Anne Arundel Board of Education Adopts New Suspensions Policy

August 21, 2014
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Richard Benfer, President of the Teachers Association of Anne Arundel County. Photo courtesy of the Maryland State Education Association.

As reported by The Capital Gazettethe Anne Arundel County Board of Education on Wednesday approved a new policy for student suspensions and expulsions that focuses on rewarding positive behavior instead of punishing negative behavior.  The Gazette describes,

The policy is designed to keep kids in the classroom, and focuses on fostering, teaching and acknowledging favorable behavior, school officials say.

But it’s hard getting through a lesson plan with a disruptive student in the room, and the shift will mean that such students spend more time in the classroom instead of the principal’s office, said Teachers Association of Anne Arundel County President Richard Benfer.

According to John Woolums, Director of Governmental Relations of the Maryland Association of Boards of Education, there is also the budgetary concern that more in-school suspensions could increase costs.  New professional development needs and additional in-school educational services and behavioral supports, including hiring additional staff such as counselors, social workers and school psychologists could be associated with the change.

For more information, see the Capital Gazette.  For more information on the statewide shift in suspensions policies, see our previous posts on Conduit Street: Queen Anne’s School Board Adopts New Student Discipline PolicyLocal School Boards React to State’s New School Discipline RegsProposed Student Discipline Regs Draw Local ConcernState Education Board Approves Engagement, Testing, Disciplinary PoliciesState Education Board Considers New Discipline Regulations.

 


Conference Session: Maryland’s Progress Towards Pension Security

August 16, 2014
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From left to right: Anne E. Gawthrop, Esq., Director of Legislative Affairs, Maryland State Retirement Agency; Kristin Barcak, Ten-Year Financial Plan Manager, Baltimore City; Elizabeth K. Kellar, President/CEO, Center for State and Local Government Excellence; Senator Edward Kasemeyer, Chair of the Senate Budget & Taxation Committee

Senator Edward Kasemeyer, Chair of the Senate Budget & Taxation Committee led a discussion of public pension plan liabilities and the ways that the State and local governments are working to reduce liabilities.

During the session, In the Wake of Detroit: Public Pension LiabilitiesElizabeth K. Kellar, President/CEO, Center for State and Local Government Excellence gave national perspective on unfunded liabilities of pension plans.

Anne E. Gawthrop, Esq., the Maryland State Retirement Agency’s Director of Legislative Affairs began with a brief history of  the State Pension System’s funding, including the effects of the “corridor” funding method. She described the General Assembly’s reforms of the pension system, including the plan to reinvest savings back into the system and other changes that will help bring the State’s system back into a healthy level of funding by 2025.

Kristin Barcak, Baltimore City’s Ten-Year Financial Plan Manager, began her presentation by noting the financial strain on the City of Baltimore. She then described how the reforms will bring the City’s benefits package into alignment with industry standards and sustain its ability to raise salaries, changes that are in line with the interests of  millennial job seekers.

 


Federal Court Upholds Baltimore City Pension Reforms

August 7, 2014
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Baltimore City Solicitor George A. Nilson. Image courtesy of the Daily Record.

As reported by the Baltimore Sun, a federal appeals court on Wednesday upheld Mayor Stephanie Rawlings-Blake’s overhaul of Baltimore’s police and fire pension system, but left open avenues for the unions to keep fighting. As described,

The 4th U.S. Circuit Court of Appeals in Richmond, Va., overturned a lower court’s ruling in 2012 that a key provision of the 2010 law limiting cost-of-living increases for younger retirees was unconstitutional and not reasonable. The appeals court concluded that the rights of the police officers and firefighters “were not impaired” because they could have contested the law in state court for “breach of contract.”

The city’s victory Wednesday likely was not the final word about the changes, which took effect in 2010. Judge Barbara Milano Keenan of the 4th Circuit wrote that the unions could try again to challenge the law using a different argument, specifically that the city has taken “private property for public use, without just compensation.”

