Forced Transfer of WV Teachers Defined Contribution Plan Members to Defined Benefit Plan Unwise, Probably Unconstitutional

During this year's regular legislative session, state lawmakers passed HB 2984, which calls for an election next year of the 22,000 members of the Teachers Defined Contribution plan on the question of whether to convert the plan into the old Teachers Retirement System, which the Legislature closed to new participants in 1991 after the system accrued a multibillion-dollar unfunded liability. The Legislature's action earlier this year was an extremely unwise and probably unconstitutional move.

The Legislature made a rare, intelligent decision in 1991 when it required all newly hired public school teachers to participate in a defined contribution retirement system rather than the defined benefit plan that was available to previously-hired teachers and which was grossly underfunded. Now, however, the Legislature has proposed not just reopening the old system, but forcing almost 22,000 public school teachers in this state to transfer to the old system.

Reopening the old Teacher Retirement System is dumb and forcing members of the defined contribution system to convert to the defined benefit system is probably unconstitutional. If anything, the Legislature should be requiring that every newly-hired state and local employee, with the exception of police officers, firefighters, and other employees in extremely hazardous jobs, be eligible only for a defined contribution retirement plan rather than a defined benefit plan. Forcing defined contribution plan members to switch to the defined benefit plan would involve the confiscation of their individual assets (the individual accounts under the defined contribution plan) and the conversion thereof to a collective asset. This is plainly unconstitutional and I expect that unless the Legislature reverses this move, defined contribution plan members who don't want to switch will clean the state's clock in court.

One of the reasons West Virginia voters rejected the Pension Bond Amendment on June 25 was the lack of sufficient safeguards to prevent future governors and Legislatures from digging another hole if we bonded the state's existing unfunded liabilities. As someone who had mixed feelings on the issue and ultimately voted against it because of problems with that specific plan and not the concept, I do not hesitate to say that a pension bond would pass if the Legislature would incorporate more safeguards into the proposal, including an ironclad requirement that newly-hired public employees at all levels with the exceptions mentioned above not be eligible for any defined benefit pension system and that existing defined benefit plan members have the option of converting to a defined contribution plan. Another pension bond proposal might also fare better at the polls if our state's leaders have plans for the savings to the state budget resulting from bonding the debt other than spending it. We taxpayers wouldn't mind being thrown a couple of bones in the form of tax cuts.