Faced with the proposed shift of teacher pension costs that until now have been part of the Maryland budget, Montgomery County officials are urging state lawmakers to split the burden between county government and the public school system as a way to ease the financial pain.
Gov. Martin O’Malley has said shifting half the cost of teachers’ pensions to the counties is a fair way to fill the state’s expected $1.1 billion budget gap in the fiscal 2013 budget. If local governments are responsible for the pension costs, they will have a greater incentive to keep salary costs low when negotiating with the teachers’ union, he said when he presented his budget plan in January.
The proposal that was approved by the state Senate’s Budget & Taxation Committee last week altered O’Malley’s plan by suggesting the county be responsible for 100 percent of “normal” costs — the costs of teacher benefits in a given year, without the added burden of unfunded liabilities — and that the costs be added as per-student costs through the state’s Maintenance of Effort law, to be phased in over four years.
Montgomery County Council President Roger Berliner, D-Bethesda, and County Executive Ike Leggett are urging the county’s state lawmakers to instead split those costs between the county government and Montgomery County Public Schools. Since the school system sets teacher salaries, the move would give the schools more incentive to negotiate lower salaries, the two wrote in a letter to Del. Brian Feldman, D-Gaithersburg/Rockville, and Sen. Jamie Raskin, D-Silver Spring.
A 50-50 split also would allow the pension costs to count toward the county’s Maintenance of Effort requirement, which requires school systems to increase per-pupil funding every year, Berliner said.
Though the costs to the county in fiscal 2013 are expected to be relatively small –$7.4 million– as a result of the four-year phase-in and federal funding, by fiscal 2016, they are expected to grow to $44.4 million.
Because the expenses will be added to Maintenance of Effort as per-student costs for the county, the costs will grow even faster in a county like Montgomery, where enrollment is expected to boom by 9,000 in the next six years, said Melanie Wenger, director of the county’s Office of Intergovernmental Affairs.
The plan would restrict half of the county’s budget every year, Berliner said.
“It hasn’t been given sufficient thought, and it could jeopardize our bond rating, and it could create a disincentive for us ever to exceed Maintenance of Effort.”
A spokesman for the Montgomery County Board of Education said the board is reviewing Berliner and Leggett’s letter and declined to comment further.
