Since the establishment of the Virginia Supplemental Retirement System (VSRS) and the Virginia State Police Officers Retirement System (VSPORS), these Systems have been reviewed from time to time by the Virginia Advisory Legislative Council to see if improvement could be made. Past Council surveys have resulted in amendments intended to make both retirement programs more responsive to the needs of the members and beneficiaries and generally to provide larger, more extensive benefits.

At the 1968 Regular Session of the General Assembly, over twenty measures to amend the provisions governing these Systems were introduced but not enacted. The decision to postpone action on these measures was predicated on a general understanding which developed during the Session that major revisions in the VSRS and VSPORS should be thoroughly studied and examined to determine their comparative benefits to the members and beneficiaries of the Systems arid their cost to the State. Senate Joint Resolution No. 63, which was agreed to by the Senate in 1968, stated that thorough study of the cost and actuarial factors involved in major revisions in the Systems should precede enactment of any revisions and called for a careful examination of the Systems and measures introduced during the Session affecting the Systems. Governor Godwin referred this Resolution and study: to the Council in April 1968 following the Session since the House had failed to adopt the Resolution. A separate Senate Joint Resolution No. 38, which requested the Council to study the feasibility of providing retirement coverage to personnel of the State's institutions of higher education through the Teachers Insurance and Annuity Association and College Retirement Equities Fund (TIAACREF), was also introduced and failed of adoption. The Governor referred this study to the Council as a part of the basic study called for by Senate Resolution No. 63. The full text of the Governor's letters and the Resolutions appears in Appendix I.

(We note that the Council has also prepared a report issued separately concerning a new Judicial Retirement System and has thus examined all of the State's retirement programs during the interim with a view to achieving a £air balance and practical uniformity among them.)

Pursuant to these directives, the Council initiated a major study of the basic State Systems. The firm of Bowles, Andrews & Towne, Inc., actuaries and management consultants, which serves as the actuaries to the VSRS and the VSPORS, was directed to evaluate the impact of most of the changes proposed by legislation introduced but not adopted in the 1968 Regular Session, the suggested changes presented to the Council by letter and at an informative and lengthy public hearing held in the Capitol December 6, 1968, and several proposals suggested by Charles H. Smith, Director of the Systems. The actuaries reviewed these numerous items to determine the effect their adoption would have on the actuarial soundness of the Systems, in terms of costs involved and with regard to the impact on current participants and beneficiaries.

The Council has carefully reviewed the reports and analyses of the actuaries and the comparative merits of the proposals and now submits the following Report and recommendations.