TOBACCO BOND SALE MARKS OVER $2.5 BILLION IN SAVINGSAND MUCH LOWER DEBT PAYMENTS IN FUTURE

Responsible Government helps ensure future of retirement programs

CHARLESTON, W.Va. -- The governor’s “Responsible Government” efforts to pay down the state’s massive Teachers’ Retirement System debt, including using $807 million from the June 14 tobacco settlement bond sale, will save West Virginia taxpayers more than $2.5 billion and ensure the future of the retirement fund, the governor announced today.

“When I took office in 2005, we had a $5 billion deficit and a Teachers’ Retirement System that was only 22 percent funded,” Manchin said. “Our cost just to pay the unfunded portion of the teachers’ retirement was expected to grow to almost a quarter-billion dollars a year.

“If we want West Virginia to prosper, we simply could not leave that unmanageable bill to our children and grandchildren to figure out how to pay.”

Working with the Legislature, Manchin has appropriated an additional $768 million more than the state was required to pay toward the Teachers’ Retirement System debt. Those advances, combined with this tobacco securitization, will result in more than $1.5 billion in additional deposits to that retirement system.

“Paying down this debt has cut our required payments from an eventual estimate of over $720 million to a much more affordable $285 million a year, and ensured the well-deserved retirement of our teachers,” Manchin said. “Together with additional payments to the troopers’ retirement system, we have saved West Virginians well in excess of $2.5 billion.”

The $768 million in advance payments and the tobacco securitization will enable the state to amortize its unfunded debt on a level annual basis at $285 million for the next 27 years. The Teachers’ Retirement System will have gone from 22 percent funded to 51 percent funded during this period.

In addition, nearly $300 million in excess payments have been contributed to the state troopers’ pension funds since fiscal year 2004, resulting in more than $100 million in savings on future debit payments toward that retirement program, the governor announced. The tobacco securitization was finalized earlier today.