O'Malley budget chief: Pension reform is sufficient

February 05, 2011

While I appreciate Marta Mossburg's concern for the future of the Maryland pension system ("Maryland pension reforms don't go far enough," Feb. 1), her assertion that Gov. Martin O'Malley's proposed reforms are insufficient is simply incorrect and is based on an apparent misunderstanding of the facts. The governor's proposal is, in actuality, based upon sound actuarial analysis and is designed to restore the pension system to 80 percent funding in eleven years and 100 percent funding by 2030.

In her description of the state's pension challenge, Ms. Mossburg contends that 50 percent of the state's compensation for its employees went toward pension and health insurance costs in 2000 and this grew to 72 percent in 2009. She forgets that the state pays pension costs for all public school teachers while their salary costs are borne by each local government. With that correction, the percentage of compensation related to benefits was 32 percent in 2009.

Furthermore, Ms. Mossburg claims that the state retirement system would need to double its current assets of $36 billion to reach an 80 percent funded status. This is inaccurate. Total liabilities for the system as of last June 30 were $54 billion. Therefore, another $7 billion would have the system at 80 percent funding. While that is still significant, it is not the $36 billion Ms. Mossburg suggests.

Ms. Mossburg correctly points out that the state faces challenges in sustaining its pension system. The fact is, Governor O'Malley and the General Assembly are forthrightly addressing these challenges during the current legislative session. The governor has proposed a plan to put the pension system on a path to sustainability without raising taxes or shifting the burden to local governments, and that plan is currently under consideration by the General Assembly.

In the meantime, the pension system and its assets are being well managed by a professional staff under the leadership of the system's Board of Trustees. Its chairman, Treasurer Nancy K. Kopp, is an individual who is fully attuned to the economic realities facing Maryland and its pension system. Her fiscal expertise and sound judgment in this area of public policy is extensive and is reflected in her role as president of the National Association of State Auditors, Comptrollers and Treasurers. To suggest otherwise, as Ms. Mossburg did in her column, is incorrect and, quite frankly, unfair.

T. Eloise Foster, Annapolis

The writer is Maryland's budget secretary.

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