For more information, see the full story from the Baltimore Sun, and our previous posts on Conduit Street, Baltimore City Adopts Series of Pension Reforms, Latest Ruling Props Pieces of Baltimore City Pension Overhaul.

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Kristin Barcak, Baltimore City Ten-Year Financial Plan Manager

Kristin Barcak, Baltimore City’s 10-year Financial Plan Manager will be discussing the City’s reforms of the pension system at MACo’s Summer Conference. In the Wake of Detroit: Public Pension Liabilities, sponsored by Human Resources Affiliate and moderated by The Honorable Edward J. Kasemeyer, Chairman of the Maryland State Senate Budget and Taxation Committee, will include a discussion of Baltimore City’s pension reforms and changes to the state’s pension system aimed at reducing liabilities. Elizabeth K. Kellar, President/CEO, Center for State and Local Government Excellence will provide a national perspective on the issue, and insight into the Detroit case.

This session will be held on Thursday, August 14, 2014 from 3:30 pm – 4:30 pm.

Learn more about MACo’s 2014 Summer Conference:

Contact Meetings & Events Director Virginia White with questions about Summer Conference.


Pension System Earns 14.37% in Fiscal 2014

July 30, 2014

As reported by MarylandReporter.com, Maryland’s State Retirement and Pension System earned 14.37% in fiscal 2014, bringing the total value of the system up to $45.4 billion, a gain of more than $5 billion for the year.

It was the second year in a row of strong performance due to sharp upturns in stocks, according to Chief Investment Officer Melissa Moye. The fund exceeded its target of 7.7% and its market benchmark of 14.16% — what its basket of assets would have been expected to earn.
The System’s press release provides additional information.
“The funds annual returns continue to reflect the strong market environment that has prevailed since the end of the credit crisis,” said State Treasurer Nancy K. Kopp, Chair of the Maryland State Retirement and Pension System Board of Trustees.
10-yr-investment-returns-graph-with-2014

In the Wake of Detroit: Public Pension Liabilities

July 15, 2014
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Elizabeth K. Kellar, President and CEO of the Center for State and Local Government Excellence

Pensions have made national headlines in recent months, notably as part of the City of Detroit’s bankruptcy proceeding. In that case, pension liabilities were cited both as a cause of the City’s fiscal demise, and a factor in bankruptcy negotiations. In this session, panelists will discuss the Detroit case, and strategies that have been successfully employed for reducing liabilities in the State of Maryland and county pension systems.

Elizabeth Kellar, President and CEO of the Center for State and Local Government Excellence, Anne Gawthrop, Director of Legislative Affairs for the Maryland State Pension and Retirement System, and Kristin Barcak, Ten-year Financial Plan Project Manager for Baltimore City will discuss these issues at MACo’s Summer Conference in Ocean City, Maryland. This session, which is sponsored by the Maryland Association of Human Resources Officers will be held on Thursday, August 14, 2014 from 3:30 pm – 4:30 pm.

Learn more about MACo’s 2014 Summer Conference:

Contact Meetings & Events Director Virginia White with questions about Summer Conference.

For more information on flooding in Maryland, see our previous post on Conduit Street, Detroit Decision: Pensions Can Be Cut in Bankruptcy.


Baltimore City Adopts Series of Pension Reforms

June 9, 2014

Over the past few years, Baltimore City has made reforms to its public safety pension plans, and more recently made changes to its non-public safety employees pension plans and added a 401(k)-style plan to its benefit offerings.

As reported in the Baltimore Sun,

Rawlings-Blake initially called for all new municipal workers to be placed in a 401(k)-style plan. The deal approved by the council will give new workers the option of selecting a 401(k)-style plan or a “hybrid” plan that combines such an account with a traditional pension. The “hybrid” plan will be two-thirds traditional pension and one-third 401(k)-style plan, officials said.

For more information, see the full story from the Sun.

