Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: WEDNESDAY, April 3, 1991                   TAG: 9104030342
SECTION: VIRGINIA                    PAGE: B-3   EDITION: METRO 
SOURCE: Associated Press
DATELINE: RICHMOND                                LENGTH: Medium

PANEL DOUBTS BUDGET MOVE/ STATE RETIREMENT FUND CHANGE COULD OFFSET SCHOOL

John Bennett, the committee's staff director, said a proposed revision in the Virginia Retirement System's investment yield assumption could cost schools $6 million and local governments $12 million a year.

"If I heard correctly, it's a rather cruel hoax to tell localities they will get $15 million for education but then take away $18 million," said Sen. Elliot Schewel, D-Lynchburg.

Secretary of Finance Paul Timmreck accused the committee of "trying to discredit the underpinnings of the governor's proposal."

Many of Wilder's 86 proposed budget amendments would reduce or eliminate funding for various programs to raise more money for elementary and secondary education. The assembly today will consider Wilder's amendments to the budget and other bills, as well as a few vetoes.

The budget bill approved by the General Assembly in February increased from 8 percent to 8.3 percent the anticipated yield on retirement system investments. The move was expected to reduce the state's contribution to the system by $42 million.

But Timmreck has said the initial savings estimate was grossly overstated, prompting Wilder to propose eliminating the 8.3 percent yield assumption.

The Finance Committee staff said the amendment will free the system to scale back its yield assumption, thus increasing by $18 million a year the contributions localities would have to make to the retirement system.

Timmreck, who listened to the committee's discussion on the issue, disagreed with that interpretation.

"If it's a flawed assumption on its face, then there are no savings to localities to begin with," he told reporters.

Finance Committee members also disagreed with Wilder proposals ranging from a $500,000 reduction in arts programs to a $3.7 million cut in Tuition Assistance Grants for students at public and private colleges.

Many senators complained that some of Wilder's proposed cuts would cost the state federal or private matching funds. For example, Sen. Richard Holland, D-Isle of Wight, said eliminating $50,000 for planning a Shenandoah Armory could put a $150,000 federal grant in jeopardy.

"The federal government would have every right to say Virginia's not interested and pull its funding," said Sen. Hunter Andrews, D-Hampton and chairman of the committee.

Wilder also has proposed awarding the Tuition Assistance Grants based on need beginning in 1993.

"Probably the group not getting its fair share [of financial aid] is the middle class who want to send their kids to private colleges but can't afford it," said Sen. Benjamin Lambert, D-Richmond. "I don't favor making TAG need-based."

Sen. Dudley Emick, D-Fincastle, wondered if he could tell parents of such children not to be upset about the loss of tuition-assistance money because the funds were going to elementary and secondary education.

"I'm trying to write my campaign brochure as we go along," Emick said.

All 140 General Assembly seats will be up for election next year.