A commission studying Maryland’s ailing pension system on behalf of Gov. Martin O’Malley and the General Assembly recommended Thursday that the state’s attorney general determine whether the state could reduce cost of living adjustments for retirees. Citing concerns about Maryland’s fiscal soundness, the Public Employees’ and Retirees’ Benefit Sustainability Commission — headed by former House Speaker Casper Taylor — said reductions in COLAs should be on the table, even though the General Assembly already slashed pension benefits for employees this year.
“We’re trying to be as comprehensive in our recommendations as we can and stay within the language that we were given in our creation, but we don’t want to mislead the public into believing that the future is safer and more secure than it really is, and therefore this issue of the COLA is an issue that must be faced up to, and I would suggest, I think we all would suggest, the sooner the better,” Taylor said.
Though the commission stopped short of calling for COLA reductions, it could signal further benefits reductions in a liberal stronghold where such perks for public employees were considered untouchable in previous years.
A spokesman for Maryland Attorney General Douglas Gansler told The Washington Examiner the office would review the COLA issue after a formal request is filed either by the commission, a state lawmaker or the retirement system.
Facing a $33 billion pension gap, the General Assembly approved various benefits reductions this year, saying the move would increase funding for the system from 64 percent to 80 percent by 2023. The changes included raising employees’ pension contributions from 5 percent to 7 percent. Those hired after July 1 also will now have to wait 10 years instead of five to be fully vested in the retirement plan.
Some Maryland officials said they doubted that state law would allow for decreases in COLAs, but the commission’s recommendation comes just a week after judges in Colorado and Minnesota tossed lawsuits by retirees who had such benefits slashed in those states.
