$19 Million for Teacher Pension Increase

The General Assembly has adopted a budget provision that would provide almost $19 million to local school boards towards additional pension costs in 2017.

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The $19 million in funding distributed across Maryland’s county governments.

The extra state funding would account for the increase in pension costs due to the adoption of new normal cost rate. The state funding does not account for the amount of the teacher pension increase that is attributable to the increase in teacher salaries, which would remain a local responsibility.

Funding for the teacher pension costs would come from an allocation that the Governor’s budget had made towards to Rainy Day fund, and thus will be provided subject to the Governor’s discretion.

Under this provision, the state funding for FY 2017 would total $19 million for twenty-one counties and Baltimore City. It does not provide additional funding to Garrett and Kent counties, because teacher pension costs are declining in those counties.

The estimated amount of the increase in teacher pension costs for FY 2017 is approximately $30 million, so this provision likely leaves more than $10 million to be paid by local school boards in 2017. It also does not provide funding for future years, where pension costs may continue to exceed previous estimates.

MACo and education advocates supported legislation to close the gap in teacher pension completely, for 2017 and future years. For more information, see Consensus Bill Closes Gap in Teacher Pensions. The Budget and Taxation Committee have not yet moved favorable on that pension legislation, which also has a House crossfile.

The budget provision adopted in Budget and Taxation last week must also be adopted by the full Senate, and the House of Delegates before it becomes law.

For more information, including a county-by-county breakdown of the state funding, see  the additional page from the Senate and Taxation budget decision documents.