Budget Conferees Meet – Pensions and Retiree Health Areas of Disagreement

As previously reported, a House and Senate conference committee has been appointed to resolve the differences in each chamber’s respective budget plan.  As reported by MarylandReporter.com, the biggest areas of disagreement are over pensions and retiree health benefits.  These differences are summarized below.

RETIREMENT AGE: The Senate adopted the “Rule of 92” to receive full pension benefits. This means that the age of an employee or teacher at their retirement and their length of service must add up to 92. Under the current requirements, adopted again by the House, anyone can retire with full benefits at any age after 30 years of service or at age 65 after 10 years of service.

COST OF LIVING ADJUSTMENTS: Both houses tie cost-of-living adjustments to the rate of return on the investments of the pension system. If the return falls below the target of 7.75% in any year, the Senate said retirees would get no cost of living increase.  The House said pensioners would get a 1% increase regardless of investment performance, and a 3% COLA if the target was met. The Senate capped the COLAs at 2%.

NEW PROPOSAL: The Maryland State Education Association has offered a counter-proposal that combines higher employee contributions and lower cost-of-living adjustments.

RETIREE HEALTH BENEFITS: There are substantial differences between the House and the Senate over how much to cut benefits and raise premiums for retiree health insurance.  The House wants to make retirees pay 25% of premiums, but the Senate set it at 20% and increased the deductible.

With respect to issues of importance for local governments a few remain to be resolved. These include the assessment  function shift, language to shift costs for the implementation of a video conference system to perform local inmate parole hearings, the Disparity Grant, and a few education items.  A summary of local government items to be resolved in conference can be found in a previous post.

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