Pension cost shift halted

House committee seeks study of moving financing of teachers' fund to counties

March 28, 2010|By Annie Linskey |

A spending committee in the House of Delegates has rejected a proposal that would have eventually transferred about $337 million in teacher pension costs from the state to local governments, stalling a Senate-approved plan to help balance Maryland's budget.

The House Appropriations Committee recommended on Friday a study of the implications of the cost shift, instead of beginning the effort next year.

"A step of that magnitude could only be done after a comprehensive study," said Del. Norman Conway, and Eastern Shore Democrat and head of the spending committee. "You really need more data."

State officials have long considered a shift in the cost of pensions. They say because local officials set the salaries on which pensions are based, fairness dictates that local governments pick up some of the burden. Counties argue that paying for pensions would require them to cut other services.

The Senate voted 28-19 last week to move the pension costs to the counties gradually, starting in July 2011. Ten of 14 supported that plan. A more drastic approach, shifting $450 million to the counties in the coming budget year, was first offered in an alternative Republican budget plan.

Because the initiative is in a Senate budget-balancing bill, it could still become law as representatives from both chambers meet for final negotiations over the next two weeks. But opposition in the House and from Gov. Martin O'Malley means the prospects are growing dimmer.

O'Malley said last week he would like to protect counties from the type of burden the plan would impose. "I don't believe that the counties are in any better position to support those payments than the state is," O'Malley said.

The state will spend $900 million on teacher pensions in the budget year starting in July. The figure is expected to grow to $1.2 billion over the next five years.

Opposition to the shift came from the Maryland Association of Counties, education groups and county executives who feared they would have to either make deeper cuts to local budgets or raise local taxes to pay for a burden that the state has always covered.

But Senate President Thomas V. Mike Miller says local officials should pay some because it is their decisions that are driving the costs.

"All we're saying is that the people who do the hiring should have to pay a portion of this," Miller said, adding that he was "not sure" that leaders in House of Delegates "understand the complexity of the problem."

That view was challenged by Del. Murray D. Levy, a Charles County Democrat, who pointed to the landmark Thornton education formulas created by the General Assembly that mandated smaller class sizes. That directive led counties to hire more teachers and increase salaries. "Are we going to penalize the counties for doing a good job?" Levy asked.

House Speaker Michael E. Busch said some pension costs would likely move to the counties "at some point" but added that many delegates "don't believe that it is essential to be done this year."

The large Montgomery County delegation, in particular, is opposed to the concept, Busch said.

"The idea of trying to fashion together 71 votes for an initiative that doesn't take place until 2012?" Busch said. "We just don't have the capability to do that."

Baltimore Sun reporter Julie Bykowicz contributed to this article.

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