MACo Supports Pension Sustainability

At its February 23 meeting, the MACo Legislative Committee adopted a position statement on state pension reform. The statement reads as follows:

MACo encourages State policymakers to consider and implement significant measures to improve the sustainability of the pension system

Maryland is not alone in dealing with significant unfunded liabilities associated with its public employee pension system. Many other states have made, or at least contemplated, pension system changes – including wholesale changes away from the defined benefit pension model Maryland still offers. Pension costs, and long term underfunding, loom as a massive fiscal issue across many state budgets.

During the 2010 session, MACo offered its views on this overall effort, encouraging “a balanced and comprehensive study of the overall structure and sustainability of the system.” MACo was pleased that the Benefits Sustainability Commission was created to provide such a view, and recognizes the extensive efforts by the Commission and the General Assembly to grasp and focus on issues of affordability and sustainability of public employee benefits.

Currently, the General Assembly faces a series of proposals, including recommendations by the Commission and the Administration, to better manage benefits and obligations under its pension system. With numerous county governments participating in the State’s system, and pension cost increases still driving debate over potential cost shifts to local employers, MACo recognizes the county government stake in these deliberations. Counties expect to provide constructive support for improving sustainability as this policy discussion continues.

Adjustments to benefits, vesting, and other retirement options can improve the funding status of the system, helping the State credibly maintain these promises to valued public employees. MACo encourages State policymakers to consider and implement significant measures to improve the sustainability of the pension system.

MACo will include this statement as part of its testimony and advocacy on the Budget Reconciliation and Financing Act (HB 72), and other relevant legislation posing changes to pension systems.

Consistent with this general statement, the Legislative Committee voted to offer “Support with Amendments” testimony on HB 72 (affording an opportunity to comment on a variety of components in that far-reaching bill), but to oppose SB 628, a bill that in addition to numerous benefit reforms would implement an immediate shift of teacher pension costs to local employers.

Michael Sanderson

Executive Director Maryland Association of Counties

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