House Joint Resolution No. 204 adopted by the 1977 General Assembly directed the Committee on Appropriations of the House of Delegates and the Committee on Finance of the Senate, "...to undertake a Joint study of benefits paid to retirees by the Virginia Supplemental Retirement System to determine whether given the retirement benefits available to these state retirees under the federal Social Security System amendments of the Virginia Supplemental Retirement Act are needed..." The joint subcommittee designated to make this study was essentially a continuation of the same committee which recommended legislation passed by the 1977 Session of the General Assembly to initiate an early retirement program for members with actuarily determined benefits, to expand and liberalize options for purchase of prior service credit, to provide for annual rather than biennial cost of living adjustments, to increase employee proportion of representation on the VSRS Board and other improvements in the Retirement System.

All meetings of the joint subcommittee were open to the public and representatives from the various employee groups were in attendance at the meetings. From the outset the  subcommittee tried to make it clear that no recommendation would be made which would result in any reduction in the amount of retirement benefits now being paid to retired members of the VSRS, and that there would be no reduction in accrued benefits for any employee presently covered by VSRS. Notwithstanding these restrictions on the deliberations of the subcommittee, numerous employees were given the impression through news reports and communications from employee groups that a recommendation had been made by this subcommittee to reduce accrued benefits when no such recommendation had in fact been made.

The members of this committee met ten times since the adjournment of the legislature in 1977 to study and evaluate the retirement benefit structure. One of these meetings was a public hearing to receive information from employees and employee groups whose comments focused on a willingness to increase employee contributions to maintain present benefit levels, a requirement for matching employee and employer contributions and a concern for availability of health insurance coverage after retirement.