Pension System

Hoping to drum up citizen support as they campaign for higher pay and a better pension, Anne Arundel County police officers are issuing warnings instead of tickets in many minor traffic infractions.The approach, which police union leaders call "Operation Impact," is a sharp contrast to prior tactics, which included negative advertising against former County Executive John G. Gary in 1996.In an early misstep in the latest campaign, four officers were disciplined recently by Police Chief Thomas P. Shanahan after they were accused of carrying out radar speed checks and other enforcement tactics that caused a traffic backup on Route 100 during Friday morning's rush hour.

Four financial institutions that manage Maryland's state employees' pension funds have been replaced, in what state Treasurer Richard N. Dixon hints is a continuing shake-up of the $28.7 billion retirement system's management.The trustees of the State Retirement and Pension System approved the firing of Mercantile-Safe Deposit & Trust Co. of Baltimore and two other fund managers last week, and accepted the resignation of another city firm, Investment Counselors of Maryland.The $451 million in pension funds affected by the shake-up have been redistributed to four other firms that already manage portions of the system's portfolio, including BT Alex.

The recent sale of Cranberry Square shopping center in Westminster to the state's pension fund may not have an immediate economic impact on the area, but local officials say the deal bodes well for the community.The Maryland Retirement and Pension System, which has a portfolio of more than $28 billion, looks for commercial properties that have a positive cash flow, are leased and can be sold for a profit, said state Treasurer Richard N. Dixon, who chairs the system's board of trustees."We thought this was very attractive," said Dixon, who lives near Westminster.

With powerful politicians endorsing their election-year appeal, leaders of the Maryland State Teachers Association believe pension benefits for their members will be raised this year by the General Assembly.Gov. Parris N. Glendening and House Speaker Casper R. Taylor Jr. have signed on to the teachers' approach to winning $3 billion in higher state contributions to their pension fund.Even two of the teachers' oldest and most powerful opponents -- state Treasurer Richard N. Dixon and Republican state Sen. Robert R. Neall -- agree that improvements are warranted and overdue, though they disagree with the union on what to do.The teachers are working diligently to arouse indignation and grass-roots fervor to impress legislators.

As a new Baltimore County Council prepares to take office, some members say they're still inclined to reform -- or at least review -- the county's lucrative pension system, which lets elected officials retire at full pay after 20 years, regardless of age."The public is definitely interested in that issue ," said Councilman-elect Wayne M. Skinner, a Towson Republican. "Personally, I do think it's excessive."Councilman Vincent J. Gardina, a Perry Hall Democrat, said he would support a cap on the pension the county executive could collect.

Members of the Baltimore County Council won't try to change the county's lucrative pension system for elected officials this year, even though five of the county's seven councilmen agree that retirement with full pay after 20 years is too rich a reward for public service."

GEORGE SANTAYANA isn't well read in the Annapolis State House. He should be.Lawmakers and the governor ought to memorize the philosopher's oft-quoted line: "Those who cannot remember the past are condemned to repeat it."This state's economic surge has politicians gleefully spending the resulting tax largess -- and ignoring long-range ramifications.Liberals are the worst offenders. But conservatives are playing their own cynical game: Trying to impose big tax cuts that will force a major contraction of government down the road.

More state employee pension funds should be invested in fledgling high-tech companies to spur economic growth, Democratic comptroller candidate William Donald Schaefer said yesterday.Acknowledging that his proposal would face opposition among those concerned about using pension money for relatively risky investments, the former governor said his plan would promote business development -- and not imperil the $28 billion pension fund's assets."There are ways the pension money could be used to help the state," Schaefer said.

Pension proposal would not fix system's flawsI am writing in response to the letter of April 2, signed by Louis L. Goldstein, comptroller; Peter Vaughn, executive director, State Retirement and Pension System of Maryland, and Carl Lancaster, chairman, Pension Study Subcommittee. Since my name was used as a member of the Board of Trustees of the Maryland State Retirement and Pension System Benefits Subcommittee, I feel I must correct the record.I would be the first to say improvements are needed in the state employees and teachers pension systems.

Article erred on Baltimore's budget surplusThe March 6 article "Another budget surplus expected" was terribly misleading and factually wrong. The city is not expecting a current-year budget surplus of more than $25 million. It is projecting a budget surplus for the current year (fiscal 1998) of approximately $5.5 million.The revenue surplus of $20.8 million must be used to cover a projected appropriation deficit and prior-year adjustments of $15.3 million, leaving a projected budget surplus of $5.5 million.

