News Coverage of the December 13 Benefit Sustainability Commission

As previously reported on the MACo blog, the Public Employees’ and Retirees’ Benefit Sustainability Commission met on December 13, 2010 to discuss numerous benefit changes and cost saving options for State employee and retiree health benefits and pensions.   As reported by MarylandReporter.com, the Commission decided to hold off on decisions until its December 20 meeting, but the group did seem to come to consensus regarding health benefit changes.

“There’s no question that Maryland needs to come more in line with other states,” said former state Sen. Barbara Hoffman.

State treasurer Nancy Kopp said, “I sense there is a consensus that health benefits ought to resemble other states.”

These changes in plan coverage would lower the costs to the state by 10% or about $100 million a year and raise the costs to employees, according to the “Decision Guide” the commissioners were given. But Warren Deschenaux, the legislature’s fiscal policy chief, told them such changes “would have to be brought to the bargaining table” with the state employee unions.

The Washington Examiner provides additional coverage, including what the changes could cost the average enrollee.

Nick Sohr in the Daily Record’s blog, Eye on Annapolis, provides a summary of the pension changes discussed.

Staffers presented a set of fixes for the pension system, which has only 65 percent of the funds it needs to pay pension benefits to current retirees and employees. They recommended giving employees an option of four new retirement plans, ranging from a cash balance plan with a guaranteed rate of return to a pension plan that requires greater employee contributions.Recommendations also included raising the retirement age by up to seven years for some employees, depending on years of service and the age at which a worker was hired by the state. The goal of the changes is to restore the pension system to an 80 percent funding level within a decade, and 100 percent within 30 years.

In a separate article, The Washington Examiner, provides coverage of the proposals to transfer a portion of teacher pension costs to the counties.

Maryland counties would begin paying 50 percent of all teacher pension costs — now paid for entirely by the state — to the tune of $500 million in fiscal 2012 under a proposal the state’s pension commission is reviewing this week.

The commission is considering another plan that would shift 50 percent of retirement costs except for health benefits onto counties. The plan would cost counties half as much as the first proposal but save the state roughly $247 million in fiscal 2012.

The state Senate passed a bill last year that would have phased in the 50-50 retirement split over five years. But the House of Delegates stalled the measure, instead appointing the commission to study alternatives. The phased-in plan is also included in the commission’s list of possible recommendations.

A fourth proposal would shift 40 percent of retirement costs onto counties in the next fiscal year. Under this plan, the cost to Montgomery would be $20.4 million and Prince George’s would owe $14.7 million.

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