Gov. O’Malley won’t pass pension costs on to teachers
Posted: 6:00 pm Fri, January 7, 2011
CAMBRIDGE — Gov. Martin O’Malley gave county officials from across Maryland some good news at their annual meeting, saying he would not seek to shift the huge costs of teacher pensions to them “this year.”
O’Malley said the state needed to make the pension system more sustainable first by either reducing benefits or increasing contributions from employees before shifting those costs — now approaching $1 billion a year — onto county governments.
“That’s going to require adjustments of the variables,” O’Malley told reporters after his speech Thursday at the Maryland Association of Counties dinner. “I don’t think [the counties are] in any better position to pick up these costs than we are.”
Howard County Executive Ken Ulman, the new MACo president sworn in by the governor, expressed the immediate relief of county officials, thanking O’Malley for his stand that “took two pages of my speech” on the pension issue.
A commission on the sustainability of the pension system had recommended last month that local school boards pick up half the costs of teacher pensions. The state Senate last year passed legislation beginning the shift, but the House of Delegates declined to go along.
O’Malley said “there are policy arguments to be made for both sides.”
The major argument for the shift is that local school boards, not the state, set the teacher salaries, which determine what future pension benefits will be.
Counties pay the employer portion of Social Security taxes for the teachers, but the state has long picked up the tab for the pensions.
The average retired teacher in Maryland gets about $25,000 a year in retirement pay. Current teachers make on average about $60,000, and they contribute 1.8 percent of that into the pension system.
O’Malley rejected the idea of moving to a “defined contribution” system like a 401(k) program. He said he’s had “many discussions with the leaders of the public employee unions,” and the one point they can agree on is not to totally dump the defined benefit system, in which employees get a percentage of their final salaries based on their years of service.
O’Malley’s temporary reprieve on the pension issue was about the only good news in his speech.
“No areas in this budget are going to be spared tough choices,” the governor said about the spending plan he will release in two weeks.
He also made no mention of restoring the highway user revenues that the counties and municipalities want returned to them. O’Malley and the legislature have taken away over 95 percent of the transportation dollars that used to go to local governments, using the money to balance the state budget.