Salem opts out of state system insurance coverage [The Roanoke Times, Va.]

June 29--The Salem City Council elected this week to abandon the Virginia Retirement System as its provider for Line of Duty Act insurance coverage and to explore other options and attempt to save money.

The council was the last among a bloc of local governments across Southwest Virginia to edge away from the state system, which is expected to raise premiums in the coming months for basic insurance used to cover public safety employees and their families in cases of injury and death.

The move by Salem officials came just days before a July 1 deadline that will force localities across the state to decide whether to continue with the retirement system or opt out forever.

Salem City Manager Kevin Boggess said Wednesday that the idea of locking into the system for the long haul unnerved him and the council because of fears it would stifle flexibility.

Boggess said he thinks that as smaller localities with fewer instances of public safety injuries and deaths pulled away from the system, and more populated cities and counties remained, premiums would rise and places such as Salem -- which has had one Line of Duty claim over a 40-year span -- would pay more for the same benefits.

According to information published by the Virginia Retirement System, premiums are expected to double by 2014. Localities currently pay $233.89 per full-time employee, a cost expected to reach $521.97 in two years.

Officials with the state retirement system said many localities -- including Richmond, Norfolk and Alexandria -- have chosen to find new ways to provide coverage, but they could not provide an exact number.

"The choice for us was fairly clear," Boggess said. "The idea of seeing rates double ... was not appealing to us at all."

The decision to pull away from the system left two options: self-insure or join either the Virginia Association of Counties or the Virginia Municipal League, both of which offer insurance plans unfettered by state control.

Salem opted for self-insuring, at least for now.

The Line of Duty Act, established in 2010 by the General Assembly to provide basic insurance coverage for police, fire and other emergency personnel, started as a mandate funded by the state. In 2010, though, state officials elected to halt that funding and pushed the responsibility of coverage payments onto local governments.

Most localities in the region decided in 2011 to leave the Virginia Retirement System. Governments in Roanoke, Franklin, Bedford, Botetourt and Floyd counties joined the association of counties. The city of Roanoke and Montgomery County opted to self-insure. Craig County also chose to leave the state retirement system, but officials were unavailable this week to talk about how they would provide coverage.

Radford was the only municipality in the region to remain in the system.

Patricia Cox, finance director for Radford, said that while premiums were expected to rise and membership would be irrevocable, city officials wanted "peace of mind." She said employees with the Virginia Retirement System knew the insurance's ins and outs.

"We were just more comfortable with VRS," Cox said. "I think having a familiarity kind of lessened the uneasiness."

Despite having an unfunded mandate "dumped" onto the localities, Boggess said the concept of the Line of Duty Act was good.

"None of us are complaining about the fact that we have to provide this benefit," he said. "The complaint is that the state has paid for it all these years, and now they're passing it down to us without passing any revenue down to pay for it."

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