Mayor Rawlings-Blake’s Ten-Year Financial Plan included pension reforms and other provisions to improve the City’s base.  As described in the her Office’s Press Release when the plan was introduced,

Currently, Baltimore’s pension system for civilian workers is the only large system in Maryland that doesn’t require any employee contribution.
The legislation also calls for eliminating a “variable benefit” for civilian retirees, which siphons dollars out of the pension trust when the stock market is up, but makes no adjustment when the market declines. City pension costs have nearly doubled since FY2004, and without reform, costs are projected to grow by another 40% by FY2022.  Reforms to the civilian pension plan for current employees are expected to save $53 million over nine years. . .

For a detailed description of the changes to the Baltimore City Pension Plan, see this Summary of the Amendments.

Also this spring, the 4th Circuit heard a case on the reforms made in 2010 to police and fire pension plans. The 2010 reforms made several changes to police and fire pension plans, including, replacing the “variable benefit” with a regular COLA. As described by the Mayor’s Office,

[R]eplacing the “variable benefit” with a regular COLA would be more consistent with the common practices among other public employers nationally and regionally.  At the same time, this approach would provide retirees with more predictable post-retirement increases better aligned with expected cost-of-living growth, and would enable establishment of an enhanced minimum benefit for long-term retirees.

The lower court found that the termination of the variable benefit was unconstitutional. You may listen to the oral argument for the case in the 4th Circuit on May 14, 2014.

For more information, see our previous posts on Conduit Street, Baltimore City Asks School Employees to Contribute to Pensions and Baltimore City Council Approves $2.4 Billion Budget For Fiscal 2014.

Pension benefits and liabilities are a topic of discussion at this summer’s MACo Conference in August.  For more information, and to register, see the MACo website.

 

 


New Jersey Pulls Back Pension Payments

May 29, 2014

As reported by Bloomberg News, Governor Chris Christie recently broke a pledge to bolster New Jersey’s underfunded public-employee pension system.  As described,

Under a law Christie signed in 2010, New Jersey was to make higher pension payments each year through fiscal 2018 to help make up for a decade of skipped contributions. Christie said this month that the extra contributions won’t happen this year or next after his revenue targets fell short by $2.75 billion.

In Maryland, Governor O’Malley’s budget reduced additional money set aside to pay down the pension system’s unfunded liabilities from $300 million to $200 million to support the general fund this legislative session.  For more information, see our Conduit Street article, Governor’s Budget Repeats Cut in Pension Funding.

For more information on New Jersey and national trends in pensions, see the full story from Bloomberg.


Baltimore City Asks School Employees to Contribute to Pensions

May 20, 2014

As reported in the Baltimore Sun, the Baltimore City pension board is requiring about 2,000 school employees to begin contributing to the municipal retirement system, a plan met with resistance by school officials, who say the district won’t be able to meet the July 1 deadline.

The school system was informed this year that some of its employees would have to begin contributing to the city’s Employees’ Retirement System for the first time in decades. The school employees affected include paraprofessionals, school police, cafeteria workers and central office staff.

But the school system, which initially fought the plan, says it has not had enough time to inform its employees. Therefore, school officials plan to pay the initial bill of $14.4 million on the employees’ behalf out of the district’s budget.

The contribution requirement for certain school employees brings them into line with other Baltimore City employees who are now also contributing to their pensions.  As described by the Sun,

School employees were not originally part of the mayor’s plan, under which thousands of civilian municipal employees began contributing 1 percent of their salaries to their pensions in October. The percentage will increase every year until it reaches 5 percent in 2017.

Citing fairness, the Employees Retirement System board voted in November to include school employees in the plan and gave the district until July 1, 2014, to communicate and prepare its workforce for the transition.

This change does not apply to teachers and principals in Baltimore because they are members of the State of Maryland’s Teacher’s Retirement Plan.

For more information, see the full story from the Sun.


