Consensus Bill Closes Gap in Teacher Pensions

MACo Executive Director Michael Sanderson, testified in support of HB 934, Teachers’ Retirement and Pension System – Employer Contribution for Local Employees, to the House Appropriations Committee on March 1, 2016.

This bill provides a method for addressing a shortfall in funding required to meet the portion of Maryland state teacher pension costs that exceed anticipated costs.

MACo joined the Maryland State Education Association and the Maryland Association of Board of Education in supporting the bill. A crossfiled bill, SB 674, was heard in the Senate Budget and taxation Committee last week.

From the MACo testimony,

According to current estimates, the actual normal costs of teacher pensions in fiscal year 2017 are approximately $30 million more than the amount that local school boards were required to provide in fiscal 2016 according to cost-shifting legislation passed by the General Assembly in 2012.

The additional funding required in fiscal year 2017 is mainly attributable to changes outside of the control of local school boards. At the same time, absorbing this additional cost in fiscal year 2017 could put pressure on school board budgets, and county governments who provide much of their funding.

While this legislation shares some of the local school board pension funding obligation with the State, it makes no changes to the county government obligations towards the teacher pension system. Every county will continue to make the contributions required under the Budget Reconciliation and Financing Act (BRFA) of 2012.

To avoid additional pressures on local school board and county budgets, MACo supports this legislative effort to enlist State support for overages in teacher pension costs beginning in fiscal year 2017. For these reasons, MACo requests a FAVORABLE report on HB 934.

An identical cross-filed bill, SB 674, was heard on February 25 in the Senate.

For more on 2016 MACo legislation, visit the Legislative Database.