Teacher pensions: Solution still pending

April 6, 2006, midnight | By Isaac Arnsdorf | 18 years, 2 months ago

Maryland's embarrassing retirement plan merits revision, but current proposal is misguided

For a state that prides itself on its schools, Maryland's pension plan is an embarrassment and an obstacle to attracting and retaining quality teachers. Maryland's teacher pension plan ranks 51st in the nation - dead last. Retired Maryland school employees receive just 38 percent of their peak salary, half as much as in neighboring Pennsylvania, according to the Maryland State Teachers Association (MSTA).

But as the current legislative session concludes on April 10, the MSTA lobbyists seem fated to leave Annapolis empty-handed. Modified versions of the MSTA's plan have been approved in both houses, according the MSTA web site. Teacher pension calculations incorporate peak salary, years of service and a fixed multiplier that determines what the state contributes. Teachers currently contribute 1.4 percent of their salaries to a state-managed pension fund and have a 1.2 percent benefit formula multiplier. The Senate bill proposed a 1.8 percent multiplier, retroactivity back to 1998 and an employee contribution increasing incrementally to five percent by 2008. The House version calls for a two percent multiplier, 5.5 percent employee contribution and no retroactivity, according to the MSTA web site.

But since the governor's budget does not allocate any funding for the initiative, the bill is effectively worthless. Although inaction on such an important issue is regrettable, the MSTA can use the legislative recess to reconsider the financial and political implications of their flawed proposal.

Either plan's $500 million price tag would devour nearly half of the state surplus, but by consigning the financial burden to new teachers, its increased employee contribution would actually be counterproductive to luring quality educators. "To what extent a pension reform plan attracts and retains teachers will largely depend on what percent of our salaries the General Assembly asks us to sacrifice," said Blair social studies teacher and union representative Marc Grossman. If the goal of the proposed pension plan is indeed to attract new teachers, that goal has clearly gotten lost somewhere along the way.

Instead, it appears to be a last-minute push by the union's vocal baby boomers for a big pay-off — one where they stand to gain while their younger coworkers shoulder the bulk of the cost.

In a salary hierarchy that favors seniority, the increased contribution is too much to ask for those who earn the least: new teachers. Even MCPS Superintendent Jerry Weast acknowledges that the cost of living in Montgomery County already exceeds a starting teacher's salary, so an additional two to four percent cut in immediate wages would exacerbate an already difficult economic situation for many new teachers.

Furthermore, if new teachers sacrifice more of their salaries for retirement benefits, they will not see the promised benefits for decades, if at all. In the 30 years until their retirement, the state could again alter the pension plan, and there will be no guarantee that the money they contributed will actually materialize. While incoming teachers will find little appeal in a plan that takes 30 years to pay off (and even then might not), outgoing teachers would benefit from increased payouts even though they would be paying the increase rate only for a few years.

Maryland already faces a severe shortage of qualified new teachers and an alarming exodus of current ones. The average teacher entering the classroom will switch professions within five years, and Blair alone has seen more than 50 new teachers in the last four years, according to Grossman. Any additional reduction of incoming teachers' immediate salaries will only intensify a mounting crisis.

As the General Assembly adjourns, the MSTA can seize this opportunity to return to the next session with a more adequate resolution. Maryland's teachers undoubtedly need a pension plan that matches, if not surpasses, the national average, but this should not involve hiking employee contributions above four percent. In Ohio, for example, teachers receive 60 percent of their peak salary when they retire after 30 years but have to contribute 10 percent of their salaries, according to Grossman. Maryland teachers should not have to sacrifice so much, but they need some guarantee that what they do sacrifice will eventually pay off. The MSTA should revise their proposal to include a graduated employee contribution so that teachers pay a higher percentage as their salaries increase with seniority.

Teachers deserve better pensions for their hard work, and retirement benefits are a promising tactic for drawing talented young educators. But the MSTA's proposal appears to be driven more by intergenerational union politics than genuine concern for improving teachers' financial security. Before approving pension reform, lawmakers need to ensure that they are supporting a viable economic plan and not yielding to political convenience by prematurely embracing a superficial solution to a critical problem.

Isaac Arnsdorf. <span style='display: none;'>Isaac Arnsdorf is a perfectionistic grammar nerd with no sense of humor. According to co-editor Allie O'Hora, "he enjoys listening to rhythmless, atonal 'music' and reading the encyclopedia." He sleeps with the Manifesto under his pillow.</span> More »

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