ANNAPOLIS | Public-employee unions are anticipating a big win this year in Maryland, fighting back General Assembly efforts to make counties share nearly $1 billion in teacher pension costs with the state.
House and Senate subcommittees in the Democrat-controlled Assembly have passed several reforms this session to rein in pension costs, including a House plan that requires state employees to increase their contributions from 5 percent to 7 percent, raising the early-retirement age from 55 to 60 and shifting $17 million in administrative costs onto the counties.
But House and Senate leaders have - at least for now - relented in their efforts to get counties to share the projected $928 million bill for teacher-pension benefits, which would have helped the state close a $200 million budget shortfall and sustain its increasingly underfunded pension system.
Union leaders and other opponents of the cost-sharing argued that many counties are now in too dire financial shape to foot the bill without making further cuts and that higher costs on employees could hurt teacher recruiting and retention.
“The proposal thats being discussed would put counties in a difficult position — a crippling position, really,” said Adam Mendelson, spokesman for the Maryland State Education Association, which helped stage a rally earlier this month that brought thousands of teachers to the State House.
The union also said the House plan would have lowered employee morale and put “Maryland’s benefits back at the worst in the nation.”
The situation in Maryland, in which the governorship and Assembly are controlled by Democrat, is markedly different this year than, for example, in Wisconsin or Ohio, where Republican governors and GOP-controlled legislatures have tried to solve budget problems by reducing benefits that unions won for government employees.
Senate President Thomas V. Mike Miller Jr., Prince George’s Democrat, is among the Assembly leaders who supported cost sharing for the state’s 23 counties and Baltimore city, saying it is the only way to save a system racked by struggling investments and spiraling payouts to retirees. He also said changes made this year were “inadequate” and that the issue is far from settled.
“Some of the costs have got to be shifted to the counties who are responsible for the costs,” he said. “And I think it’s going to happen next year.”
Mr. Miller said cost sharing has strong support in the Senate and would likely have passed the chamber this year. However, the House is far more divided on the issue, largely because many junior delegates are reluctant to make an unpopular decision, he said.
Maryland, one of only three states that pay teacher pension benefits without help from local governments, has seen its teacher pension expenses double in the past five years. Its pension system was 93 percent funded in 2003, but will be just 59 percent funded this year.
The changes will be in the fiscal 2012 state budget. The House has passed a $34.2 billion budget, a reworking of the one Democratic Gov. Martin O’Malley submitted in January. The Senate is expected to begin its debate Tuesday, which will be followed by leaders of both chambers meeting to agree on a final version.
Cost-sharing supporters also say such a change is only fair, considering counties control their own salaries and hiring.
“I think were going to eventually have to do something,” said state Sen. Ulysses Currie, Prince Georges Democrat and member of the chamber’s Budget and Taxation Committee. “But these are tough times for local governments.”
Pensions will likely be a major issue again in next years General Assembly, when the state will face an anticipated $1.2 billion structural deficit. While the pension system will be 59 percent funded this year, Mr. OMalley has said he hopes to see the system 80 percent funded by 2023.
Delegate Gail H. Bates, Howard Republican, opposes cost sharing, especially in a time where numerous local governments are facing their own shortfalls. While some cost-sharing supporters have blamed counties for the failing pension system, arguing that they recklessly raised salaries, she said the state is also to blame for overspending and approving pension-benefit enhancements in recent years.
“When we enhanced the pension years ago, the counties never came to us and said, ‘Please increase the payments.’ We did that on our own,” said Mrs. Bates, a member of the House Appropriations Committee, which approved this year’s pension changes.