Educators and state employees deserve a secure retirement!
Pension Shift Proposals
Preventing Governor O'Malley's proposed shift of teacher pension costs to local governmentsis critical to protect the investments in our schools. Read MSEA President Clara Floyd’s statement in response to the shift proposal included in the governor’s budget.
Gov. O'Malley's shift is tantamount to a huge, long-term cut in education funding—creating far more problems than it solves. A pension shift is poor policy on its own, and without a comprehensive fix to maintenance of effort, it would be a disaster for our schools.
Governor O'Malley's shift is tantamount to a huge, long-term cut in education funding—creating far more problems than it solves. A pension shift is poor policy on its own, and without a comprehensive fix to maintenance of effort, it would be a disaster for our schools. Before the legislative session ended on April 9, the General Assembly developed an alternative proposal that is more responsible, gradual, and measured than the governor’s proposal.
If the General Assembly is called back for a special session, it is expected that one area of unfinished business will be in sharing teacher pension costs with local governments. The finalized agreement in conference committee included a four-year phase-in to share the employer portion of normal costs with local school boards. The plan would be to phase in 50 percent of normal cost in FY13, 65 percent in FY14, 85 percent in FY15, and the full 100 percent of normal costs in FY16.
For each year of the phase-in, county governments will meet their MOE obligation and must pay the cost of the pension bill shifted to the school board. In FY17, after the phase-in is complete, the MOE calculation will be increased to include the normal costs in that year, thereby creating a new MOE value moving forward. By shifting to the employer share of normal costs, the General Assembly identified a factor in the pension formula that is both predictable and declining. The budget deal in total would have included local offsets in the revenue bill to assist counties in the increased costs starting in FY13.
Significantly, this proposal shifts hundreds of millions of dollars less to the counties than the governor’s proposal. The Senate proposal greatly minimizes the impact of a cost shift on county finances and bond ratings, and is structured so that the additional costs would be prevented from supplanting resources going to our schools. While MSEA does not support a pension shift in isolation, this proposal protects school funding and is far better than the governor’s original proposal.
Pension Benefits
Read about MSEA's July 2011 letter to the governor and legislative leaders in response to the final report issued by the Public Employees’ and Retirees’ Benefit Sustainability Commission.
The letter stressed the importance of ensuring a sustainable pension system for the state; providing educators with retirement security and maintaining an important retention incentive; and not upsetting the flow of classroom resources. Learn more.
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