For more than 35 years, Montgomery County teachers have done better in retirement than their peers statewide. Now the recent move by the Maryland General Assembly to improve teacher pensions could prove costly for the county.
In 1968, the county pulled out of the state retirement system and created a new retirement accountpegged to the state’s rate, plus 10 percent, school system benefits manager Wes Girling said. Maryland reimburses the county for its share of teachers’ pensions, and Montgomery funds the extra.
State lawmakers last week agreed to use a more generous formula to calculate retirees’ pensions, retroactive to employees hired after 1998 and those retiring after July 20.
So where does that bump up do to Montgomery’s budget?
“It may affect the county. Right now we’re working very hard to figure out how,” budget analyst Steve Farber said Thursday.
Girling said there will be a meeting today “to discuss the effects” of the state’s move.
This comes as Montgomery faces renegotiating all employee contracts, including those for teachers, within the next year.
Currently, school officials are inclined to continue offering the extra 10 percent, Girling said.
Council Member Howard Denis, the group’s lone Republican, from District 1, said he was against “pension reform” in the early 1980s.
“What we thought was going to happen largely has been borne out,” he said, including the prospect of steadily growing county budgets over the foreseeable future due to compensation and retirements.
Council Member Phil Andrews pointed out that the generous 20-year retirement option approved by the council in the department’s last contract cost the county $4.5 million a year and depletes the department’s strength.
“I think we should encourage our employees to stay,” he said.
Council Member Marilyn Praisner also urged caution: “If we want to be true to our employees, the realistic way to do this is not to extend our obligations beyond our ability to meet them.”
