MACo Officials Predict Pension Funding Shift Will Pass

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MACo Officials Predict Pension Funding Shift Will Pass

Prince Frederick, MD - 3/21/2012

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By Marty Madden

Left, MACo President Ingrid Turner, right, MACo Executive Director Michael Sanderson
Left, MACo President Ingrid Turner, right, MACo Executive Director Michael Sanderson

QUOTE OF THE WEEK

“It’s atrocious what the state is doing.”

Commissioner Evan Slaughenhoupt, criticizing the Maryland General Assembly and the O’Malley Administration for forcing jurisdictions to spend more money on education.

Despite protestations from Maryland’s local jurisdictions, an official from the organization representing the counties predicted March 20 that two initiatives before the state legislature—shifting funding responsibilities for teachers’ pensions and increasing maintenance of effort (MOE) requirements—will pass during the General Assembly’s 2012 session.

Maryland Association of Counties (MACo) Executive Director Michael Sanderson delivered the gloomy news to the Calvert County Commissioners during the panel’s Tuesday, March 20 meeting.

Association President Ingrid Turner told the board “it’s not looking good” for changing the legislators’ minds about the funding shift.

“The debate is not if, it’s how much,” said Sanderson of the plan to shift responsibilities for the teachers’ pension fund. He explained the Maryland Senate’s current proposal would have school boards paying the “normal cost” of retirement, phased in over four years with concurrent county-paid MOE increases. Sanderson explained the normal cost “reflects the current cost of retirement for active employees, which does not include unfunded, accrued liabilities. The normal cost’s dollar value grows primarily by the growth in salaries and the number of teachers employed. Required maintenance of effort paid by counties increases each year by additional pension costs during the phase-in period.”

Sanderson said the state would continue to be responsible for payment of unfunded accrued liabilities and reinvestment, as well as a portion of the normal cost and any costs above the estimates during the phase-in period.

“It’s not a wonderful plan,” said Sanderson, who added the Senate proposal “brings the costs down and is less offensive.”

Sanderson said pension costs would be offset by a $37 million federal fund reimbursement relief to school boards, new county revenues and local aid to counties and school boards. “It’s trying to give counties resources to help,” he said.

Sanderson stated the Maryland House of Delegates has a pension shift plan that makes the process move at a “brisker” pace. The two proposals would need to be reconciled before final passage.

The executive director told the commissioners the MOE bill “is going to pass this year” and admitted it would have significant impacts on county operating budgets.

The commissioners were not pleased by the news from MACo.

“It’s the state that’s cutting education by $7 billion,” said Commissioner Evan K. Slaughenhoupt Jr. [R]. “It’s atrocious what the state is doing.” Slaughenhoupt surmised that the measures were an example of detrimental impact from “one-party rule” in Annapolis.

“This puts this board in this county in a real bad position,” said Commissioners’ President Gerald W. “Jerry” Clark [R], who likened the state lawmakers to houseguests who have worn out their welcome. “What they are doing is eating us out of house and home. We wish they’d go back.”

Clark noted state officials gloat about Maryland’s high achieving schools and fail to credit the individual jurisdictions for their oversight. “We’re going to work hard to keep our schools up there but there’s a reality,” he said.

The county’s proposed fiscal year (FY) 2013 budget includes a cut in the amount of funding to Calvert County Public Schools (CCPS) compared to FY 2012. County government staff has budgeted for the potential pension funding shift and has the allocation to CCPS at the MOE level.

“I think we all knew this was coming down the road,” said Commissioner Pat Nutter [R], who thanked MACo officials for their efforts “to keep it within reason.”

Contact Marty Madden at marty.madden@thebaynet.com



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