan more common in the private sector, in which employees assume more risk when financial markets decline.
Karen Conchar, president of the county’s chapter of the Service Employees International Union, said she and other union leaders would be open to adjusting the age and years-of-service formula, but not to switching to a 401(k).
“It’s only the promise of a secure retirement that keeps a lot of employees here,” Conchar said.
