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Maryland teachers’ union head rips state pension process

The executive director of the state teachers’ union has said the process being used by the commission considering changes to state pensions was “offensive,” rushed and lacked both details and consultation with affected employees.

“The whole discussion has been how are we going to cut costs,” David Helfman, executive director of the Maryland State Education Association, told reporters last week. “There’s no indication that it’s being done in good faith.”

Casper Taylor Jr., the former House of Delegates speaker who heads the Public Employees’ and Retirees’ Benefit Sustainability Commission, denied most of Helfman’s complaints.

“I think we’ve been very consultative,” Taylor said. “We have had a complete actuarial analysis.”

Even though the commission only started meeting in October, he said, “I’ve had no pressure” to finish the work of the commission.

Taylor also denied saying that the eight-member commission would attempt to save $400 million to $500 million for the fiscal 2012 budget. After the commission’s Nov. 29 meeting, MarylandReporter.com reported that Taylor said, given the potential deficit of $1.8 billion in 2012, “the governor may have to be looking at our commission for $400-$500 million.”

“Our job isn’t to balance the budget,” he said Thursday, echoing remarks made by State Treasurer Nancy Kopp and former Senator Barbara Hoffman on Nov. 29.

He said one of the issues affecting the state budget was whether to transfer some of the cost of teacher pensions to the counties, as he and others favor.

The commission meets again on Monday, for what Taylor said would be “a complete rundown of all of the options that we are going to vote on the following week.”

The options include increasing the vesting period to obtain a pension from five to 10 years, and applying the rule of 95 to receive a full pension, meaning a state employee’s age and length of service would have to add up to 95. Currently, state workers can retire after 30 years of service regardless of age, and some can retire at a reduced pension at 55 after 15 years of service.

Several options would also reduce the amount of pension earned from each year of service from 1.8 percent of pay to 1.4 percent or even 1.2 percent of pay.

There is also a proposal to freeze cost-of-living adjustments for five years, or even for as long as 15 years.

Other options could include a “defined contribution” plan like a 401(k).

Helfman said he believes the COLA formula for current retirees constitutes a contract that can’t be changed.

The commission was set up to look at changes to reduce the pension’s unfunded liability of $18 billion over the next 30 years.

“We see this as a funding issue, not a benefits issue,” said Randall Mickens, a staff member of the Maryland State Education Association. Ten years ago, when the pension system was fully funded, the Legislature switched to the “corridor method” of contributions, allowing the state to put in less than required each year if the pension funds could cover 80 percent of what they would have to pay out. That reduced funding, plus the collapse of the stock market, led to the current funding level of about 64 percent. It will probably rise to 69 percent this year because of an improved stock market.

Helfman said better investment returns and the lower pay raises for teachers that actuaries have not factored into projections should reduced the shortfall in the pension funds.

“Don’t overreact to a short-term funding challenge,” Helfman said. Major increases in school system aid fueled big hikes in teacher payrolls, but those increases have disappeared. “The growth in payroll is going to fall well under what the actuaries are assuming,” he said.

Pension benefits for teachers and state employees were raised four years ago, passed by the Legislature with unanimous bipartisan support and signed by Republican Gov. Robert L. Ehrlich Jr.

“Our members will be lobbying the General Assembly very forcefully to keep its promises,” Helfman said.

2 comments

  1. What is that these UNION IDIOTS cannot comprehend? There is NO MORE MONEY. They have sucked it down and stolen it all.

  2. This is crazy – someone should go to jail for not doing what the law requires to fund the system. I have heard that the pension system has not been properly funded for over ten (10) years. Where are the trustees of this pension system they should be behind bars and it does not matter if they are democrat or republican. You had two different Governors turning their head the other way and scores of politicians over those years and now they want to screw the teachers because of the terrible job they did ? I think the teachers and other public employees and their unions should consider a stae wide \Strike\. Yes I know thats illegal but so is not funding their pensions and now trying to reduce their their benefits significantly. It’s always the workers getting screwed for someone else’s wrong doing. Teachers get off your ass’s and don’t take this sitting down it’s not yopur fault and you should not pay the price its bad enough their frezzing and cutting your salaries everywhere and loading your class’s up with more kids than they should-its time to draw a line in the sand and say \Enough\ and no one but all you teachers can do it-it’s time to mobilize and be pissed off and move to action. Their is answers and other ways to solve this problem-why not get a goldman sachs in here as a consultant they have some of the best finajncial minds in the world and probably can get the investment return on the pension fund up significantly. Teachers of Maryland- if you sit back on this one -your done -and your pension will be ruined and this will be the begining of the end for all of the other public employees in the state. Once they change one system look out all the others will be next no matter if state, county or municpal. Wishing you all a Merry Christmas and a happy New Year and praying you are all successful in thwarting this obscene action- Sincerely, Michael J. Smith, Husband of a teacher of 25 years and father of a new teacher of 2 years.

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