Amid budget crisis, Md. Senate votes to shift cost of teacher pensions to counties

Critics say change would threaten education funding in the state

March 24, 2010|By Annie Linskey |

The Maryland Senate gave preliminary approval Tuesday night to a plan that would balance future state budgets by shifting hundreds of millions of dollars in teacher pension payments to local governments.

The shift would occur in the fiscal year that starts in July 2011. Proponents say the move is fiscally responsible, but critics contend that it marks a disturbing new era in which state education funding is threatened.

"This is a sad day," said Sen. Paul G. Pinsky, a Prince George's County Democrat. He said the Senate vote marks the "erosion" of a landmark 2002 education funding formula that infused hundreds of millions of dollars into the state's public schools. "The counties are going to have additional pressure," he said.

The pension shift was among a series of votes the Senate took on a package of $120 million in cuts made to Gov. Martin O'Malley's budget by a Senate spending panel. The cuts were adopted by a Senate committee last week, and the full Senate was endorsing them Tuesday.

The new pension plan would require local governments to contribute an added $63 million in the first year. Within two years, their payments would rise to $337 million.

Supporters said state forecasts predict shortfalls between revenues and expenses for years into the future, a trend that Wall Street firms that play a role in setting the interest on Maryland's debt dislike.

"The state is under a lot of stress," said Sen. Richard S. Madaleno Jr., a Montgomery County Democrat who supported the pension shift in the budget committee.

The state this year owes $900 million in teacher pension payments, and that is expected to grow to $1.2 billion in the coming years. About a quarter of the amount is now funded with federal stimulus money, which will not be available next year.

The Senate voted 28-19 to approve the pension change, but the entire budget is pending approval in the Senate and changes could still occur. A vote in the House of Delegates would come next.

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