Teachers union: A better way to reform pensions

Counter-proposal would produce comparable savings to the governor's plan while maintaining reasonable benefits

March 28, 2011|By David Helfman

I was stunned when Gov. Martin O'Malley unexpectedly took the stage at our "Rally to Keep the Promise" on March 14. After attempts to settle the restless crowd by celebrating the contributions public employees make to Maryland and announcing that things aren't as bad in Maryland as they are in Wisconsin or Ohio, he uttered the line we needed to hear: "We are committed to staying at the table and to figuring this out and to moving together as One Maryland."

Governor O'Malley made a promise at our rally to stay at the table and find a solution to the state pension system's problems. The following evening, the Maryland State Education Association (MSEA) presented the governor with a comprehensive solution — one that would enhance the security of our retirement system without violating the principles shaping our priorities.

Our solution adheres to the exact principles that Governor O'Malley outlined as his goals at the beginning of the process: preserve defined benefits for state workers; reduce unfunded liabilities; increase the system funding level; and ensure sustainable pension funding. Our solution matches the governor's proposal by achieving $160 million in first-year savings and reaches the target of 80 percent funded status at the same time.

How do we get there? Our solution enhances the sustainability of the pension system by increasing our contribution rate from 5 percent to 7 percent and converting a 3 percent cost-of-living adjustment to a lower, more predictable 2 percent escalator. We ensure retirement security for our hard-working educators by preserving a defined benefit plan, a 1.8 percent multiplier, and by not tying COLA to the consumer price index or market performance.

For months, educators have been asking Governor O'Malley and legislators to keep the promise. On March 14, 15,000 educators, state employees and other Marylanders came to rally in Annapolis and delivered a strong message to elected officials: provide a sustainable pension system and a secure retirement for educators and state employees. MSEA's solution achieves those goals and provides a pathway to reach them. It also avoids a devastating shift of costs to the counties, which would inevitably destroy jobs and harm children. It avoids creating a two-tiered system of benefit levels, which would force new hires to pay more but receive far less. It avoids the House-proposed artificial cap on reinvesting savings which would divert billions of dollars over the next decade, balancing the general fund in future years on the backs of educators and state employees. Such a system would not treat employees equally and would send our benefit level to the back of the pack nationally — greatly harming our efforts to recruit and retain the excellent educators that our schools need and that parents and children demand.

For years, schools have benefited from record increases in state support. We put those investments to good use, and they've paid handsome dividends to Maryland's students, parents, taxpayers and businesses.

Today, we understand the harsh reality of our economy, and our plan provides fiscal relief for the state to maintain other important priorities and services. So the proposal we made includes both increases in our contributions and changes in some benefits. Our proposal also contained numerous enhancements to the system, providing educators with a more stable and secure benefit over the long term.

Elections have consequences. Maryland elected Governor O'Malley, not a Governor Walker. Throughout the state, education-friendly senators and delegates were elected by Marylanders who value education and understand how a strong school system benefits us all. We urge Governor O'Malley and legislators to champion our solution — one that accomplishes the objectives Governor O'Malley first articulated — and allows us to move forward together.

This is an opportunity for Maryland to prove that we're not Wisconsin, Ohio or Indiana. In Maryland, the tough issues should not drive us apart. We should be a state where such issues bring us together in an effort to solve them. Together, we can pass a solution that is sustainable for the state and for employees, and that protects and preserves the retirement security of our educators and our ability to recruit and retain top-notch staff. As Governor O'Malley has said, we do not walk away from each other in Maryland. We stand together, we work together, and we solve problems together.

Now is the time to move together as "One Maryland." We urge Governor O'Malley and the General Assembly to support our solution, which finds a middle ground wherein the pension system is made more sustainable, retirement security is protected, and promises are kept.

David Helfman is executive director of the Maryland State Education Association. His e-mail is dhelfman@mseanea.org.

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