In Search of a Window of “Opt-outunity”

MACo seeks options for county government members of the State Pension System with regard to legislation to increase the maximum benefit allowance under the Law Enforcement Officers’ Pension System (LEOPS).

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Senator Eckardt spoke in support of county budget security at the hearing on HB 1042.

Legislation has passed the House of Delegates to increase the maximum benefit allowance that law enforcement officers might attain in the State’s Law Enforcement Officers’ Pension System. On March 22, the bill, HB 1042, which does not have a Senate companion, had a hearing before the Senate Budget and Taxation Pensions Subcommittee.

Seven Maryland county governments participate in the State’s Law Enforcement Officers’ Pension System. These include Allegany, Caroline, Dorchester, Harford, Kent, Queen Anne’s, and Worcester Counties.

At the hearing, MACo Research Director Robin Eilenberg presented an argument for adding an opt-out provision to the bill. Such an amendment would provide county government participants in the Law Enforcement Officers’ Pension System with a choice as to whether or not to sign-on to the new benefit levels.

From MACo’s testimony:

An amendment could resolve this county mandate. There is precedent for providing county members of the state system with an option to join the benefit enhancement, too. Such an option could provide a discrete amount of time, for example 12 months, for a county government to determine whether they would join the enhancement.

There is precedent for allowing county governments an option like this. When the State enacted broad enhancements to several of its pension systems in the early 2000s, county participants were given a certain amount of months to opt-in or out of the changes. Those county participants had joined the pension system under a certain benefit structure, and enhancements to benefits increase pension contributions and pension liabilities for county government participants.

Cost estimates for this particular benefit change are not high. However, those costs will only increase with increases to officer salaries. In addition, the enhancement change creates a deeper divide between retirement benefits for local law enforcement and other county employees.

Senator Eckardt is a member of the Senate Budget and Taxation Pensions Subcommittee, and spoke at the hearing about the need to protect county budgets. Senator Eckardt represents Caroline, Dorchester, Talbot, and Wicomico Counties.

MACo will continue to advocate for an amendment to allow counties to opt-out of this pension enhancement.

For more information, see Pension Benefits Increase Would Create an Unbalanced System

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