During the 1966-1967 interim between regular sessions of the General Assembly, the Council conducted an initial investigation of the three State retirement systems which remain outside the jurisdiction of the· Board of Trustees of the Virginia Supplemental Retirement System. Those three systems afford retirement benefit coverage for (1) Justices of the Supreme Court of Appeals, judges of the circuit courts, corporation courts and other city courts of record, Commissioners of the State Corporation and Industrial Commissions and Assistant Attorneys General, (2) Clerks of the Senate and House of Delegates and (3) county court judges. We will refer to these systems as the Judges and Commissioners System, the Clerks System and the County Judges System, respectively, hereafter. The Council examined the systems to determine whether they are planned and funded on an actuarially sound basis and whether they should be revised and strengthened.

For expert assistance, the actuarial firm of Bowles, Andrews & Towne was employed to act as consultants. Their Actuarial Evaluation of the three systems was carried as Appendix I in the Council's Report which was printed as 1968 House Document No. 16. The consultants' Evaluation demonstrated that the systems are not actuarially funded but financed on a pay-as-you-go basis.

The consultants described present funding practices succinctly as follows:

"In the case of the three Funds considered in this study, only one (Fund III [County Judges System]) had any assets as of June 30, 1966, and even in that case, the assets were very small. By law, the State is supposed to match the amount of the participants' stipulated contributions each year to Fund I [Judges and Commissioners System], but in any event contribute enough, along with participants' contributions to meet the benefit outlay. Apparently the same procedure is followed for Funds II [Clerks System] and III.

"For Funds I and II, the matching contributions are not even enough to meet the benefit payments currently falling due so that the State is contributing at a considerably higher aggregate rate than are the active participants. For Fund III the matching contributions are getting very close to the point of being inadequate to meet the benefit payroll.

"So long as the State is merely contributing enough to pay the present benefits, and is using the active participants' contributions to help meet this outlay, nothing at all is being set aside to provide the benefits for those present active participants who will retire in the future. The 'pay-as-you-go' approach, which is really a form of. robbing Peter to pay Paul, will be perpetuated. As more and more participants join the retirement roll, the State's annual outlay will continually increase until, at some point in the distant future, it may tend to level off." 1968 House Document No. 16, p. 13.

The Council agreed with consultants that the systems were not funded on an actuarially sound basis and examined several possible revisions to achieve sounder financing. It concluded:

"The possible revisions in these systems which the Council has examined and which would be calculated to place these systems on a sounder basis actuarially, to simplify their administration, to eliminate some of the discrepancies among these systems and to bring them more closely in accord with the retirement treatment afforded by the State to the bulk of State employees, are all of necessity related matters and raise important questions especially as they affect the participants in these systems.

"In view of the serious questions which arise in any determination of the funding and actuarial - soundness of these systems and which concern the benefits to be paid, the rates of member and State contributions, mandatory participation and retirement and eligibility for retirement, it is the conclusion of the Council that further study should be conducted which will involve the members of the systems." 1968 House Document No. 16, p. 6.

An additional consideration affecting Council's decision not to proceed hastily was its recognition that

" ... there were special considerations involved in the establishment of these systems apart from those which applied in creating the broader Virginia Supplemental Retirement System. The question of adequate salary and benefits to attract well-qualified men, the frequently shorter periods of service and the relatively advanced age of numerous appointees are factors affecting retirement programs established for these men ...,

"We believe that further consideration of both the purposes and provisions of these systems is necessary if they are to be established on a more soundly planned basis and still to meet the problem of providing fair and proper retirement benefits to these State officials, and we so recommend." 1968 House Document No. 16, p. 9.

To implement its recommendations for further study and consultation with system participants, the Council suggested that the 1968 General Assembly adopt the following joint resolution, to which the General Assembly did agree in due course:

House Joint Resolution No. 167.

Directing the Virginia Advisory Legislative Council to continue its study of Retirement Systems for Judges, Commissioners and Clerks.

Whereas, the Virginia Advisory Legislative Council, pursuant to House Joint Resolution No. 124 of the 1966 Acts of Assembly, has investigated the operation and actuarial soundness of those .retirement programs not currently administered by the Board of Trustees of the Virginia Supplemental Retirement System; and

Whereas, the Council has concluded that such systems as currently constituted are not operated on an actuarially sound basis and changes may be in order to assure their more equitable and sounder operation both for the benefit of the Commonwealth and the participants of such systems, now, therefore, be it

Resolved by the House of Delegates, the Senate concurring, That the Virginia Advisory Legislative Council is directed to continue its study of the operation of all State retirement programs not within the jurisdiction of the Board of Trustees of the Virginia Supplemental Retirement System and to consult with representatives of the systems being reviewed and of the Virginia Supplemental Retirement System in the formulation of recommendations concerning the revision and future operation of such systems.

The Council shall complete its study and submit its report and recommendations to the Governor and the General Assembly by September one, nineteen hundred sixty-nine.