Pensions

It should come as no surprise that Baltimore City's long-term fiscal prospects are bad. The population has dropped by more than a third since its peak, poverty and unemployment are high, and the signs of disinvestment are everywhere. Meanwhile, the way the city provides government services remains effectively unchanged, and the cost of everything from police to code enforcement grows every year. But just how bad things are has never been apparent, largely because no one has had the stomach to ask. Mayor Stephanie Rawlings-Blake did, and the answer, presented to the City Council today, was grimmer than most would have guessed.

By resigning ahead of a vote to remove him, former Anne Arundel County Executive John R. Leopold may hold onto his $8,000 county pension, officials said. "I believe this factored into his decision," said Jerry Walker, chairman of the Anne Arundel County Council. The County Council had scheduled a vote to remove Leopold for Monday, his 70th birthday, after he was found guilty last week of criminal misconduct in office. With six of seven members co-sponsoring the measure, it was expected to pass.

The federal Pension Benefit Guaranty Corp. is suing the Renco Group — parent of bankrupt RG Steel — for allegedly attempting to "evade liability" for the steelmaker's pension obligations. The agency is seeking $97 million from the New York holding company, which created RG Steel in 2011 to buy the Sparrows Point steel mill and other facilities. RG Steel rapidly failed and sought bankruptcy protection last May. The lawsuit, filed in U.S. District Court in New York on Monday, alleges that Renco sold 24.5 percent of the steelmaker, of which it had been sole owner, in January 2012 with the "principal purpose" of avoiding pension liabilities.

Republicans in the House of Delegates proposed legislation Tuesday that they say would shore up the state employee pension system while cutting the risk that taxpayers will be left on the hook for losses. The House GOP leadership is backing a package of bills that would, among other things, steer the $40 billion system away from what Republicans consider overly risky investments and lower the long-term assumptions of the retirement plan's earnings on its investments. "The rose-colored-glasses projection of our pension system is deceptive to the citizens of Maryland," said House Minority Leader Anthony J. O'Donnell of Calvert County.

Blaming CEOs for the current pension crises may address Scott Klinger's need to engage in class warfare rhetoric, but it does not address the root causes for the funding deficit facing private pensions ("Fix the debt? Fix private pension's first," Dec. 26). Retirees are living longer than anticipated while there are fewer active workers paying into private pension plans. The projected rate of return for most pension funds has fallen short because of a volatile stock market, a financial crises, a recession, low interest rates and a weak economy.

While America's CEOs are fretting about the government's so-called "fiscal cliff," millions of American workers face a financial disaster that gets much less media attention. There's a half-trillion-dollar deficit in the nation's worker retirement benefits. The Great Recession, which decimated retirement assets, played a big role in building this lesser-known cliff. But many corporations could have avoided the problem by shoring up these funds during the boom years. Instead, they siphoned pension assets for other profit-boosting purposes.

R. Dean Kenderdine's attempt ("Pension chief: Mossburg ignores reforms," Dec. 10) to argue the facts in Marta Mossburg's excellent Dec. 5 column, "Maryland's Debt Bomb," is ludicrous on the face of it. Ms. Mossburg cited the State Budget Solutions' national State Debt Study which, using two-year-old data, actually understated the pension debt. Extrapolating from the latest full-year data for 2011 from the U.S. Census survey of public pensions, I put Maryland's unfunded pension debt at $78 billion as of this year.

In her latest column, "Maryland's debt bomb" (Dec. 5), Marta Mossburg cites a report by the State Budget Solutions that Maryland's "pension obligations to state employees are about $48.2 billion. " Ms. Mossburg and other critics of defined benefit plans continue to make such erroneous assertions by calculating public pension liabilities using economic assumptions and financial theory that comport with neither historical experience nor accounting standards endorsed by the Government Accounting Standards Board, the Government Accountability Office, or any other credible accounting or actuarial authority.

A court ruling that struck down a key provision of Baltimore Mayor Stephanie Rawlings-Blake's overhaul of the fire and police pension system will not dismantle the entire law, a federal judge ruled Friday. "The Ordinance will not 'fall as a whole,' " wrote U.S. District Judge Marvin J. Garbis. In September, Garbis held that the city's decision to change the method for determining annual increases for retirees - resulting in less money for many - was unconstitutional and not "reasonable and necessary to serve an important public purpose.

Baltimore County sold $256 million in pension obligation bonds this week to fund its retirement system, and officials say the borrowing will cost less than they expected. The county borrowed the money at a 3.43 percent interest rate, compared with the 4.25 percent to 4.5 percent originally projected. Officials said Thursday they expect to save $343 million over the next three decades, compared with the $250 million they previously estimated. The county plans to pay the funds back over the next 30 years.