FTI Consulting reports 6.9% profit increase in Q2 FTI Consulting Inc., a Baltimore firm that finds financial fraud, helps companies restructure and provides other business-advisory services, said Tuesday that its second-quarter profit was $37.2 million, up 6.9 percent from a year earlier. Revenue for the three months ending June 30 was $360.5 million, an increase of 6.8 percent from a year earlier. Per-share earnings were 69 cents, up 6.2 percent from a year earlier. FTI also said it now employs more than 3,400 worldwide.

Baltimore Mayor Sheila Dixon has withdrawn a pension reform bill that would have stripped a lucrative post-retirement benefit from the financially troubled fire and police pension plan and was opposed by the city's public safety unions. "We're looking for a bigger fix for the system," Dixon's spokesman, Scott Peterson, said. The Administration plans to make more comprehensive changes to the $1.677 billion pension system. The bill's withdrawal was applauded by the city's police union chief, who said that the unions now can also "look at the bigger picture" and suggest broader reforms to the pension system.

Baltimore police officers and firefighters can't keep on receiving the lucrative pension benefits now paid to retirees. The numbers work against them. Police and fire retirees are living longer, which means the city has to pay out much more over the long haul, and other aspects of the pension deals are costing more, too. Poor performance in the stock market has compounded the problem for everyone and put the city on the hook for $82.1 million in the fiscal year that begins in July and a whopping $110 million the next year.

Pension proposal unfair to retirees In introducing legislation to the City Council that could reduce the hard-earned pension benefits of retired Baltimore police officers and firefighters, the city administration has shown its willingness to promote an idea that is rooted in greed and deception ("A costly pension benefit," editorial, Oct. 23). For almost 30 years under four different mayors, the variable benefit program has provided pension increases to retired police and fire employees.

The gravy train for Baltimore police and fire retirees is nearing the last station. For 24 years, retired members of the city police and fire departments have profited from a unique feature of their pension system that increased their benefits when pension fund investments performed well. If the investments perform poorly, retirees didn't suffer; instead, the city simply paid more into the plan. But the city no longer can afford to keep this train running. The feature had the costly effect of increasing a retiree's base benefit that the city had to fund, which added to its financial burden.

Local government leaders took notice this month when declining tax revenue projections left a $432 million hole in the state budget. Naturally, they're worried that Baltimore and the counties are going to be left to do much of the shoveling. And the most likely pile of money to be shoveled is the more than $600 million the state contributes toward teacher pensions. Why? Not only is this a substantial sum, but it represents the wrong way to finance public education. The state doesn't set salaries, local governments do. But as salaries increase, teacher pensions grow proportionately, and that's a burden shouldered 100 percent by the state.

"Horrifying" is how Carroll County budget director Ted Zaleski describes it. "The bogeyman," says David R. Craig, county executive in Harford. "There's very little I fear more than that," Howard County Executive Ken Ulman says. What has local leaders trembling is the possibility that Gov. Martin O'Malley might try to shift the $622 million cost of teachers' pensions from the state to local governments in response to a projected $432 million budget shortfall this fiscal year. The result could be local tax increases or severe cuts to services, leaders say. In Baltimore, the resulting $60.8 million hit would be a harsh blow to the budget, officials say. "We're already dealing with some structural deficit issues," said Sterling Clifford, spokesman for Baltimore Mayor Sheila Dixon.

The Board of Public Works agreed yesterday to clarify the appointment process for advisers to the state retirement and pension system after complaints that a nominee who would have been the first African-American in that post was treated poorly. Comptroller Peter Franchot and state Sen. Catherine E. Pugh said yesterday that Larry E. Jennings Jr., co-founder and senior managing director of TouchStone Partners, a private equity firm that manages over $300 million in assets, was treated unfairly and subsequently withdrew his name from consideration, creating concern among many in the state's minority business community.

Three days after Gov. Martin O'Malley announced a $1.1 billion initiative for the biotechnology industry, Comptroller Peter Franchot announced yesterday that he would advocate that the state pension fund to invest about $1 billion in life sciences and "green" technology such as renewable energy and environmentally sensitive building materials. Franchot, who is vice chairman of the Maryland State Retirement and Pension System, said he would recommend that about $500 million be invested in the biotechnology industry, particularly in Maryland.

Assets owned by the Maryland State Retirement and Pension System gained 1.56 percent in value for the six months that ended Dec. 31, a report shows. That's not a bad result during a tumultuous period. Credit bonds and international stocks. The fund that finances retirement income for teachers, police and other public employees is more diversified than it used to be. Standard & Poor's index of 500 big U.S. stocks delivered a negative return of 2.7 percent for the period. Seven years ago, U.S. stocks made up 48 percent of the portfolio.