House Kills Troubling Pension “Assignment” Bill

March 20, 2014

HB 1201 State and Local Retirement and Pension Systems – Assignment of Benefits to Trust for Disabled Individuals received an unfavorable report from the House Appropriations Committee. The Senate crossfile, SB 403, has not moved out of its committee. The bill provided that a retiree or beneficiary of a county or State retirement may have their retirement allowance assigned to a special needs trust established for their benefit.

MACo opposed the legislation, citing concerns with the new financial and administrative burdens the bill presented, including the need for outside legal counsel.

Sixteen of Maryland’s twenty-four county governments administer their own retirement systems either for general employees or selectively for law enforcement and correctional officers. Under this bill, those counties could be required to pay a certain retirement allowance into a supplemental needs trust for a disabled retiree or beneficiary if requested and verified by the retirement plan administrator. As drafted, the bill requires counties to adopt a new definition for disabled and administer a new process for assignment of benefits. These changes complicate retirement plan administration and create new financial and administrative burdens, including the need for outside legal counsel.

The State Retirement and Pension System Board of Trustees also opposed the legislation, stating that,

The board’s opposition is primarily due to its concerns that as [the bill] is currently drafted, it may violate certain requirements of the Internal Revenue Code (IRC) which could in turn raise issues regarding the System’s tax qualified status.

For more information, see the bill text, the bill information page, the fiscal note, and opposition testimony to the bill and its crossfile, SB 403, from MACo and the State Retirement and Pension System Board of Trustees.


State Policy Changes Boost Teacher Pension Costs

January 31, 2014

According to a budget analysis prepared by the Department of Legislative Services, “local governments should continue to plan for a higher-than-forecast normal cost rate in fiscal 2017.”  This increase in normal costs is due to a change in demographic assumptions used to calculate pension liabilities. It is estimated that local school board contributions will increase by a projected $73.3 million beginning in fiscal 2017.

The budget analysis explains the effect of these changes in actuarial assumptions:

The board of trustees voted in spring 2012 to adopt the recommendations of its actuary to change a variety of demographic assumptions used to calculate pension liabilities. The new assumptions related to rates of retirement, disability, withdrawal, and mortality were first applied to the June 30, 2012 actuarial valuation, which is the basis for the calculation of employer contribution rates for fiscal 2014. The changes vary extensively across different plans within SRPS, as well as by age and accumulated service credit, reflecting actual trends in those rates identified by an experience study completed in 2011. The net effect, however, was an increase in the value of service credit earned by SRPS members. This is reflected in an increase in the normal cost, which is the value of pension benefits earned in a given year by members.

The analysis further details how these costs are borne directly by school boards, but with a required appropriation (with annual dollar amounts written directly into the enacting bill) from county governments as an offset.

Chapter 1 of the first Special Session of 2012 requires local school boards to pay a portion of the normal cost for their employees who are members of TRS/TPS. Prior to that, the State paid 100% of the annual employer contribution on behalf of teachers in the State. Based on 2012 projections of the normal cost, local school boards pay 50% of the normal cost in fiscal 2013, phasing up to 100% of the normal cost by fiscal 2016. For those four years, Chapter 1 specifies the exact dollar amount to be paid by each local school board based on the projected normal cost and the local share of that cost. Beginning in fiscal 2017, however, local school boards must pay 100% of the actual normal cost. It bears noting that beginning in fiscal 2013, Chapter 1 also requires county governments and Baltimore City to adjust their maintenance of effort payments to local school boards to compensate them for teacher pension costs. Beginning in fiscal 2017, the fiscal 2016 payments by the counties are included in subsequent years’ maintenance of effort calculations, so local school boards are responsible for any increase in normal cost payments between fiscal 2016 and each succeeding year.

The budget analysis also provides a chart showing the increase for each county.

A complete listing of all fiscal 2015 budget documents affecting county governments can be found on MACo’s website under Research, then Budget and Finance.


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