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Charles County Commissioners, School Superintendent Warn of 'Devastating' Pension Shift Impacts
La Plata, MD - 2/29/2012
By Andy Marquis
With a political battle brewing in Annapolis over a plan to shift the costs of teacher pensions to the county governments, Charles County joined a number of Maryland counties in holding media events to raise awareness of the plan's fiscal impacts to the county and county schools.
School officials joined the commissioners in a press conference on Tuesday afternoon to discuss the proposal and its impacts on Charles County residents.
“If approved, this proposal would have a profound fiscal impact, approximately $240 million on counties statewide,” Charles County Commissioner President Candice Quinn Kelly (D) said. “That figure is rising fast.
“We all agree that education is important and we will continue to work together to maintain adequate funding levels for our educational institutions. These are tough times for everyone and this proposed legislation poses a challenge to us because it would carry a major financial burden. That is why we find it important to inform citizens of this potential shift and what may happen as a result of this proposed legislation.”
“Governor O’Malley’s current budget proposes a dramatic shift of costs on to county governments for the coming year which has the potential to severely affect our county budget,” Charles County Commissioner Vice President Reuben Collins (D) said. “In tough economic times, we appreciate the governor holding off on this proposal as long as he has but it is clear this addition to the state budget does not bode well for the counties.
“The Administration has cited several “cost drivers” to justify making this shift, one of which is salary increases for teachers, which are negotiated by the school boards, not county government. The county has no control over or influence on these cost drivers, but we would bear the burden of the costs. This plan would shift funding responsibility for all teacher retirement costs (both pension and social security) to become a half-state, half-local responsibility. Currently, school board budgets include all the funding for social security, while the state budget provides funding for the state-run pension system. The shift would begin in fiscal year 2013, but the amount of local responsibility is expected to increase in FY 2014 and beyond.”
“Like most other counties throughout the state, we are bracing for a tough budget year,” Charles County Commissioner Ken Robinson (D: 1st) said. “Income from property assessments, our number one revenue source, continues to decline. And, although revenues are down, more than half of the county budget is off limits thanks to strict state requirements and funding formulas.
“The price tag for the teacher pension shift will be a steep one. In Charles County, the new county cost for the coming year is 6.8 million dollars. The fiscal staff in Annapolis says that would grow immediately to 8.8 million the next year, and all the way to 10.3 million over the next three years. That kind of burden would put massive pressure onto the county’s taxpayers and to the public services our citizens deserve and depend on.”
“All of the previous proposals regarding teacher pensions in recent years included a phased-in shift; this proposal shifts everything at once,” Charles County Commissioner Debra Davis (D: 2nd) said. “Three years ago, the Senate passed a plan that would have shifting zero dollars the first year, 60 million dollars in the second year, and then gradually phased in costs from there. This plan shifts the entire 240 million dollars at one time. We want the public to know that the proposed pension shift affects public schools, community colleges, and libraries the same way, but has been universally shortened to ‘teacher pensions’ since the lion’s share of the funding at stake is connected to primary and secondary teachers. The numbers that Commissioner Robinson just provided include the fiscal effect of all three shifts combined.”
“There is no question that the costs to counties are going to grow quickly. As the state
Contribution rates go up; half of the new costs are going to be an invoice to county governments. If we bear these costs, the only way we will be able to balance our budget and continue to provide critical services to citizens, is by raising taxes. At a time when everyone is struggling financially, burdening taxpayers is not something that we want to do.”
“The state created and assumed responsibility and accountability for creating a competitive pension program for all teachers” Charles County Board of Education Chairman Roberta Wise said. “And the reason they did that was to support the 24 school systems in recruiting and retaining a highly competent workforce. Last year, the general assembly made significant changes to the pension plan by having our employees pay two percent more. we do not believe they have given this new system an opportunity to show that it will work. if indeed this is passed down, what it will mean to our system is that programs, staff in the classroom will be affected.”
“Maryland schools have been number one for the fourth year in a row,” Education Association of Charles County President Elizabeth Brown said. “Shifting costs to the local governments is not what's good for the children. Schools are already feeling the pinch from budget cuts and now this shift will create and even greater deficit. Larger class sizes, fewer programs, eliminated programs and less support for our children will not help Maryland keep its number one standing. Educators do their part.”
“Over the last several years, the state, working with the teachers had made a change in the contributions to pay more,” Charles County Public Schools Superintendent James Richmond said. “The teachers did not create thus problem, the state underfunded its amount of money to the pension system for years… we couldn’t conceive of underfunding it, then saying you have to pay more to support it.
“We have, over the last several years, shrunk the offerings that we give. After school programs, summer programs are vital to our students and the learning programs that they receive and those would be on the block. We have tried to maintain the support to the classroom. We’re at the edge now that we have used everything we have. There’s no way I can get that kind of money without affecting positions. 80 percent of our money is tied in to positions so when you hand me a six million dollar bill plus the other problems that we’re dealing with, it’s just devastating. We can’t reach it any other way.”
“48 percent of our budget last year was commitments to education,” Kelly said. “It’s important for people to hear is that there’s nothing more we can squeeze out of that. This is above and beyond, this is almost a seven million dollar hit above and beyond what we’ve already flat lined for education. When you consider that, in our budget, that is a significant amount of money. The biggest issue is sustaining that year after year. What we’re struggling with here, in the last five years, is that we’re losing revenues.
“It’s important for our citizens to hear this because the solutions are pretty obvious. There’s going to have to be some way to raise revenues, there’s just nowhere else to go. The salaries are the most important piece in what we do. In education, it’s what happens in the classrooms.”
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