Instead of costing the state millions of dollars, the transfer of nearly 15,000 teachers and school personnel from a 401(k)-style plan to a defined benefits plan will save the state about $22 million in pension costs, legislators learned Monday.

That's a far cry from initial estimates that the transfer could cost the state as much as $78 million, to subsidize pensions for teachers and service personnel who transferred to the Teachers Retirement System but had limited assets in their Teachers Defined Contribution plans.

Harry Mandel, actuary for the state Consolidated Public Retirement Board, told a legislative interim committee that surprisingly large numbers of TDC participants at or near retirement age did not transfer.

However, he said, a surprisingly high percentage of under-40 teachers and service personnel voted to switch to TRS.

"Our overall results are costs well below what we expected," Mandel told the Joint Standing Committee on Pensions and Retirement.

The retirement board had projected that nearly 100 percent of all teachers and service personnel age 65 or over would switch to the pension plan with defined benefits.

However, only 50 percent of TDC participants over age 70 transferred, and only 69 percent in the 65-to-69 age group opted out.

Those age groups posed the greatest potential liability to the state, since taxpayers would have had to essentially subsidize their entire pensions.

"I really don't have any idea why the over-70 group didn't come over," Mandel said. "It was really a matter of, 'Give us 25 cents and we'll give you a dollar back.'"

The retirement board had projected that fewer than 10 percent of teachers and school personnel under age 40 would transfer to the defined benefits plan.

For younger teachers - particularly those planning to move out of state at some point - staying in the 401(k)-style plan could have been the more rational option.

As it turned out, more than 75 percent of the 40-and-under age group voted to switch.

Instead of costing the state millions of dollars, the transfer of nearly 15,000 teachers and school personnel from a 401(k)-style plan to a defined benefits plan will save the state about $22 million in pension costs, legislators learned Monday.

That's a far cry from initial estimates that the transfer could cost the state as much as $78 million, to subsidize pensions for teachers and service personnel who transferred to the Teachers Retirement System but had limited assets in their Teachers Defined Contribution plans.

Harry Mandel, actuary for the state Consolidated Public Retirement Board, told a legislative interim committee that surprisingly large numbers of TDC participants at or near retirement age did not transfer.

However, he said, a surprisingly high percentage of under-40 teachers and service personnel voted to switch to TRS.

"Our overall results are costs well below what we expected," Mandel told the Joint Standing Committee on Pensions and Retirement.

The retirement board had projected that nearly 100 percent of all teachers and service personnel age 65 or over would switch to the pension plan with defined benefits.

However, only 50 percent of TDC participants over age 70 transferred, and only 69 percent in the 65-to-69 age group opted out.

Those age groups posed the greatest potential liability to the state, since taxpayers would have had to essentially subsidize their entire pensions.

"I really don't have any idea why the over-70 group didn't come over," Mandel said. "It was really a matter of, 'Give us 25 cents and we'll give you a dollar back.'"

The retirement board had projected that fewer than 10 percent of teachers and school personnel under age 40 would transfer to the defined benefits plan.

For younger teachers - particularly those planning to move out of state at some point - staying in the 401(k)-style plan could have been the more rational option.

As it turned out, more than 75 percent of the 40-and-under age group voted to switch.

"What we're hearing today is good news in terms of potential liability to the state," said committee chairman Sen. Dan Foster, D-Kanawha.

"However, I worry about some of these folks who apparently don't have a whole lot of money who will be dealing with these TDC retirements," he added.

Also during legislative interim meetings Monday:

Those issues included directly depositing cash advances for team travel expenses in excess of $250,000 into the athletic director's personal checking account between July 2005 and June 2007.

While there was no indication the funds were misused, the auditors concluded the director could have directly benefited by earning interest on his personal account from the state funds deposited there.

Also, the athletic department reported a total of $12,850 in ticket and concession revenue, but a lack of receipts or adequate recordkeeping made it impossible for auditors to determine the total number of tickets sold, or total amount of revenue that should have been collected from those sales.

This spring, the Legislature set aside $50 million of state lottery profits for matching grants to fund high-tech research initiatives at WVU and Marshall. Under the law, WVU is eligible to match $35 million of the $50 million endowment.

Hill said WVU is likely to have a "huge focus" on energy research with its "Bucks for Brains" funds.

"At least half of the positions that are created by this will be in the energy sector," he told an interim committee.

Reach Phil Kabler

at ph...@wvgazette.com

or 348-1220.