Update on County Pension Rates and Teacher Pension Costs

Contribution rates increase for county members of the State Pension System, and the State and local governments share teacher pension costs in fiscal year 2020.

At the most recent meeting of the Board of Trustees for the Maryland State Pension System, the Board heard a presentation of the annual actuarial valuation of the System from its consulting actuary, Gabriel, Roeder, Smith & Company (GRS).

The valuation is conducted each year in order to determine the required employer contribution rates for the state and municipal plans. The valuation also presents the System’s funding level as of June 30, 2018 and a report on the progress toward full funding since the benefits and funding reforms of 2011.

Screenshot 2018-10-31 09.39.32.png — Rate, value, and funding data for the county and municipal pool in the State Pension System from the State Pension Board’s actuary’s annual valuation.

County Employer Contribution Rates

The valuation resulted in an increase in employer contributions for county members of the State Pension System from fiscal year 2019 to fiscal year 2020. For the Employee Pensions System, the increase is from 5.47% to 5.85%. Contribution rates for the Law Enforcement Officers Plan increased from 31.43% to 32.22% and rates in the Corrections Officers Plan increased from 9.85% to 10.26%. Some county employers participate in these three plans.

Officials of all participating employers were briefed on the proposed change in amortization policy by State Retirement Agency staff in November 2015.

As described in the presentation,

The increased in the ECS [Employees Plan] pooled rate from FY2019 to FY2020 is mostly driven by a legislated change in amortization policy. The change was designed to deal with an otherwise scheduled doubling of the rate from FY2020 to FY2021.

Teacher Pension Shift to Local Governments

The valuation also includes information on the allocation of teach pension costs to local governments. The shift of responsibility for teacher pension normal costs to local school boards was enacted by the General Assembly in 2012 following the recession. County governments provide funding toward these costs through payments stipulated in State law and included in annual education funding for local school systems.