State teachers union pushes for better pensions

Group says current retirement benefits are worst in nation, make Md. less attractive to top educators

December 06, 2005|By ANDREW A. GREEN | ANDREW A. GREEN,SUN REPORTER

Maryland's teachers union is making a major push improve educators' pension benefits, which it says are the worst in the nation.

The Maryland State Teachers Association is organizing house parties and after-school meetings across the state this month in an effort to build support to pressure legislators to increase pension benefits, which leave former educators with about 38 percent of preretirement pay, compared with 71 percent in Pennsylvania.

Maryland teachers contribute less to their retirement plan than their peers elsewhere, but teachers association President Patricia A. Foerster said the disparity in benefits hinders Maryland's ability to retain top-quality teachers, lowering the quality of education for the state's students.

"Schools are hard-pressed to create a stable, high-quality, capable staff that understands the curriculum and can keep the programs running year after year after year," Foerster said.

State Sen. Edward J. Kasemeyer, who co-chairs the legislature's Joint Committee on Pensions, said there is no doubt that Maryland's pension benefit is poor, compared with those of other states. But he said it would be hard to call it the worst because the differences among systems make precise comparisons difficult.

Still, he said he senses a will among legislators to make improvements this year.

"I don't know where the House is exactly, but I think their leadership wants to get it done, and I think the Senate is the same way," Kasemeyer said.

Maryland Budget Secretary Cecilia Januszkiewicz said yesterday that the administration is examining the issue and looking forward to working with the General Assembly on the issue. "The administration is interested in attracting and retaining good teachers," she said, "and the compensation package is an important piece of that."

Maryland teachers' pensions are based on the average of their final three years' salaries. For every year worked before 1998, teachers earn 1.2 percent of that average; for every year after that, they earn 1.4 percent of the average. That means teachers who retire after 30 years now get pensions equivalent to about 38 percent of their pay.

The national average for teacher pensions is about 57 percent of pay, said David E. Helfman, the union's executive director. But the state's problem with retention is exacerbated by the proximity of Pennsylvania, which has the fifth-highest pension benefit in the nation.

A teacher in Maryland whose salary for the final three years averaged $61,000 would get a pension of $22,974. In Pennsylvania, the same teacher would get $45,827.

The union's proposal is to increase the pension to 2 percent per year worked and to apply the change retroactively. That would give a teacher with 30 years of experience and a $61,000 average salary a pension of $36,600 a year.

Such a change would cost the state hundreds of millions of dollars a year, even if teachers were required to increase their annual contributions to the pension fund. Changes to teacher pensions also affect other state employees, whose benefits are linked to those of teachers.

Maryland teachers now pay 2 percent of their salaries per year into the pension system. The average elsewhere is about 5.75 percent, and in Pennsylvania, it ranges from 6.75 percent to 7.5 percent, depending on when a teacher was hired, Helfman said.

Union officials said yesterday that they expect Maryland teachers will have to increase their contributions, but they have no specific proposal for how much.

Bumping the contribution to 5 percent - which would shift more of the burden of paying for benefits on educators than they now carry - would cost the state $315 million a year for teachers' pensions and $165 million for other retiree pensions, for a total of $480 million, Helfman said.

Sue Esty, a spokeswoman for the American Federation of State, County and Municipal Employees, said the union supports the teachers' efforts and is also lobbying for better pensions for its members. But, she said, state employees may not be able to afford to increase their contributions to the system as much as teachers can.

"The teachers have talked about as much as a 5 percent employee contribution, and I don't think that [is] practical for state employees," she said.

The requests come at the same time that the state is feeling pressure from bond-rating agencies to increase its spending on retiree health benefits, possibly by hundreds of millions a year. If the state does not increase its contributions, it will be forced to record liabilities on its balance sheet that a recent Ehrlich administration study pegged at roughly $1.6 billion a year.andy.green@baltsun.com

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