Teacher Pensions: A Mid-Session Update

With widespread county attention focusing on the potential shift of teacher pension costs, and the legislative session about to focus on budget-balancing, this post will seek to “wrap up” where things lie on this far-reaching fiscal issue.

The recent timeline on this issue:

  • March 2010 – Maryland Senate issues a surprising amendment to the budget reconciliation bill, including a 3-year phase in of teacher pension cost shifts
  • March 2010 – Maryland House of Delegates rejects the Senate proposal
  • April 2010 – Budget conference committee makes final recommendations, sending pension and benefits issues to a blue-ribbon commission
  • September 2010 – Benefits Sustainability Commission named, begins setting schedule for meetings
  • December 2010 – Commission issues recommendations, including a phased-in shift of teacher pension costs
  • January 2011 – Governor O’Malley announces at MACo Conference he will not include shift in Administration budget plan
  • January 2011 – Administration BRFA bill introduced with pension system reforms, but no shift of costs to locals
  • February 2011 – House Speaker Busch addresses MACo Legislative Committee, indicates “legislative math” makes shift unlikely to pass House
  • March 2011 – House of Delegates expected to move budget package in coming weeks, pension issues remain uncertain

With the issue still unresolved, there are a wide range of proposals before the General Assembly that deal with either pension reform generally, or teacher pensions in particular. A quick rundown of several of the major proposals under consideration are as follows:

  • HB 72/SB 87 – Governor’s Budget Reconciliation Bill — Does not shift teacher pension costs, includes cost-saving reforms for current and future employees
  • SB 628 – Senate President Miller’s bill implementing recommendations of the Benefits Sustainability Commission — includes a 3-year phase in of cost shift to locals, with wealth equalization
  • DLS – Fiscal staff recommended an immediate shift of pension costs, using one-time federal funds to effect a 2-year phase in of costs to locals
  • DLS (at BRFA hearing) – Indicated that “other options” for pension shifts were being considered, including a phase-in without a net fiscal cost for FY 2012
  • House Republican Caucus – Proposed its budget plan at BRFA hearing, which does not include a shift of teacher pension costs
  • HB 1061 – Delegate Kramer’s legislation to constitutionally protect state funding for teacher pensions
  • HB 1289, 1290, 1317,1318 – Delegate Serafini (working with a group through the early session) introduces various forms of pension reform legislation –  establish a hybrid defined benefit/defined contribution plan;  end membership in the current pension systems and establish a defined contribution plan, local share would be 20% of cost in FY 2017 increasing to 100% by FY 2021; establish a cash balance plan; make changes to the Board of Trustees and Investment Committee

MACo will continue to follow the range of proposals being considered regarding pension cost shifts, as well as system reforms that can improve sustainability of the benefits.

Michael Sanderson

Executive Director Maryland Association of Counties

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