Enhanced teacher pension signed into law

All state workers are to benefit

Ehrlich OKs more than 100 bills


ONCE FULLY PHASED IN — Worried that Maryland is losing top educators to other states, Gov. Robert L. Ehrlich Jr. signed into law yesterday an enhanced pension benefit for teachers and other state employees, elevating what workers said was one of the worst retirement plans in the nation.

Once fully phased in - a process that will take decades - a teacher who retires with 30 years of experience will get a benefit equal to 54 percent of his or her final salary, up from 38 percent for current retirees. Teachers union officials say that will bring Maryland to nearly the middle of the pack nationally.

Ehrlich signed the bill, along with more than 100 other measures, including laws that will require school systems to have automatic external defibrillators on hand during sporting events, enable most Maryland wineries to sell directly to retailers and restaurants, and allow diners to take home unfinished bottles of wine.

"We have made historic new investments in our public schools since 2003, and our teachers should be no exception," Ehrlich said in a statement. "I am proud to sign this legislation to improve teacher and state employee pensions in Maryland, as well as legislation to empower Maryland's growing wine industry."

The Maryland State Teachers Association engaged in a high-profile publicity campaign this year to push for better pensions. The union ran radio ads and organized its members to lobby for better retirement benefits.

They argued that Maryland is losing veteran teachers to other states - notably Pennsylvania, which has one of the best pension benefits in the nation - because educators worry that they won't be able to afford to retire if they stay here. By law, other state employees' pensions are linked to the teachers' benefit, so any improvement for educators helps them, too.

The pension debate has political overtones in this election year. Both of the Democrats running for governor, Montgomery County Executive Douglas M. Duncan and Mayor Martin O'Malley, supported the teachers' proposal.

Ehrlich, who has feuded with the teachers union, included no money in his budget proposal for enhanced pensions, but legislators made cuts to free enough for a down payment on the $120 million annual benefit, which will go into effect next year. The legislators did not identify a source of funding to pay for the benefit in the future.

MSTA President Patricia A. Foerster said the union's members had hoped for a more generous plan - this one applies retroactively only to 1998 and does not raise final salary as high as teachers wanted - but she said it will be an important boost to the state's efforts to retain educators.

"While I know all of them would have appreciated an even greater recognition, it's clear that the legislators had a huge leadership role to play, and in going through a budget with not one red cent toward improving pensions, they did an outstanding job," Foerster said.

Lt. Gov. Michael S. Steele, who led a commission that examined Maryland's K-12 educational system, said the bill Ehrlich signed yesterday should be considered a first step.

"When you're paying out 38 cents on the dollar after 30 years of experience, that's ridiculous," Steele said. "We need to get ready for Round 2 next year."

The Steele commission recommended creating a "completely portable pension plan" that would allow teachers to keep their benefits if they change states or careers, much like the way 401(k) accounts can be rolled over. He did not suggest that the state should pay more money for the system.

Yesterday, Steele said he simply wanted to start a debate on portable pensions and that Maryland "absolutely" needs to put more money into its pension system, even beyond the commitment Ehrlich made yesterday.

MSTA Executive Director David E. Helfman said he estimates Maryland will rank about 40th out of the nation's 54 pension plans when the new benefit is phased in. (Some states have multiple pension plans.) But, he said, the new benefit will put Maryland just slightly below a large pack of states, so the benefit is better than its ranking might suggest.

Furthermore, he said, it puts Maryland ahead of Delaware, Virginia, West Virginia and Washington, though still well behind Pennsylvania.

The deal will require teachers to increase the amount they contribute to the pension system from 2 percent of their salaries to 5 percent. That is still below Pennsylvania's contribution, Helfman said.

Lisa Norrington, chairwoman of the business education and School-to-Career department at Patapsco High School and Center for the Arts in Baltimore County, said the new benefit will make it "a lot easier" to plan for retirement, and will help her free money for other expenses such as higher gas prices and electric bills.

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