The Maryland General Assembly is considering changing the Teacher Pension System to alleviate the budget gap, a move that could result in an extra $80 million expenditure for Montgomery County.
The proposed reforms originate from an estimated $880 million state debt this year. The state was required to fund $407 million this fiscal year for teacher pensions. The proposed changes involve handing over the state's responsibility of providing teacher pensions to the counties, allowing the state to appropriate money to other programs. Senior Policy Analyst to the General Assembly Lesley Knapp said the plan, "requires that counties pick up the parts of the pension system," and that "the state will still oversee [the pension system]" after it is transferred.
All Maryland counties will have to create their own teacher pension systems if the reforms take place, because the state has provided pensions up to now. According to the Maryland State Teacher Association (MSTA) website, a new pension system will cost smaller counties like Kent County $1 million and larger counties like Prince Georges or Montgomery $56 million or $80 million respectively.
"Transferring the cost to local jurisdictions would be devastating to local governments," said MSTA president Pat Foerster. Since money withdrawn from the county's education budget greatly restricts their ability to increase expenditures, "any improvement in the future would be off the radar screen." Even without any changes, Foerster alleges that Maryland has one of the worst pension systems in America. "We have a hard time keeping teachers in the state," said Foerster. "The benefits are poor, [so] we lose people."
Modifying the pension system is one of the more radical strategies the General Assembly has brainstormed to ameliorate the state debt, and is considered a "doomsday scenario," said Knapp. "The changes very well could happen, but if the state economy gets better, we may not have to cut the pension," said Knapp. "Everything across the board is being considered," Knapp explained. Other plans under consideration include raises to the sales tax , controversial welfare and healthcare cuts and increases of fees like car titling.
Governor Robert Ehrlich did not announce whether or not he would endorse a change in the system. "These decisions have not been made at this point. Ehrlich's current plan pays 100% of the pension plan," said Ehrlich Press Office Spokesman Henry Fawell, and there is "no plan as of now to change it."
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